Free-TV Emerging Markets

Free-TV Emerging Markets comprises the 20 free-TV channels in the Baltics, Hungary, the Czech Republic, Slovenia, Bulgaria, Macedonia and Ghana. 

The Emerging Markets free-TV operations generated 24% sales growth in 2008, excluding the results of both DTV Group Russia and Nova Televizia. The DTV Group Russia was sold and deconsolidated with effect from 16 April 2008. Nova Televizia in Bulgaria was acquired and consolidated with effect from 16 October.
 
The operating profit development reflected the deterioration in the operating and financial environment during the second half of the year and the ongoing investment in the Group’s operations in Ghana. The full year results were also impacted by the cost of acquiring the broadcast rights to the UEFA EURO 2008 Football Championship for the Czech Republic, Bulgaria and Slovenia, as well as the launch of new channels in Estonia, Lithuania and Hungary.

Viasat in the Baltics comprises TV3, TV6 and 3+ in Estonia and Latvia and TV3 and TV6 in Lithuania. Viasat is the largest broadcaster in the Baltics and was impacted by the weaker performance of the local economies and advertising markets, with the condition of the Estonian and Latvian markets being most adversely affected. The Baltic businesses reported a 9% growth in sales to SEK 613 (564) million. The combined Baltic free-TV businesses reported an operating income of SEK 151 (163) million, and operating margins of 25% (29%).

TV Prima in the Czech Republic generated 25% growth to SEK 1,045 (837) million, which reflected price increases and the relative strengthening of the Czech koruna currency.

TV Prima reported an operating profit of SEK 160 (185) million. The operating performance reflected the investments made to prepare for the launch of the new Prima COOL channel in 2009 following the awarding of new digital terrestrial licenses as part of the digital TV transition process, as well as the investment in UEFA EURO 2008. TV Prima therefore reported operating margins of 15% (22%).

The Group’s free-TV operations in Bulgaria comprise the Diema, Diema2, Diema Family and MM, and Nova Televizia which was consolidated from 16 October. The combined businesses reported sales of SEK 234 (42) million, and operating profits of SEK 22 (-6) million. The operating results included a SEK 11 million charge arising from the integration of the Nova and Diema businesses.
 
Viasat’s other Emerging Markets free-TV operations comprise Viasat3 and TV6 in Hungary, TV3 Slovenia and Viasat1 in Ghana in West Africa, which was launched on 12 December. The combined businesses reported 31% sales growth to SEK 256 (196) million. Viasat Hungary generated 27% growth following price increases and improved sales efficiency levels. The combined operations reported an operating result of SEK -42 (-6) million, which reflected the ongoing investments in the development of the Ghanaian and Slovenian businesses, as well as lower margins for the Hungarian business due to increased programming spend, the launch of a new channel and the impact of adverse currency exchange rate fluctuations on international content acquisition.

Associated company CTC Media

MTG owns 39.4% of Russia’s largest independent television broadcaster CTC Media and the Group reports its equity participation in the earnings of CTC Media with a one quarter time lag due to the fact that CTC Media reports its results after MTG. CTC Media comprises the three Russian networks CTC, Domashny and DTV, the latter acquired from MTG in 2008. CTC Media generated 43% sales growth to USD 615 (428) million for the twelve month period ended 30 September. Operating profits increased by 56% to USD 259 (167) million over the same period and CTC Media generated an increased operating margin of 42% (39%). MTG’s reported share of earnings in CTC Media’s results therefore amounted to SEK 629 (461) million for the twelve month period.
For more information please visit www.ctcmedia.ru.

Significant events The Group acquired 100% of the shares in Bulgarian Nova Televizia on October 16. The Group launched a national terrestrial TV channel in Ghana in West Africa on 12 December. The new channel, Viasat1, has a five year national terrestrial TV license and is Viasat Broadcasting’s first commercial free-TV entertainment channel outside Europe.

Significant events after the end of the year On 26 February, CTC Media reported the financial results for the fourth quarter and full year 2008. Sales growth for the full year 2008 was 36% to USD 640 (472) million, with a net income before tax of USD -158 (86) million for the fourth quarter and USD 4 (205) million for the full year. The result included an impairment of intangible assets of USD 233 million.
On 3 March 2009 MTG announced that it is reorganising the ownership of its free-TV assets in Bulgaria. MTG has signed an agreement with Apace Media plc whereby the assets within Balkan Media Group, Diema, Diema2, Diema Family and MM in Bulgaria and the Albanian language channel ERA TV in Macedonia, will be transferred into the MTG subsidiary Nova Televizia. MTG will own 95% of the enlarged Nova Televizia group, whilst Apace will hold a 5% minority interest.

On 1 April the free-TV channel Prima COOL will be launched in the Czech Republic. The new channel complement MTG’s existing TV Prima channel. Prima COOL will be launched following the award of new digital licenses to TV Prima as part of the ongoing digitalisation of the Czech TV market. Analogue terrestrial broadcasting is gradually being switched off, with the process due to be completed by the end of 2011.