Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Sara Bersani. Please go ahead.
Good morning, ladies and gentlemen, and welcome to the nine-month results presentation of MFE-MediaForEurope. Let me introduce immediately the speakers of this web conference call. Today's presentation will be hosted by our Group CFO, Marco Giordani, and by Matteo Cardani, Managing Director of Publitalia '80. Now, let me hand over immediately to Matteo for the advertising and audience outlook. Matteo, please go ahead.
Thank you, Sara, and good morning. Thanks for your attendance. Today we comment on nine-month 2022 results with an outlook on ongoing indicators for current trading. As we anticipated in the last conference call, we are still working in a highly uncertain context. The macroeconomic scenario and consequently, the advertising market, are still impacted by the effects of the inflation, as confirmed also by other broadcasters reporting their results in these weeks. Notwithstanding, in the last three years, MFE has learned how to mitigate the impact of this uncertainty, acting quickly to adapt the business strategy. On top of that, unlike two years ago, the economic indicators are decreasing more gradually, and not registering a shock in the demand.
In fact, as you can see in slides number three and number four, the macroeconomic indicators demonstrate a significant change in market sentiment and behavior in Q3, definitely, with confidence index declining both for consumers and business. Consumption, on the other end, is flattening year-on-year, both for goods and services. Flattening, but not suddenly decreasing. Also, the gross domestic product growth year-on-year has registered a slowdown, but not a shock, moving from +4.9% in Q2 to 2.6% in Q3, and the congiuntural variation is still positive, +0.5 in Q3. This is the macroeconomic scenario. If we move to the advertising market dynamics, I'm commenting chart number five.
In Q3, many companies adjusted the allocation of advertising budget and spending for the current year. As you can see, in nine months 2022, total advertising market is down -4.7% year-on-year, with Q3 at - 9.3% year-on-year, the market. In this context, our performance in the nine months is - 2.5% year-on-year, so better than the total market and the addressable market, that includes TV, radio and digital. As anticipated in our H1 presentation, Q3 year-on-year trend is affected by the tough comparison with the two previous year. Q3 2021 was positively affected by the Euro 2020, the Olympics and the end of the spring lockdowns, so was particularly positive.
Even Q3 2020 was positively affected by the postponement of Serie A and Champions League in the summer period, and again, the positive effects of the reopenings after the spring lockdowns. Therefore, the most appropriate benchmark is Q3 2019, against which we are down low single-digit%. In this context, our better than market performance delivered by the fact that, as you can see in chart number six, our market share is further improving year-on-year. We moved from 40.8% last year to 41.5% in nine months 2022.
To better explain and understand both the current trading and the outlook, we have to consider the dynamics on the demand side, focusing on sector dynamics combined with our company offer proposition, focusing on MFE total audience evolution. Talking about the sector dynamics, I'm now on chart seven. It's interesting to observe that the impact of the current situation is strongly asymmetrical between goods and services. In fact, on the one end, automotive and food are the sectors most affected by the energy costs and the shortage of raw materials components, resulting in a decreasing level of advertising investment. On the other end, e-commerce, direct to consumer, telco sectors, tourism and leisure are maintaining or increasing the level of advertising investment, counterbalancing the performance of the weaker sectors.
That is why we comment again this scheme that is useful, has been useful also in the past conferences to understand market dynamics. We have growing sectors. These sectors represent 48% of the market and bring a positive contribution to our performance. As you can see, it's better than market on these sectors, and it includes personal care, media publishing and tourism with high double digit peaks. You have the second tier of our sector, the segmentation, stable or slightly declining sectors that worth about 39% of the market. Here you have sector being impacted by the inflation crisis as food, pharmaceuticals, banking and finance. The performance of these sectors is flat or down low single digits.
Last but not the least, the challenging sector that only worth 13% of the market and where the automotive sector represents 60% of this segment, which despite the incentive is still declining double digits in the nine months. It is worth commenting the fact that e-commerce and direct to consumer sectors are becoming more and more relevant, and they are growing in terms of weight. They account for 25% of the total market. The last comment on this chart is the graph on the right-hand side, where you see the weighted contribution by sectors on our revenue. You see that the negative trend of some sectors is partially compensated by the positive dynamics of other sectors.
Still on sector dynamics, I want to comment on the chart number eight, that from where I stand I think it's particularly significant because here you have the trend of value retail sales of the whole range of sectors contributing to our revenue. You see with exception of automotive, which represents 8% of our revenues, 92% of sectors in MFE advertising perimeter are still registering sales growth on a year-on-year basis, of course, including also the component of the inflation. If we take into account the value trend of retail sales is positive, and we combine this positive trend in Q3 with a positive one in private consumption, let me say that the start and the outlook of Q4 does not look that negative.
Last chapter of my presentation before the final remarks on the outlook on Q4 is regarding the company's offering proposition. Last week, MFE-MediaForEurope CEO, Mr. Pier Silvio Berlusconi, pointed out our programming strategy with a very well-balanced range of own production, fiction and entertainment, and the diversified portfolio of generalist and thematic channels, each of them with a very distinctive positioning. On top of this, the contribution of sport events. All this offering, as you can see on page number nine, is delivering on our main commercial target, a linear order share that is growing by 2.8% year-on-year over the nine months, while our digital non-linear order is perfectly aligned around 40%. Now I'm moving to chart number 10.
The interesting thing, and this is thanks to our strong programming offer, despite all the talks around linear TV audience downturn, actually our linear TV audience is in a very good health, +0.6% versus 2019, which is the right comparable basis, not only for the revenues but also for audiences. On this baseline, as you can see, we had a high double-digit growth of the digital screens, so connected TV, mobile, desktop, bringing our total audience performance to 2.5% growth rate versus 2019. The interesting thing is in the chart number 11, that is a chart that we are now able to produce thanks to the total audience delivered by Auditel, this summer.
You see that if you take into account the total audience contribution, we are adding +2% to the traditional audience performance. This benefit is not only quantitative, but also qualitative because as you can see, the total audience is adding a younger viewers profile from digital screens with the additional benefit of a higher CPM than that of linear televisions. Furthermore, the audience data related to connected televisions now available from September confirm the effectiveness of combining the three screens, the triple play linear TV, connected TV and digital screens reach all the most relevant target segments, including the younger again.
Last but not least, on chart number 12, with regard to monetization, you see the pricing upside opportunity we have on connected TV and digital screens with a higher revenue per hour rate compared to linear also. Now, I'm closing the first part of our presentation, and I would like to summarize a few preliminary comments on Q4 outlook, combining three main drivers, so sector dynamics, TV offer, and advertising trend in Q4. With regards to sector dynamics in the first 10 months, we have seen the negative trend of the challenging sector reducing its speed for the first time over the past 18 months. In fact, in October, we have seen slightly positive signals in automotive new car sales. Luckily, this is recycled in our early indicators for advertising collection.
Combining this with the fact that growing sectors are still growing high single-digit and stable or soft declining sectors are still low single-digit down, we are confident that sector trends will be balanced, helping us particularly in the second half of November and December. Second driver, our TV offer, you see we commented about, competitiveness expressed by the quality of the programming schedule and the very good audience trend, total audience trend we are registering. This will allow us to maintain the traditional level of prices for the advertising blocks, even during the last part of Q4 when RAI will broadcast the World Cup. Regarding the advertising trend in Q4, I'll try to give you a bit more color. At this stage, the outlook for Q4 could be divided in two parts, equally weighted in the quarter.
The first part, until mid-November, say up to today, before the start of the World Cup, shows good level of resiliency, being more or less at the same level of the same period of the last year. We are almost flatish year-over-year, October plus mid-November. Remarkably, we are up around +2.5% compared to the same period of 2019. With regard to the second part of the quarter, from the beginning of the World Cup next Sunday, we are affected by low visibility in [uncertain] and Christmas. It is clear, not being the owner of the rights, we will not be the first choice for advertiser. At the same time, the Italian team, unfortunately, is not part of the event and the World Cup this time comes in a period of high exploitation of the advertising inventory.
Our performance will depend on how these two opposite effects will play out. Our best assumption at this stage is that we will be below the corresponding period of 2021. Very, very difficult to say to what extent. It will also depend on the dynamics of the underlying market and the World Cup attractiveness for advertising. Just a very, very final remark, just to recap, what are the reasons of our performance in the first part of Q4. There is definitely a resilience of the Italian macroeconomic indicators compared to the other European countries. We are experiencing a slowdown in growth, but gross domestic product growth year-on-year has registered, as we say, a slowdown but not a shock.
Moving from +4.9 to +2.6, and the conjuncture variation is +0.5. In relative terms, 2022 gross domestic product forecast for Italy is equal to or slightly above the European average. That's the first factor explaining the Q4 start. There is a resilient advertising market in Italy. Private consumption is still positive in Q3 2021, and 92% of the sectors in MSC advertising are still registering sales growth on a year-on-year basis. Let me say that the positive signals we commented on the last part of September were confirmed by the first part of Q4. Last but not least, we have a unique proposition in the Italian advertising market.
Our cross-media portfolio offer has proven effective in outperforming the market through the different cycle, so upside and downside, as shown by the evolution of our revenue share on the total addressable market. After this introduction on advertising, I hand over to Marco. Thank you.
Thank you, Matteo, and good morning to everybody. Today, also on my side, we will briefly comment the nine-month result, and we are going to confirm broadly all the outlook, and guidance for the full year that we gave, one month ago. To briefly summarize, the result in the first nine months are in line with our expectation in the Italian performance and, is ahead of certain financial and operating metrics, especially in the cost, on the cost side, but we will comment them afterwards.
As you have seen, from the press release and on the presentation, we have reached a little bit more than EUR 1.9 billion revenue, and we closed the nine-month result with a positive group net profit of EUR 78.5 million. Clearly the comparison with last year's performance is largely affected by the extraordinary positive events of last year that is accounting for almost EUR 130 million. If you remind them, they were an extraordinary gain on the sales of the Mediamond business. Some financial gains on proceeding instrument and derivatives, and the positive effect in our other revenue line coming from the Vivendi settlement.
These are clearly something that are not replicable in 2022, and so it's affecting a lot the comparison with last year. As far as the group net financial position is concerned, the nine months end with EUR 877 million debt. That is better than the last year number, so the 2021 number. That clearly has to take into account the fact that we have distributed EUR 133 million dividends and the voluntary tender offer on Mediaset España shares caused a cash outflow of almost EUR 184 million. The improvement versus last year is really remarkable having accounted for these two very important events.
The free cash flow generation at group level was a little bit less than EUR 360 million. Again, a pretty remarkable number. Moving to the Italian business, clearly Matteo has already explained everything about advertising performance. If we go to the other revenue line, we register EUR 194 million revenue. Everything in line with our expectation and phasing. In terms of guidance, we confirm the EUR 290 million we gave one month ago. Everything is going in line with our expectation. Clearly we are still facing some uncertainty regarding, for instance, cinema revenue. Take into consideration that, clearly this is a season where cinema revenue are traditionally pretty high.
Clearly the result on the movies that are out on the cinema are clearly going to affect the full year numbers. However, we are pretty confident, as Matteo said, also regarding the other revenue that we are collecting from third-party, let's say, publisher like DAZN, that clearly will be exposed to the macroeconomic trend as all the other publishers in the market. Just as a reminder, in the other revenue line, this year we will have the positive effect of the DAZN contract, as I mentioned already. Champions League on streaming platform is performing very well. Clearly now we are entering in a period where Champions is not on screen, but clearly, for October, the revenue has been very good.
All the retransmission fee and sale of content to OTT platform. Again, this line is performing as expected one month ago. Few words about cost. In the nine months, we reach a level of EUR 1,325 million of cost, of total cost. The trend is consistent with our guidance that we are confirming. Clearly this big number is composed by several trend in which clearly I'm going to explain something more. Looking at the Q3 cost evolution, we are very proud of the performance because we were able to act very fast in terms of adaptation to the top line trends.
Clearly we put already in the Q3 some efficiency actions that allowed us to have a decrease in the total cost of 4.4% in the quarter compared to last year number. That number is even more remarkable if you exclude inflation and energy costs. As I said, excluding these factors, the decrease would have been 6.5%. In the quarter, we were able not only to offset the energy and inflation increase, but we were also able to be below last year, and more remarkably, also below 2019 numbers. Clearly we are going to replicate everything on the Q4 with more effect for two reasons. First is timing, clearly.
Clearly in the Q3 our reaction has been fast, but clearly some of the obligational costs were already there, so we were not able to tackle them. While on the Q4 , clearly that is going to be possible, first. Secondly, also because the amount of costs or the base cost is clearly larger, and so all our action will be more effective. Our target today is to have a decrease of 20% of the total cost compared to last year. This means roughly EUR 120 million cost savings in the last quarter compared to last year. That's the reason for which we confirm our guidance of EUR 1.8 billion thanks to these additional efficiency action.
That has already been implemented in October and will go on and be implemented in November. Clearly, that it's also the result of what we learned during pandemic. The company is prepared to be, let's say, very tactical and opportunistic, and we will adapt our cost base very fast to all, let's say, macroeconomic trends we are going to face in the coming months. Looking below EBIT line, financial charges were clearly they're not charges, but I mean, financial revenue were positive for EUR 12.4 million and associates again positive for EUR 9.9 million. In terms of guidance, we are confirming the EUR 10 million we gave one month ago.
Also in terms of associate, our guidance is still 151.5 million EUR for the full year. Moving to investment, you see the number on the chart, and we are confirming the guidance we gave, so to be in line with last year, EUR 270 million-EUR 280 million CapEx. That clearly looks pretty boring in terms of comparison, but in reality is a result of a strong efficiency actions, given the euro dollar exchange rate trend that is clearly, let's say, negative for us, and also to the cinema reopening that is clearly causing an increase in investment in that respect. Lastly, moving to cash flow. The company free cash flow is around 200 million EUR in the nine months. Again, pretty remarkable.
Again, if you compare these numbers to the first nine months, you can appreciate almost double in terms of generation, and that again is pretty remarkable. Finally, for the full year or year-end, let's say net debt expectation, we are confirming that we are going to be around one time net debt to EBITDA as forecasted. This already including the voluntary tender offer on Mediaset España and the dividends I already mentioned. I finish my presentation, so I'll now give back the word to you in the Q&A section. Thank you.
Thank you. As a reminder, to ask a question, you will need to press star 11 on your telephone and wait for your name to be announced. Please stand by while we compile the Q&A queue. Once again, please press star 11 if you wish to ask a question. We will now take the first question. One moment. It comes from the line of Fabio Pavan from Mediobanca. Please go ahead. Your line is open.
Yes, good morning. Thank you for such a detailed presentation and for taking my question. I would love to go back to the outlook you provided for Q4, as it seems to be much better than the outlook provided by other European broadcasters. Can you provide us more granularity on the evolution of the quarter? Eventually, which sectors are driving this outperformance? And also, to the extent you feel you have already managed to capture the results of a better audience in the quarter. Thank you.
Okay. I answer the question. Thank you, Fabio. Matteo. With regard to outlook Q4, I can, to some extent, repeat what I already said. That, the reality is, we are in a market with a high variability and low visibility. You can easily check this if you think that, when we met, one month and a half ago, we were commenting on a tough September period with the second part of September recovering. It was judged as an early indicators for October, but who knows? Actually, October and the first part of November confirmed this positive trend. Our interpretation is that,
As I said, probably what happened is that the majority of advertisers adjusted their budget allocation with a shift from Q3 to Q4. Of course, the general trend is a downward trend, but they rebalanced to cover Q4 that typically is very important in terms of sales. For sure, we are benefiting from a positive audience trend, both in terms of share and in terms of total audience. That is why we had a press conference last week with Pier Silvio Berlusconi commenting on this. Because as I said, we are, let's say, positive compared to 2019 baseline. To some extent, we know we are an exception, a positive exception, while the other broadcasters are below year-on-year performance, and this definitely helps.
I would also add to comments about our resilience is that we were, let's say, recognized by the fact that we have a good portfolio of thematic channels. A good part of our growth is part of the thematic channel strategy. They account for 11-12 points of audience share. So this definitely helped. On top of this, our cross-media offer, so TV plus radio plus connectivity plus digital and even digital out of home is definitely helping in managing the context. Having said this, you should take into account that, as you know, Q4 is the most important quarter in our year. You know from our past track record that it accounts for 30%, one-third of our total year revenue.
As I said, they are equally weighted between the first half and the second half. Some positive, let's say, lights on the first half, but honestly, the second half will be definitely impacted by the World Cup. As we said, we don't know to what extent, but we know in advance that it will be a negative second half of the quarter. You know the weight of the two parts of the quarter, so it's very important, and that is why we stay very cautious with our year forecast. That's my answer. Hope to have answered and give you more color.
Yes. Thank you very much.
Thank you.
Thank you. We will now take the next question. It comes from the line of Julien Roch from Barclays. Please go ahead. Your line is open.
Yes. Good morning, Marco. Good morning, Matteo. Good morning, Sara. My first question for Marco. The total cost in Italy were EUR 1,325 after nine months. Last year in Q4, it was EUR 535. You said you would save 120. 535 less 120 is 415. 415 plus 1,325 is 1,740, not 1,800, which is your cost guidance. Can you reconcile the two, Marco? That's the first question. Second question for Matteo. Can you give us an estimate of how much you think RAI will get for World Cup advertising? Now, I understand it is very difficult. It's the first time it's in the autumn. Italy is unfortunately not playing. RAI does not have advertising in prime time, but still, a guesstimate will be appreciated.
Is it EUR 20 million, EUR 40 million, EUR 60 million? My last question, which is the usual one on page ten, can you give us a split of your audience between the three components you put on page ten? Grazie.
Thank you. Thank you, Julien. No, you're right. But you have to consider two elements. Last year, as you remind, we had almost EUR 50 million extraordinary cost. That clearly is not gonna be replicated. Then you have also, let's say, to remind the inflation that clearly is gonna impact it. In any case, we are going to have EUR 474 million cost in the Q4 . That's exactly reaching the 1.8. That's looking at 2022. Matteo, then you can answer to these other two questions. Thank you.
Okay. Thank you, Julien. With regard to the impact of World Cup, honestly, we don't know.
We made a lot of assumptions calculations, but honestly, it's difficult. It will be definitely material. We actually don't know because there is a high uncertainty about the audience performance. The first match is Qatar versus Ecuador, just to say, so not very attractive. There are also some very important matches like Germany versus Spain, and for sure the second part of the World Cup will be definitely interesting. I assume December probably more impactful than November. Honestly, we don't know. It's really the first time and while in the past edition, when we owned the rights in 2018, it was for sure a positive sum game because it was a big event with no concurrent TV programming running around.
While November, December TV programming needs and also other commercial television is running smooth and there are no major discontinuation in TV offer. If the event is not attractive, audience will stay. The audience could split in a different way. I assume that also advertisers will be to some extent quite tactical. They should wait and see the audience results of the first part, and there could be an uplift in the second part. We have, let's say, elaborated our scenarios. As I said, they are material, so we are considering dozens of millions EUR, but we don't know the exact numbers. With regard to the split of the three screens is an ever-recurring question, and you know, we don't comment on the split.
Again, what I can say that the total contribution of our cross-media offer beyond the linear TV is again material. It's a relevant percentage of our offer. Moreover, 80% of clients in terms of our weighted revenue have adopted this media mix, so TV plus connected TV plus digital plus radio. We are used to adapt our cross-media offer according to TV audience performance and the connected TV growth to offer the best mix.
The only thing I could add is that, as you know, from any country in the world, the connected TV growth is a global phenomenon, is very attractive for advertiser, and it is growing significantly year on year, despite all the upside and downsides of the economic cycle. That's it.
Okay. Thank you.
Yeah.
If I can ask a follow-up question on the World Cup. Now, I understand it's very difficult to give a number. To help us, maybe could you give us how much revenue you made in 2018 when you had the World Cup? Then how much revenue in Italian TV is in prime time? The percentage of prime time as a total advertising. Two numbers, if possible.
Yeah. A lot. Okay. I remember that we also declared in 2018 when we commented the World Cup that the total revenue collection was around EUR 95 million at that time. Sorry, I lost the second part of the question. Could you kindly repeat, please?
Yeah. What percentage of television advertising is in prime time? Because RAI does not have prime time advertising, so they obviously won't have any prime time advertising with the World Cup.
Okay. No, all right. Prime time, it depends on what you do, what do you consider by prime time, because there are a lot of definitions. There is the typical prime time. From which time band?
The one where RAI can't have advertising, which I think is after eight o'clock, isn't it?
No, it's not, Julien. That's not the case. In Italy, we don't have any limitation in prime time for RAI. They have a daily limit.
Okay.
A weekly limit, but they don't have specific limitation for prime time.
Sorry, my bad.
No, no. In fact, I didn't catch your question because actually they can offer prime time, and for them it's important. I would say at least two-thirds of their revenues are in prime time. Again, there is a mismatch with the World Cup schedule because two-thirds of the matches runs in daytime, mainly in the first part. That is why we say, okay, it's attractive but probably not so attractive. That is why it's very difficult to judge in advance the potential. For sure, again, as the World Cup goes on, the audience potential will grow definitely.
Okay.
I will be surprised. Okay.
Thank you. We will now take the next question. Sorry. It comes from the line of Thomas Singlehurst from Citi. Please go ahead. Your line is open.
Yes. Good morning. Thank you very much for taking my questions, and thank you for the presentation. Two questions, if it's okay. The first one was just on that topic about visibility. I see exactly what you're saying. It's visibility is contracted. Can you just talk about the phenomenon of visibility? Is that, do you think now, are just a permanent feature of the Italian sort of TV advertising landscape that that visibility will be fairly restricted going forward? Or do you think that we will get back to a point where you do get more forward bookings and more visibility on advertising revenue, as hopefully things calm down? That's the first question. The second question was on the cost saves. Obviously a very significant number for the Q4 .
I mean, is that true cost savings in the sense that it's actual reductions in cost, or is it cost deferral? I'm interested in whether there is scope for incremental cost savings for the full year 2023. Thank you very much.
Yes. I'll take the latter. Actually, the cost saving program has started already in the first part of the year. The problem is that we had some cost increase in the first part of the year that was, if you want, hiding a little bit the efficiency in the sense that probably you remember, we acquired the Coppa Italia right last year. Cost of that started September last year. Being the larger number of matches played in, let's say starting from January, the biggest part of the cost weight has been in the first half. First half 2022 had a non-comparable cost increase due to the football rights.
the DAZN contract we mentioned before was started to be implemented with the last year's championship, Italian championship, and that again started to be accounted in September last year. first half 2002 has been affected by a non-comparable cost increase. Actually, the underlying efficiency was already present, but you didn't see them because of that non-comparable event. Clearly, last quarter this year is the Q1 where these non-comparable items are now comparable because they were already last year, and the efficiency are there. that are the main reason. Clearly, in addition to that, there are also some tactical cost savings we implemented already in July, looking at the schedule for two reasons.
First one, because our revenue was clearly a little bit weaker than expected, and secondly, because audience performance was so good that frankly now we don't need a strong program. This program has been postponed to next year. That are the main reasons. I hope I have answered. Before leaving to Matteo, just a personal comment on visibility. I believe that, let's say the new world, it's all on time, you know. Clearly, if you book a web campaign, you don't have visibility just because you can decide really day on day. I believe that the industry trend, it's making these as a sort of standard.
I believe the digital world is taking new way of behaving in business, and that's also affecting industry that in the past was managing a different way. I'll leave to Matteo to a more precise answer to visibility.
Thank you, Marco. Now, I simply build my answer on your remark. As I said, visibility couples with variability, that's the reality. Honestly, over the past years, 2020, 2021, 2022, we all get used to this market that, on the one end, is resilient and reactive because the markets definitely prove very reactive, but with an increased degree of variance. To tell the truth, the beginning of September was quite concerning, while the second half of September was encouraging. None of us would have bet on the performance we had on the Q1 of Q4. That does not mean that we are not in control, because that comes to our portfolio offer.
We are lucky because, okay, leading linear television combined with an important connected TV offer plus digital, we are the leading publisher in Italy, and we are also the leading radio group in Italy. For example, over Q3, you know, you have the market data, so the Nielsen data, so you know that linear TV is down in Q3 while, for example, radio and digital are experiencing a single digit positive trend. I'm talking about the market, not our portfolio. Again, connected TV is a double digit growth business.
Our capability is, let's say, to absorb the upside and downsides of the market, thanks to this offer and limiting the downside leverage on those segments of our offer that are still growing. An important factor that I had on visibility, Marco mentioned the sports rights, the football offer, and this definitely helped because we have free offers, Serie A, Coppa Italia, and the third-party partnership with the Zona DAZN of Serie A and then Champions League.
All the free football competitions are offered to the market with a forward buying mechanism, and this helps to understand to have a better visibility compared to our competitor in a range of two, three months, because we try to sell in advance this competition. At least for a part of the market, we know if clients are active with their advertising campaigns in the following month. We don't know the amount, but we gain some competitive edge because of the football trading that is a forward buying approach. That is why having no full offer for November and December in terms of the World Cup, we are so cautious for the remaining part of Q4. Okay, I hope to have answered.
One.
Okay.
One very quick thing to say was, should I infer from your comments about cost saves that your approach for 2023 will be to just remain flexible, see where the top line comes out, and then react as you know as you see the top line evolving or will there be a follow-
Yes.
through effect?
No, no. I do think that continuity in offer, combined with flexible adaptation, both of TV programming and of our commercial quality, has been the successful recipe over the past three years. We are not concerned. We are, let's say, in an alert mode, and we are very, very reactive, and that's the way it goes. As far as cost is concerned, clearly 2023 will be a mix of effects. Clearly, we will have an inflation increase to face. Anyway, we will have efficiency action that are going on, that are structural efficiency.
Among them, we have also to include some of the synergies we have declared already with Spain that will probably start to show some effects already in 2023. In the structural part of our cost base, we have these two elements to face next year. This will certainly imply some net decrease in cost. In addition to this structural and fixed, let's put it this way, cost base, we have the scheduling on which clearly we will adapt the power of the scheduling depending on the macro trends. In any case, from the content point of view, we are very happy.
The lineup is very good and powerful, so we are in any case projecting a pretty strong audience trend also in 2023, and that's clearly a great help because this is allowing us to be very flexible on scheduling depending on the top line. All in all, I would say a minus can be also next year in terms of cost.
That's very clear. Thank you very much.
Thank you. We will now take the last question. It comes from the line of Stefano Gamberini from Equita. Please go ahead. Your line is open.
Morning, everybody, and thanks for taking my questions. As we go to costs, Marco, could you just explain in the case of flat advertising trend in 2023, could we expect a decline in OpEx and what is more or less the magnitude of this decline? The second is, what is the flexibility that you have in terms of a decline of 100 basis points in advertising trend in terms of cost savings that you see right now? The second question regarding the TV sector. You underline, you were able to outperform all the other players which are suffering right in terms of audience.
AGCOM underlined that in the Q2 this year, the total viewers were down more than 10% compared to pre-pandemic levels. Could you elaborate a little bit about this problem of TV, how you can solve it as a sector overall, and if this trend will continue next year, what are the risks in terms of advertising trend as well? Two final questions, one regarding the situation of ProSiebenSat.1. There were some rumors of interest of ProSiebenSat.1 for Sky Deutschland, then denied. The new CEO arrived there. Do you really expect an acceleration towards the market consolidation from ProSiebenSat.1 or not? Finally, my typical question regarding EI Towers, according to [uncertain] something happened, now there are some talks.
Could you update us on the situation, and if do you see some interest on your stake that I understood you want to dispose or to maximize the value, we can say this way, from some investors, considering that probably a deal should arrive shortly. Thanks a lot.
Thank you, Stefano. As far as costs are concerned, the budget is not yet there, so it's very hard to answer your question so precisely. I mean, I will give you somehow we are working. In any case, the major trends we are going to face. We are expecting an inflationary impact on our cost base next year in the region of EUR 15-20 million coming from energy costs mainly, but also some contracts, as you can imagine, are linked to inflation, like for instance labour fees and in any case office leases. That's clearly the first objective we have to accept. Not a big one, but in any case material.
that will certainly be financed through all the effects of all the efficiency plan we put in place this year. That's the reason for which I said before that we are in any case targeting a lower than 2022 number for 2023. The magnitude of this reduction clearly will be very much depending on, as you said, the advertising trend, because clearly will depend on how strong our scheduling will be and will be clearly adapted to the advertising trend. What I can say is that certainly next year we are going to generate cash more than this year and also operating profit margin will be higher.
We will recapture a little bit of profitability next year. Moving then I'll leave the total audience answer to Matteo, but I mean, I will complete with the answer regarding ProSiebenSat.1. I mean, it's a difficult situation to comment because clearly we were not informed about the firing of their CEO. We clearly learned it as you did. Clearly it was something that was a little bit shocking for us also because I mean, he was the former CEO was just confirming the guidance. Clearly the profit warning after, let's say, the changes in the CEO cannot be considered well accepted by us. Fair enough. It's part of the life.
I never met Bert, so clearly I cannot comment on his strategy. I mean, I got it. We don't have a clear view on what the strategy will be. That's clearly not the perfect word. I hope that soon, the company will say something. Share price performance clearly is also reflecting the fact that the market is not so happy about the conglomerate strategy that ProSiebenSat.1 was trying to implement in the past. We hope that the future will be different. Clearly, Bert is coming from media, and that's good. We speak the same language, if you want. We are waiting to see what can be the plan for the future.
Clearly outside in, we didn't see ProSieben actually answering to the big challenge that the industry is facing today. One of which is the question you just posed to Matteo, and then Matteo will answer you. For instance, audience decline, but also monetization is a big challenge. Lack of scale compared to the digital giant, it's another challenge. Digital transformation is a further one. There are many industrial challenges that frankly, we're not facing an answer from ProSieben in the past. I hope that Bert can give an answer.
As far as our position is concerned, we just disclosed to the market, we have secured close to 30% of the voting just to confirm that we are long-term investor, and we clearly believe in the industry, we clearly believe in Germany, and we clearly believe in Europe. As far as the rest, as I said, it's a little bit up to the company to say what will be their strategy in the future, and let's hope that this new strategy will be different from the past and will generate some value creation for the future. I mean, clearly we are going to be. We are ready to help the company if needed.
We are ready to talk to the company if they want to share, business trend, business, let's say project, whatever. It's important, I believe, that we give answer to the challenge because otherwise, it's difficult to make the share price increasing without giving answer to what is there impacting on all the media company in Europe. Lastly, on EI Towers, I mean, frankly, I got some news regarding consultants appointed by RAI, but frankly, I didn't see any news on talks. Actually, as far as I know, there are no talks with RAI regarding the possible consolidation. As you said, we are sure that the consolidation will happen, clearly taking probably longer than expected. Changes on the government is clearly not helping.
I believe that it's good for everybody, not only for us, because it's an infrastructure that can have a lot of benefit in the consolidation for all the stakeholder. I think that will happen. Time is more in their hands than anything else. I repeat, there are no talks, as far as I know, currently. Matteo, maybe you can answer on total audience.
Yes. Thanks, Marco. Just a quick and, I think final, answer in our conference call. The total audience is a very fascinating question. I have in mind, Stefano, the AGCOM report on the long-term trend. The nice thing is that, if you read the magazine and newspapers commenting on that, all the observers forgot to mention the fact that if you compare, for example, Q2 2022 versus Q2 2021, you have, probably, I remember, a double-digit -10% in total TV audience trend. They forgot the fact that there was lockdown in April and the European football championship in June. Taking into account these two factors, the organic trend is a low single-digit.
What I'm saying is that no one is hiding the fact that there is a long term single digit erosion of the linear TV. Again, we are really confident on the fact that a lot of the audience is moving towards connected TV and digital, and this is almost compensating for this downward trend. I say this because I saw editorial data. For example, the last fiction we had, each episode, 3.0 million viewers on linear and the total series got 50 million streams on connected TV and digital.
The point is that, as soon as Auditel is ready to deliver not only the editorial audience but also the advertising audience, we will be in the position to offer the market the incremental reach coming from non-linear TV viewings. Time-shifted viewing, on-demand viewing, that is definitely an important part. Anyway, this should happen in the first half of next year. In the meanwhile, it's over two years that we have been delivering our clients' campaign reports with the incremental reach. We know that the contribution of connected TV and digital is more than proportional. So, the...
If you plan 1%-3% of connected TV vision, you get 2%, 4%, 6% of incremental reach, and that is why this is driving high the connected TV. Last but not the least, again, the strength of our portfolio, we should not forget the radio contribution. We know that in each time we offer TV plus radio, we get from five to 10 and even to 15 points of additional reach thanks to the radio offer. That is why it's so strategic. We have, let's say, a perfect shock absorber in terms of reach, thanks to this combination of media. I hope to have answered. We could talk for an hour about this topic. I thank you.
Thanks a lot. May I ask you a quick follow-up, Matteo, regarding how many new connected TV for the total market arrived in the last quarter? I don't know what figure you have compared to last year. Thanks.
Okay. Probably I don't have the number here immediately available. I would run the risk to tell you wrong number. I can grant you that it's growing, but they also change the way of calculating this penetration. The connected TV penetration is definitely higher. Is going up. Is over 50%. We do expect that the last part of this year, also thanks to the World Cup and the state incentives, will deliver an additional growth to the organic trend. I will manage with Sara Bersan team to give you the right number in the immediate follow-up.
Stefano, we can provide you the data after.
Sure, thanks a lot.
Thank you. Thank you, Matteo, Marco, and thank you guys for all the questions and for taking the time for the conference call today. As always, we'll be available for any question, information you would like to ask. Have a good day. Bye-bye.
That does conclude our conference for today. Thank you for participating. You may all disconnect.