PRESS RELEASE
TVN S.A. 166 Wiertnicza St. 02-952 Warsaw, Poland tel. +48 22 856 60 60 fax. +48 22 856 66 66 www.investor.tvn.pl www.tvn.pl www.onet.pl www.n.pl www.tvn.pl/grupatvn/media
TVN GROUP REPORTS SECOND QUARTER RESULTS CHARACTERIZED BY A WEAK ADVERTISING MARKET ENVIRONMENT
Warsaw – August 9th, 2012
Comparable consolidated revenue slipped 1% year-on-year in 2Q as the strong operating performance of ‘n’ platform was offset by a weak advertising market environment o Reported 2Q revenue decreased 8% year-on-year reflecting primarily adverse TV advertising market evolution well below expectations, driven mainly by high pricing for airtime around UEFA Euro 2012, which was considered excessive despite dominant audience shares of this event broadcasted by public TV Comparable EBITDA decreased by 22% year-on-year and reached 24% margin in 2Q, impacted by the weak TV advertising market on TV segment revenue, with the profitability of ‘n’ platform remaining fairly stable on the back of further subscriber base growth and investments in premium content o Reported EBITDA was down 25% in 2Q, driven by TV segment revenue decline with limited short-term cost savings opportunities, recording a 32% margin Key developments on the operating side in the second quarter: o TVN’s overall channels all day audience share in 16-49 year-old target group increased year-on-year in April and May but suffered a decline in June due to UEFA Euro 2012 broadcast by public TV; o ‘n’ platform increased its subscriber base to 983 thousand with strong net additions of 17 thousand in 2Q, benefiting from a strong contribution from its partnership with Orange Poland and further improvement in churn management; o Onet increased its real user base by 0.4% year-on-year, number of video unique users by 10% and more than doubled unique users base of mobile services Net result from continued operations is a loss of PLN 4 million in 2Q, driven primarily by net finance result of PLN -147 million reflecting interest costs and unrealized foreign exchange losses on valuation of Senior Notes Net loss of PLN 230 million from discontinued operations, mainly from the impairment of goodwill in Onet, drove the total net result for the period to a loss of PLN 234 million in 2Q
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Net Debt to EBITDA ratio increased to 4.8x primarily as a result of lower EBITDA Merger of ‘n’ platform with Cyfra+ and strategic partnership in respect of Onet with Ringier Axel Springer are under regulatory review with definitive closing of the transaction expected towards the end of 2012 In anticipation of the closing of the Onet transaction and the receipt of proceeds thereon, the TVN Group may from time to time seek to purchase outstanding debt through one or a series of cash purchases in open market transactions, privately negotiated or otherwise, either directly or indirectly through one or more agents. The amounts involved may be material.
Markus Tellenbach, Chief Executive Officer said: “TVN Group results clearly reflect the condition of Polish advertising market. Following its worse than expected evolution in the second quarter, no improvement in July-August and continued low visibility going forward, our outlook for full year TV advertising market dynamics is a decline in a range of 6-9% while Online display advertising should maintain its growth at a mid-single digit rate. We believe that TVN advertising revenue should develop broadly in line with the market. As there were limited cost saving opportunities in the second quarter, mainly due to the fact that market slipped when our spring schedule was already up and running for a few weeks, we have launched a number of optimization initiatives that will offset approximately half of the full year advertising revenue decline impact at the EBITDA level. With a strong track record of preserving profitability, we are confident in achieving this target.”
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Please note that as a result of the agreements: with Group Canal+ signed on December 18th, 2011, and with Ringier Axel Springer signed on June 4th, 2012, ‘n’ platform and Onet Group were reclassified in the TVN Group accounts as “Discontinued operations”, as per the requirements of IFRS 5. Therefore, in order to provide comparable data for the second quarters of 2012 and 2011, we show TVN Group comparable revenue and EBITDA, i.e. presented as if ‘n’ platform and Onet Group were not reclassified, and TVN Group reported revenue and EBITDA which show impacts of such reclassification.
Three months ended Three months ended In million PLN Change June 30th, 2012 June 30th, 2011 Comparable revenue 718 724 - 1% TV segment 444 483 - 8% ‘n’ platform 215 180 + 19% Online segment 69 72 - 4% Reported revenue 452 491 - 8% Comparable EBITDA 175 223 - 22% Comparable EBITDA 24.4% 30.9% - 6.5pp margin Reported EBITDA 143 190 - 25% Reported EBITDA margin 31.7% 38.6% - 6.9pp
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TVN Group Financial Highlights – Weakness of advertising market and transaction concerning Onet reflect on TVN Group results TVN Group comparable revenue decreased by PLN 6 million year-on-year to PLN 718 million in the second quarter, which represents a 1% decline. Such evolution can be explained mainly by: Strong ‘n’ platform’s top line year-on-year growth of PLN 35 million in the second quarter, thanks to effective subscriber acquisition combined with ARPU growth; Online revenue lower by PLN 3 million year-on-year, due to further slowdown of internet advertising market in the second quarter influencing mainly ZUMI and impact of restructuring Onet VOD offer still reflecting on year-on-year comparisons; TV segment revenue decline by PLN 40 million in the second quarter, primarily a function of further advertising market weakening, partially offset by growth of thematic channels’ carriage fees. As a result, comparable revenue amounted to PLN 1,328 million in the first half of 2012, up by PLN 22 million or 2% year-on-year. Reported Group revenue was down PLN 39 million year-on-year to PLN 452 million in the second quarter, reflecting TV advertising market underperformance. Year-to-date reported revenue was PLN 817 million, i.e. 5% or PLN 41 million lower than in the first half of 2011. Comparable EBITDA reached PLN 175 million in the second quarter, down by PLN 48 million or 22% year-on-year, with margin at 24.4%. The decrease reflects mainly shortfall in TV advertising revenue with limited short-term cost saving opportunities while Online and ‘n’ platform reported broadly stable EBITDA. Cumulative comparable EBITDA reached PLN 277 million in the first half of 2012, representing PLN 63 million or 18% decline year-on-year. Year-to-date margin was 20.9%. Reported EBITDA arrived at PLN 143 million in the second quarter after a year-on-year decline of 25%, i.e. by PLN 39 million. Margin decreased by close to 7 percentage points, reaching 31.7%. Lower profitability again reflects mainly weakness of TV advertising revenue on the background of deteriorating market environment. Reported EBITDA for the first six months amounted to PLN 233 million, down PLN 56 million or 19% year-on-year. Net result from continued operations amounted to a loss of PLN 4 million in the second quarter, primarily as a result of reported EBITDA being fully offset by net finance result of PLN -147 million reflecting interest costs and unrealized foreign exchange losses on valuation of Senior Notes. During the first six months of 2012 continued operations delivered a net profit of PLN 162 million. Net loss attributable to the owners of TVN S.A. reached PLN 231 million in the second quarter, a function of PLN 230 million loss from discontinued operations reflecting primarily impairment of Onet’s goodwill. As a result, net loss attributable to the owners of TVN S.A. was PLN 46 million in the first half of 2012. Net Debt amounted to PLN 2.74 billion at the end of the second quarter, with a Net Debt / EBITDA ratio increased to 4.8x due to lower 12-month rolling EBITDA. Healthy liquidity was maintained at a level of PLN 569 million in free cash and liquid assets.
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TV Segment Highlights – Weak TV advertising market drives TVN performance TV segment revenue decreased by PLN 40 million year-on-year in the second quarter and reached PLN 444 million. This 8% decrease was as a function of lower spot advertising revenue partially compensated by higher sponsoring and carriage fee revenues. Spot advertising revenue amounted to PLN 314 million in the second quarter after a decrease of PLN 51 million, i.e. by 14%. Such underperformance can be solely attributed to a very weak TV advertising market. According to estimates by Starlink, the market was down by 11.4%1 in the second quarter. Sponsoring revenue increased by PLN 7 million to PLN 46 million in the second quarter, at a rate of 17% year-on-year, driven mainly by solid performance of our main channel. Carriage fees from thematic channels were up by PLN 7 million or 15% year-on-year and reached PLN 55 million. This revenue source was fuelled by 5% average growth in the channels subscriber bases further supported by a year-on-year 8% depreciation of the Polish zloty versus the Euro, a currency in which these fees are denominated. As a result, TV segment revenue for the first half of 2012 amounted to PLN 800 million, representing a year-on-year decline of 5%. TV segment EBITDA was down by PLN 51 million or 25% year-on-year reaching PLN 158 million with a margin of 36% in the second quarter. This decrease reflects revenue underperformance while its key factor – significant weakening of TV advertising market – took place in April when spring schedule was fully up and running and did not allow for significant cost savings. Year-to-date EBITDA amounted to PLN 263 million with a margin of 33%.
‘n’ Platform Highlights – Further strong operating performance in a seasonally softer quarter Pay TV revenue increased by PLN 35 million or 19% year-on-year, arriving at PLN 215 million in the second quarter. The key growth drivers were subscriber base of 983 thousand, up by 19% year-on-year, coupled with monthly ARPU slightly exceeding PLN 61. During the second quarter net subscriber acquisition reached 17 thousand compared to 4 thousand net loss a year ago, resulting from maintaining high level of gross sales with 12-month rolling churn rate improved to 12,4% - a level representative for the industry best practice. Consequently, Pay TV revenue amounted to PLN 419 million in the first half of the year, up by PLN 63 million or 18% year-on-year. Pay TV EBITDA slid by almost PLN 3 million year-on-year and reached PLN 4 million in the second quarter. This decrease, similarly to the first quarter, was a result of higher programming costs, both variable – driven by subscriber base increase, and fixed – related to exclusive movie contracts with 20th Century Fox and Monolith effective from January this year. In the first six months of the year Pay TV EBITDA decreased year-on-year by PLN 6 million amounting PLN -1 million at the end of June.
1 Airtime only, without sponsoring.
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Online Segment Highlights – Softening of the Internet display advertising market impacts auxiliary online services Online revenue decreased by PLN 3 million year-on-year or 4%, amounting to PLN 69 million in the second quarter. Standalone Onet increased its top line by more than PLN 2 million (+4%) but remaining online services more than offset this growth primarily with revenue decline in Zumi while VOD advertising revenue is still not comparable to last year due to the restructuring of the video offer in the second half of last year. Lower revenue growth rate in Onet and decline in Zumi were driven by slowdown of Online advertising market growth. On such a background, Online segment revenue decreased by 4% reaching PLN 126 million in the first half of the year. Online EBITDA exceeded PLN 27 million in the second quarter and was 3% higher year-on- year. Again the growth came from Onet which EBITDA margin increased to 46% while cash EBITDA margin was close to 51%. Revenue decreases in other services translated directly to their EBITDA and therefore mitigated strong performance of Onet. Year-to-date EBITDA of Online segment was close to PLN 46 million, down 1% year-on-year.
For further information please contact:
Tomasz Poźniak Karol Smoląg Head of Investor Relations Director of the External Relations Unit, Spokesman (+48 22) 856 66 14 (+48 22) 856 66 88 mobile: (+48) 516 444 316 mobile: (+48) 516 444 388 e-mail: [email protected] e-mail : [email protected]
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*** TVN Group is the leading media group in Poland. TVN Group owns and operates ten television channels.
TVN, our principal free-to-air channel, is recognized in the Polish market as a leading television broadcaster of high quality entertainment and comprehensive independent news. TVN reaches 92% of households in Poland.
TVN7 is an entertainment channel that complements TVN’s offer by broadcasting feature films and television series. The channel reaches 70% of households in Poland.
TVN24 channel is the first 24-hour news and current affairs television channel in Poland, reaching 63% of households in Poland.
TVN CNBC is our business news channel launched in cooperation with CNBC Europe. The channel reaches 56% of households in Poland.
TVN Meteo is Poland’s first dedicated weather channel reaching 61% of households in Poland.
TVN Turbo is Poland’s first thematic channel aimed at man and at the same time dedicated mainly to motorization. The channel reaches 62% of households in Poland.
TVN Style is a thematic channel focused on life styles, health and beauty aimed at women. The channel reaches 62% of households in Poland.
ITVN is a television channel that targets viewers of Polish origin living abroad. It is available in Europe, Northern America and Australia.
Telezakupy Mango is the only, all day, teleshopping channel in Poland, reaching 60% of households.
NTL is a local television channel addressed to residents of Radomsko and surroundings.
TVN Group also owns TVN News & Services Agency, broadest media services agency operating in Central and Eastern Europe and the only one in the region to offer full complexity services.
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TVN Group owns Onet. For over 15 years Onet continuously and successfully defines the standards of entertainment, information, communication, e-commerce, mobile services and online advertising. This most important internet’s opinion former is reported to be the most frequently visited content destination site in Poland. Onet Group, as one of the largest Internet Groups in Poland, operates the leading web properties including thematic vortals.
Onet’s services are also leaders in their categories:
Zumi is a new tool, not existing before on the Polish market, bringing together the features of map services, online directory and yellow pages.
Sympatia.pl – the most popular dating service in Poland.
plejada.pl - an interactive multimedia site dedicated to show business. It is the first project on the Polish market available immediately on launch via three platforms – Internet, mobile phones and “n” platform.
Vod.onet.pl - "video on demand" service allows web users to watch Polish and oversees series, TV shows and feature films. Cutting edge technologies ensure the highest quality of audio and video.
OnetBlog – the biggest blog service in Polish internet.
TVN Group also owns:
tvn.pl - daily source of information and entertainment related to the show- business. Continuously updated service describing events, characters and programs broadcast not only by TVN, TVN Style and TVN Turbo channels. Guaranteeing access to a broad base of video and photo materials and full episodes of TVN’s series and shows.
tvnplayer.pl - video on demand platform, allowing free access to the largest library of series, shows and programs broadcast on the TVN channel. Also available in versions for mobile devices with Android, IOS systems, PS3 consoles, TV receivers of leading manufacturers and for new generation n television.
tvn24.pl - the first news portal in Poland, which combines text, voice and video. The web site contains extensive video content related to the most important events in Poland and all over the world. The portal features paid access to the on-line broadcast of the TVN24 channel as well as information and materials that haven’t been broadcast on television.
tvnmeteo.pl - the most state-of-the-art weather portal in Poland. Created by professional editors, Internet users and spectators interested in meteorology. Provides weather information and forecasts in more than 80 thousand locations in Poland and abroad.
tvnwarszawa.pl - a media project dedicated to Warsaw and its residents. TVN Warszawa focuses on life in Poland's capital, providing high quality news and entertainment programming.
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TVN Group also owns digital pay-tv platform “n”
Pay-tv platform n launched on October 12, 2006. It is the first satellite platform in Poland and central-eastern Europe to offer HD channels, Personal Video Recorder (PVR) and Video on Demand (VOD) in one. As the first platform in Poland, has launched a 3D service - nShow3D to guarantee the "third dimension of entertainment."
Pay-tv platform n offer gives the largest selection of programs among all digital platforms in Poland. It includes 34 HD channels: nPremium HD, nPremium2 HD, nPremium3 HD, nPremium4 HD, TVN HD,TVN HD+1, TVN TURBO HD, TVN STYLE HD, TVN 7 HD, TVP HD, TVP1 HD, Polsat HD, HBO HD, HBO2 HD, HBO ComedyHD, FOX HD, AXN HD, MGM HD, FILMBOX HD, DISCOVERY HD, nSPORT HD, EUROSPORT HD, EUROSPORT2 HD, MTV HD, ANIMAL PLANETHD oraz NAT GEO WILD HD, National Geographic Channel HD, BBC HD, FOX life HD, BBC Knowledge HD, Cinemax HD, Cinemax 2 HD, Romance TV Polska HD. Pay-tv platform n is an unchallenged leader in the most up-to-date TV technologies available in the Polish market. Along with riche program offer, pay-tv platform “n” is also about some innovative services, including: set-top-box equipped with 1 TB disc and the most advanced EPG offering some unique and easy to operate features. Pay-tv platform n is available in nationwide points of sale, an online shop and through a call center.
TVN S.A.’s shares have been traded on the Warsaw Stock Exchange since December 7, 2004 and are included in the Warsaw Stock Exchange indices, including the WIG 20 and WIG Media.
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