Good morning and good afternoon, ladies and gentlemen. Thank you for holding. Welcome to MTG's Q4 and full year 2015 earnings call. At this time, all participants are in a listen-only mode. After the presentation, participants will have the opportunity to ask questions, at which time instructions for the question and answer session will be given. If any participant has difficulty hearing the presentation, please press star zero for operator assistance. May I also remind you that you can find presentation slides for this call at mtg.com. I will now hand the call over to your host, MTG President and CEO, Mr. Jørgen Madsen Lindemann, who is joined on today's call by CFO Maria Redin. Please go ahead.
Thank you, operator. Good morning, everyone. 2015 was a record year for us. It ended with an all-time record high sales quarter. We have better products than ever before, more customers, and higher sales. Our broadcasting businesses are performing very well on an underlying basis. The new digital businesses that we have created or acquired are tracking ahead of plan. Organic sales were stable in the quarter. They reflected 5% growth in the broadcasting businesses, offset by lower revenues for our content production business. We gained market shares in seven out of our eight free-to-view markets. Our group-wide digital revenues were up 40% on an organic basis. Profits excluding non-recurring items were down on a reported basis. Profits would actually have been up 8% if taking into account the SEK 80 million of negative currency impacts in the quarter.
2015 was a year of major transformation for us in terms of our organization, our structure, and of course, the way that we are doing business. We are on a journey from being a traditional terrestrial broadcaster to a global digital entertainer. Not only have Viaplay and our play services continued to perform beyond expectations. We also bought a number of companies in the second half of 2015 that established clear category leadership positions for us in the multi-channel network sector and also in the esports spaces. On a pro forma basis, MTGx Ventures generated 94% full year revenue growth to SEK 970 million. We are entering exciting new partnerships to make content from across MTG even more broadly available now. A great example of this is our involvement in Spotify's current test of their new video service.
It is being launched in Sweden, the U.K., U.S., and Germany, which are countries where our products are already present. Our content is very popular. We will contribute short-form content from Zoomin.TV, from ESL, from Viasat Sport, from Viaplay, from Play, and our free TV shows. This is a great promotional window for our content to reach millions of Spotify customers. Our Trace business is also spreading its wings. It will announce at MIPTV in Cannes in April that it will launch Trace Play, the first global esport platform dedicated to urban entertainment. The priority launch territories will be sub-Saharan Africa, it will be France, the U.K., and the U.S.A. We have also continued to optimize the portfolio and our capital allocation by exiting a number of businesses. We sold SAPA, our cable business in Sweden.
We sold our free TV operations in Hungary, our Russian and international pay TV channels businesses, and our stake in Radio Nova in Finland. Furthermore, CTC Media has now completed the sale of 75% of its operating businesses, and we expect to exit the CTC Media investment during Q1 if all goes to plan. We are finalizing a solution for the future of our Ukrainian satellite pay TV business, given the very tough operating conditions in Ukraine. We have also transformed the way in which we organized our cost structures and how we buy content. We have moved from a product to a content-based organization in order to bring our product development and decision-making even closer to the customer. We have transformed the way in which we buy content so that we have far greater flexibility to move rights between products and increase monetization potential.
The reshaping of the organization has led to painful but necessary decisions and is expected to generate savings of approximately SEK 600 million. These savings are necessary to be able to invest into our products, while at the same time mitigate currency headwinds and continue to drive the digital transformation. We will reinvest the majority of the savings into business and have already invested in what is the strongest-ever sports lineup for our linear and OTT services for the next few years. Right now and in the weeks and months to come, Viaplay and Viasat are showing the European Handball Championship, the World Cup of Hockey, the Premier League, the La Liga, the Serie A, the French, the Dutch, the Danish League, the UEFA Champions League, the FA Cup, the golf majors, the ice hockey NHL, the KHL, the NFL, Rio Olympic Games, and much, much more.
This is, of course, why we have announced price adjustments to better reflect the value of our product offering getting into 2016. This is also why we will launch a brand new channel in Sweden in April, TV3 Sport. This follows the example of what we have done in Denmark with the same channel brand. The new channel will be included in our Viasat premium package, and we will also sell advertising on the channel. It will include coverage of a wide range of the sports we have and be a great addition to the TV3 family. Our aim is clear for 2016. That is to accelerate our sales growth and increase our operating profits despite the SEK 250 million of currency headwinds and the forced disposal of our highly profitable Russian and international pay TV channel business.
This is possible because of our cost savings that we have made, further price adjustments on the back of the best ever content offering, and the significant operating leverage in our emerging markets free TV business. As usual, I will now briefly review the performance of each of our business areas before we take your questions. If you look at Scandinavian free TV operations, we have sales up at 6% at constant exchange rates, and this reflects not just the higher ad prices and AVOD revenues, but also the sales cooperation with Viacom. AVOD revenues were up 28%. Our sales were up in Denmark and Norway, but down in Sweden. The Norwegian and Danish TV ad markets are estimated to have grown in the quarter, while the Swedish market is estimated to have been down.
Commercial PUT, or linear viewing, in our target groups was down again in Q4 in each of the markets, with October and November down double-digit percentage points year-on-year, with the decline moderating to low to mid-single-digit percentage points in December. Operating costs were up due to the adverse impact of the appreciation of the U.S. dollar, as well as the Viacom sales cooperation. Profit were up just over 10% in the quarter, with an improved margin of just over 20%. The fact that we have been also able to increase both our sales and profit in Q4 as well for the full year and despite falling PUT levels, demonstrate that TV remains the most powerful, high-impact, and cost-effective and scale rich media.
We do expect commercial PUT levels in our target groups to continue to decline in 2016, we're also raising prices to capitalize on our investments in strong and relevant content. We do expect to further increase our market shares, not least in Sweden, where we have the strongest sports lineup in many years and including the Summer Olympics in Rio. We also expect our AVOD revenues to continue to grow and represent an even higher proportion of total revenues. We then move on to the Nordic pay TV businesses, Viaplay continues to lead the way. I'm happy to see that the strength of the content offering has also had an impact in the traditional businesses, where we have added a total of 24,000 premium subscribers, more than double the intake in Q4 last year, and also the highest quarterly intake for the last six years.
Viaplay had its best fourth quarter ever in terms of paying subscriber growth, following a higher intake and lower churn. The newly added sports rights and the very strong series, films, and kids content lineup drove the customer intake and loyalty in all countries. Usage levels in terms of started streams have been higher than ever. Started streams were up 30% compared to Q3 and up 60% compared to Q4 last year. We have continued to break records in January, Sunday the 17th was our best day ever so far in terms of started streams. The Svenskt Kvalitetsindex presented the 2015 customer satisfactory survey for streaming service in Q4 and announced that Viaplay had passed Netflix. We now have the most satisfied customers in Sweden. The Viaplay app also comes out as by far the highest graded app in customer ratings of iOS apps.
We have now raised our Viaplay movies and series price twice in the last 18 months, from SEK 79 to SEK 89 in September 2014, and now to SEK 99 per month from October 2015. We have now also introduced price adjustment for our Viaplay sports packages from this month, with the prices up from SEK 299 to SEK 449 in Sweden, for example, This applies to both new and existing subscribers. These price adjustments reflect the investments that we have made in both the technical platform and, of course, the sports lineup. An increase has also been made on the Viasat side, both for the satellite and third-party subs.
The price increases here for the top tier DTH package in Sweden was 14%, from SEK 515 to SEK 535 per month, and the Viaplay and Viasat prices are now more aligned and are fantastic value for money, with an unrivaled offering of sports, movies, series, and kids shows, as well as locally produced dramas that will premiere this spring. We had higher programming costs already in Q4 with the addition of the Spanish and the Italian football leagues and the investments made in sports in Finland. This will have a full quarter effect impact in Q1. We will then have the French League and new Premier League deal coming up during the years as well as the Olympics, so the cost will ramp up.
The benefit of the price adjustments will come through gradually and drive accelerated revenue growth, and remember that the incremental currency headwinds too, which we will seek to mitigate with the savings from the cost transformation. If we now shift the focus from the Nordic to the international operations, our free TV emerging markets, we had a good sales of 6% at constant exchange rates and 9% on an organic basis for the ongoing business, which means adjusted for Hungary. AVOD sales were up 27% in the quarter. Operating profits were up 21% with a 15% margin, which clearly demonstrate the high operational gearing in these businesses. Bulgaria was again the standout performer, with 17% constant exchange rate growth and continued market and audience share gains. Digital sales were up 31% in Bulgaria in Q4 and up 29% for the year.
Nova is now firmly established as the number one linear broadcaster and digital entertainer in Bulgaria. Vbox7 had 250% more video views compared to last year, and its app has now been downloaded over 6,100,000 times. Sales for Baltics free operations were up 7% at constant exchange rates and driven by the performance in Estonia and Lithuania. Sales for our Czech operation were up 7% at constant exchange rates. We launched our fifth Prima channel, Prima Max, during November, as well as the new comedy channel, Prima Comedy Central, in cooperation with Viacom during December. Moving forward, reported sales will be affected by the deconsolidation of Hungary, as well as a change in how we structure agency deals in Czech. The combined revenue impact of these two factors amounts to approximately SEK 200 million, but with a small positive impact on our profits.
We do expect continued underlying growth for the segment in 2016 and continued margin expansion. Now to our pay TV operations in the emerging markets where sales were stable on an organic basis, but down at constant exchange rates due to the deconsolidation of our Russian and international pay TV channel business from November. The Ukrainian satellite platform continues to experience lower subscriber volume and revenues, but this was offset by good growth in Trace. Total profits were down due to the disposal of the Russian and the international channel businesses. Finally now to Nice Entertainment Group, MTGx and the MTG Radio business, where sales were up 26% at constant exchange rates and almost entirely driven by the newly acquired digital businesses, which continues to grow ahead of plan.
Sales for the radio business were also up in each market, while Nice Entertainment sales were down due to the lower number of corporate events production. The higher operating costs affect the consolidation of the newly acquired digital businesses and the associated M&A costs. We have invested further in the development of these businesses during Q4, especially in Turtle's U.S. expansion. The radio and Nice Entertainment businesses were profitable in the quarter and for the year. Turtle continues to perform above expectations. Sales increased by over 100% in 2015 to EUR 65 million. That is well above the EUR 50 million projection that we provided back in July when we announced the acquisition. Turtle attracted 241 million views in Q4 and almost 900 million for the full year. To put that into perspective, this means that Turtle attracted more views in Q4 than in the whole of 2014.
We've also acquired DreamHack, which is the leading esports organizer of the world's largest digital festivals. DreamHack organized two major events in Q4, which has total attracted 126 million views, up 165% compared to last year. Splay has more than doubled its sales, video views, and subscribers and continues to invest in both geographical and product expansion, as well as in its talent network. Zoomin.TV sales were also strong, up more than 60%. MTGx Ventures generated performance sales of close to SEK 1 billion in 2015. We expect Ventures to continue to grow rapidly in 2016 and to be loss-making as we continue to focus on growing the business through product expansion and geographical expansion. These businesses do also have a somewhat different level of tangible and intangible assets to our other operations, so you should expect higher depreciation and amortization charges running at approximately SEK 50 million.
Nice Entertainment and Radio are both expected to report sales and earnings growth in 2016, and the non-venture parts of MTGx have from 2016 been moved to the operations. We do expect that the total segment will be profitable in 2016, but not necessarily in the first half of the year. In summary for the group, we have again grown our sales to record levels despite all the investments that we have made in our existing and new products. Profits were almost stable year-on-year and would have been up close to 30%, if not for the almost SEK 400 million of currency and M&A impacts. The strategic transformation is on track and working. We have exited Russia, sold or closed a number of underperforming operations, and invested into category-leading digital businesses that are growing even faster than anticipated.
Our aim is to accelerate our sales growth in 2016 and to deliver higher full-year profits despite the further currency headwinds and the significant investments that we continue to make in the content in particular. We continue to balance investments and shareholder returns and therefore proposing an increased dividend of SEK 11.5 at a payout ratio of 86% and well above the declared 30% policy. As we have discussed with a number of you over the last few months, we are also reviewing our disclosure structure in light of the organizational changes that we have made and the fact that the businesses that we have bought and sold have changed the makeup of the segment we currently report. Just look at the downscale pay TV emerging market segment and the inclusion of the upscale expansion in the segment with Nice Entertainment and Radio as an example.
The project to review this and announce the new format is almost complete, and we will be back in Q1 to present this. That concludes my comments on the results, and I will now hand over the call to you, Maria, for your comments.
Thank you, Jørgen, and good morning, everyone. Our Q4 profits were negatively impacted by SEK 80 million of FX effects, primarily reflecting the movements in US dollars, but also the Norwegian krona and the Russian ruble exchange rate. This was slightly more than we estimate in Q3. This is due to the weakening of the Norwegian krona. The effect was equally split between the Nordic free and pay business with a small impact for the emerging markets business. Looking forward at 2016, based on the current spot rates and net of forward currency hedges, we currently expect a negative FX impact of approximately SEK 250 million. This is in line with what we have previously been communicating. As before, please remember that this is not a form of guidance, but it is an indication of what can be expected given where we are today.
Our cost transformation is developing according to plan. We generated savings of approximately SEK 15 million in Q4. We expect incremental savings of approximately SEK 450 million in 2016. The remaining SEK 100 of the SEK 600 million target is to be delivered in 2017. The cost for the program is expected to approximately SEK 700 million, of which SEK 550 million will impact our cash flow. Of the SEK 550 million cash impact, approximately SEK 160 million of payments were made now in Q3 and Q4. We expect the majority of the rest to impact in 2016. Keep in mind that we will reinvest the majority of these savings into the ongoing transformation of the business, as we have said before.
We have now a stronger sports rights portfolio and lineup than we ever before. I would therefore like to provide you with an update on how we treat these content rights from a P&L perspective and what the cash flow impact will be. Starting with the Summer Olympics, we will divide the rights cost evenly between pay TV Nordics and free TV Scandinavia. The free TV segment will take all of the costs during the actual event, i.e., this is going to be during August. The pay TV segment will spread the rights cost over 24 months, starting from January 2016. All other operating costs, such as host, et cetera, will be taken during the event period. We have started to take some of the costs for LaLiga and Serie A in Q4. The full impact will come in Q1.
The new Premier League contract will start to impact our P&L from the second half of the year. The Q4 cash flow was negatively impacted by upfront payments from newly acquired and extended sports rights and payments relating to the cost restructuring. Moving forward, we expect the cash flow in 2016 to continue to be negatively impacted by the transformation and return to more normalized levels in 2017. We also expect significant quarterly fluctuation. This partly reflects in the rights payments. This year, we have changed our organization, we transformed our cost base, and we have taken significant steps in regards to our portfolio. Doing all this while at the same time growing our underlying profit provides me with a lot of comfort for the future. Our ambition is clear. We want to accelerate growth and grow our profit in 2016.
This is despite further FX headwinds and the forced divestment on our very profitable wholesale business in Russia. We have now the leadership position in three of the most interesting online video verticals out there, our SVOD, our esports, and the multichannel networks. We are therefore in a good position to benefit from the consumer shift and actually come out of this transformation stronger than ever before. That is it for my comments. Back to you now, Jørgen.
Thank you, Maria. That concludes then our commentary on the results. Over to you then, operator, to start the Q&A session, please.
Thank you, sir. Ladies and gentlemen, we are now ready to register questions. If you would like to ask a question, please press star one on your telephone keypad, and you will enter a queue. Should you wish to cancel, please press star two. Our first question today comes from Viktor Höglund from SEB. Please go ahead.
Yes, good morning. If you can just repeat what you said around Turtle Entertainment there on the growth in the quarter. I didn't hear very well. If you can maybe give some flavor on the CTC Media status, if there's any reason to be worried around that, or if you're comfortable that it will be as what we all hope and expect, I guess. If you can go in a bit on the Viaplay, if the price increases has resulted in a churn or customer service, what kind of trends you see on that. Lastly, if I may, thank you very much. On the Nordic market, on the free-to-air side, the PUT is going down, the price increase is coming up. What do you see here? What do you expect the results to be from this?
Can you maybe do something with the spot and fixed negotiation ratio to mitigate potential price decreases? What's in the toolbox to handle this? Is it even a problem? Thank you.
There was one question we didn't hear. Was that regarding CTC Media and stages on CTC Media? Was that the question? Sorry.
Yes.
Good. I would take most of the questions, Maria Redin, she will comment on CTC Media. When you talk about the Turtle Entertainment and the growth that we are seeing, what we commented was for full year. Full year, Turtle Entertainment managed to make a revenue of EUR 65 million, and that was up 100% versus 2014. Positive for us, of course, is that when we spoke to you in July, when we just acquired Turtle Entertainment, we talked about that we expected the revenue to come in at around EUR 50 million, but actually it came out at EUR 65, tracking much stronger than we anticipated. That is very good news, and we also see, as I said, the viewing on the product is increasing.
When it comes to Viaplay, we have invested a lot in order to make sure that Viaplay is an even stronger product than it was just some few months ago. We have done that by adding much more relevant content. Already today, we broadcast the Premier League, the FA Cup, and the UEFA Champions League, and so forth. Now with the addition of La Liga and the Serie A and also the French League from summer. We also have the World Cup coming up. We have the Rio coming up, which every second will be broadcast on Viaplay there as well. We have handball and so forth. Therefore, what we have done is that we have increased the relevance of Viaplay, and therefore we have higher customer intake.
What we see then in Q4 is, of course, that we have the best fourth quarter ever for Viaplay and even more usage. Then, of course, it helps as well that Viaplay has been voted the best OTT service, now streaming service, in Sweden ahead of Netflix. That is something we are very satisfied with. We continue to invest in the product and, of course, make sure that our customers like what they see, and also you see that because of the lower churn and more usage. When it comes to the advertising market, what you can see as well, particularly then in Denmark and in Norway, we have taken a lot of shares because our product and our target groups are very relevant in these markets and therefore you grow your relevance and therefore the fact that advertisers want to spend money with you.
That is a very important lever. It's not just to raise prices because you want to raise prices. You raise prices because you can document in any campaign model or calculation that you actually are super cost efficient and the return on your product, meeting this target group and that reach is very strong. The fact that the advertising market goes down is not necessarily correlating that we should suffer from that. On the contrary, next year, you could argue that we have the Olympics coming up. As I said, the European Handball has done good to us. We have the World Cup in ice hockey and many more things. Now we have launched a new sports channel as well, which also will carry advertisement.
The whole idea for us is to broaden our reach of the product, and by doing that, you hopefully deserve more money from the advertisers and Maria, on CTC, if you can.
Yes. There is no change outlook on CTC. Rather, we expect the proceeds to be received in Q1. What is pending is some final approval from the [inaudible] on the issue of the license. No change there.
Good.
Thank you very much. Good clear answers.
Thank you. We move on to our next question from Adrien de Saint Hilaire of Morgan Stanley. Please go ahead.
Thank you very much. Just one quick technical question on MTG Ventures. The losses that you mentioned, does that include the transaction costs, which I think were about SEK 46 million? Originally what you were saying is that Turtle was a profitable or breakeven-ish business. I am a bit surprised by the size of the loss. Although the revenues are, of course, very impressive. That is the first question. The second question, I think there has been some press talks around the carriage fee disagreement between Canal Digital and SBS. I was just wondering if your own carriage agreements were secured into 2016 and 2017. Lastly, well, you mentioned a review of the disclosure, which is indeed appreciated.
I'm just wondering, do you consider yourself to be done in terms of your portfolio reshuffling, or do you think there could be more assets that could leave the group? Thank you.
Yeah. When it comes to the last question about the done, when it comes to reviewing the portfolio, no, we're not done. That is, of course, an ongoing business and ongoing work that we do in order to understand where to put our money, where to invest, and where do we get the highest return. You should expect to see more shifts from us or more changes when it comes to our portfolio going forward. When it comes to the carriage agreements, yeah, we do have long-lasting carriage agreements with our partners, and as you can see with the net intake of, I think in the third quarter net was, I think it was 37,000 subs in the quarter, premium subs.
That, of course, hopefully is a good relationship and a good partnership we have because what we do, of course, is we add a lot of value to the packages since that they can grow subs together with us on the content that we are having. We have long-lasting partnership. We've had that for many years. What we have done also maybe contrary to others, is that we have continued to invest in the product. When we made agreement with whatever, Tele Danmark or Com Hem some years ago, we didn't tell them that we also would deliver LaLiga and Serie A and so forth. The same goes to some of the other distributors that we have, like in Finland where we now are broadcasting the Champions League, the Premier League and so forth as well.
We are constantly adding to the portfolio, which hopefully makes us very important to the customers and therefore our content should be very relevant. When it comes to the M&A cost on Ventures, Maria, if you have.
Yes. If looking at the venture companies newly acquired, as you say, the losses are greater than what we initially set out and in particular, Turtle, and that reflects the investments we've done in the U.S. expansion, also significantly driving top-line growth. On top of that, we have for the full year, SEK 46 million of M&A costs reported in the segments within the legal entity of MTGx in other businesses.
Okay. Very clear. Just, Jørgen, to come back on your point about carriage agreement. My question was more referring to the free TV channels because I think this is where Canal Digital and SBS have a conflict. Are your agreements well in place for all your TV3 and some on channels in Sweden, Denmark and Norway?
Yeah, they are, but we have more cooperation with our partners than many of our competitors in the market. When we talk to a partner That could be whatever, Com Hem in Sweden. We are talking about delivering, of course, our free TV channels to them, which they then can capitalize on in their basic packages. Of course, we also talk about delivering premium content to them. The package that we are delivering for Com Hem to go to base is, of course, bigger than many of our competitors, because we have very strong free TV channels and also very strong pay TV offerings. That is a discussion we are having on ongoing basis also to understand the need of what they would like our partners.
Yes, these distribution agreements are secured long-term, but of course, it is a constant discussion on what to do more. Of course, we know that our partners do appreciate the fact, for instance, that Olympics is now with us, because that also gives them opportunity to capitalize on these rights in their universe. There is many touch points we have with the partners, therefore we have long-lasting relationships and long-lasting contracts.
Great. Thanks.
Thank you. Our next question comes from Sami Sarkamies of Nordea. Please go ahead.
Hi, good morning. I have two questions. Firstly, I would ask about the pricing outlook for Scandinavia. Last year, you raised ad prices quite a bit, how do you see it this year? Secondly, on esports, Activision recently acquired your U.S. competitor, MLG. Can you discuss the implications on your franchise? For example, could this lead to you losing all your business with Activision, does it open new opportunities elsewhere? Thanks.
First on the Scandi outlook of pricing, I think it is a bit early to try to give you an idea on the actual outlook. I think very important, as I also said, is that we have, for instance, in Sweden, more product than ever and do definitely hope that we will generate more ratings in Sweden because of the hockey, because of the Olympics and so forth. Therefore deliver the right target boost to the customer. We definitely do expect to have price inflation on our products in Sweden, not just because we want to, because we actually have very strong target group delivery historically and also foresee that for next year to come with these rights that we have acquired, investment that we have done. To give you a specific outlook is very difficult.
As you can see right now, we have strong growth, for instance, in Norway, that of course means that they should be able to be more relevant to their advertisers than they were in the past. The same, of course, goes for Denmark and for Sweden. It is something you deserve and that you only do by investing in the product and growing your shares. That is, of course, what we aim to do. When it comes to esports and to Turtle, I think we have seen very strong growth. The fact that we have seen this happening in the U.S. does not change the relationship that Turtle have with the different publishers as well. Turtle is a global company, of course they want global traction as well and to be part of global tournaments. That we don't see.
I think it is fair to say that the interest in esports is very high right now, therefore we are super happy that we managed to get DreamHack on board as well. The company actually, we have fairly strong expectations to also to grow the relevance of esports even further. Already now, as you know, esports is as relevant as we talk about followers and interest like the NHL, it's forecasted to be as well with like the NFL going into 2017. Focus is to make sure that we grow Turtle, but competition will come, I reckon that we will see more entering this space because it is a very interesting area to be in. Our job is, of course, to make sure that Turtle stays the biggest and continue to grow.
Thanks. I would have one more follow-up actually to Maria. Could you repeat what you said about the Olympic Games content investments, how they will be divided across the quarters?
Yes, we will take half of the cost on free TV and half of the cost on paid TV. The paid TV is divided equally over the two years, the free TV is fully charged at the time of the event, which is August.
Okay, thanks.
Thank you. Our next question comes from Martin Arnell from DNB Markets. Please go ahead.
Yes. Good morning, everyone. My first question is on the other businesses. I am trying to get my head around all of that, of course. How confident can you really be in 2016 that the results here will not be worse than expected? I am thinking about Nice development and the investment growth phase you are in the esports business.
I think when we look at it right now, of course, what we are saying, given what we know when it comes to the investment that we are making in esports and so forth, we do expect it for the full year to do better the segment. Nice, we do as well. We do expect Nice to grow. I think that the pipeline that they have is very strong, and the traction on the content we see is strong. The radio segment as well, the radio businesses that we are having, their particular P4 Norway is a star performer, I must say, and just continue to grow. With that in mind, I think we do expect that what we are talking about here is something which will materialize.
When that is said, of course, we will not miss an opportunity to continue to grow Turtle or the other digital businesses. What we're giving you now is what we can see right now, but I can tell you if some interesting thing, opportunity will occur, of course, that is something that we would go for. It is not an EBIT optimization exercise right now with the Multichannel Networks or with Turtle. It is to make sure that we grow even faster than we do today.
Jørgen, when do you think it will be an EBIT story?
That is something that we actually decide. I think if we wouldn't have made all the investments in all the territories we were in when it comes to U.S. and all the other ideas that Turtle management, good ideas, I have to add, the Turtle management that they have right now in investment in product, then of course you could make it even possible. That is not problem to do today, but that is not the game here. The game is really to capitalize on this very interesting vertical that we managed to get hold of here and together with Turtle and [ViaMed] management, to make sure that we are the pioneers and that we become the global leader or continue to be the global leader of esports.
To give you guidance to say that will happen in 2017, 2018 or second half 2016, that is not something I can give you now or will give you now.
Of course. Thanks. Just also on Viaplay, these price increases. I understand them, of course, but can you just elaborate on how you reason around the potential churn risk here? Also, the local sports are more tilted to your competitor C More from now on.
I was asked to say that local sport is more tilted. I think that what we have done is exactly what we wanted to do, is that we have added even more content to the Viaplay subscribers. I think that is the game here, of course, is to make sure that the subscribers comes to us and they don't go to some of our competitors. The important thing is that the content that we have seen right now and the impact, as you can see in fourth quarter, has been positive. More people are coming to Viaplay. This is not related to a price increase. The price increase follows, of course, all the content investment we have made, but we have not done that to get less customers.
You're doing that because you want to enrich your product, which we have done, and that is now demonstrated as well in more customers coming to the product. I think that is quite important. Of course, it should be easier to choose now. If you want football and you can go one place where you can get the leagues, I don't want to repeat them again. That is, of course, our ambition is to make sure that we are strong in that field. We want to watch Olympics, yeah, Viaplay is the place. If you want to watch all NFL, all NHL, if you want to watch UFC, if you want to watch the best boxing, name it, Viaplay is the place. For SEK 449 a month, inclusive all the movies, inclusive all the series.
As we also discussed several times, the SEK 99 price point that we have on series and movies and kids content and own production. Well, what is it? Half a beer in Norway or something like that. That, of course, the only reason we have that price, SEK 99, is because our competitors, they, particularly Netflix, seem to think that is a good price point, which probably you could argue it isn't. Therefore, that is a very strong entertainment product, and that is something we have invested in a lot. Also you can see is very well recognized by the consumer since we are now ahead of Netflix when it comes to the Swedish OTT satisfactory index.
Sure. Just final question from me. On your strategic portfolio review work, should we expect more here in 2016? What did you say about Ukraine earlier on the call?
Yeah, you should expect more, Ukraine is one of the business, of course, you look at to say, "What can we do with that business?" The business, of course, is suffering from this geopolitical situation. It is not easy. For the business, it's not easy. For the people, it's not easy. For management, of course, as well. We need to find out what to do with a business like that. That is, of course, the review we are doing, that also goes for other parts of our business to make sure that the money we invest, we only do where we can see the highest returns. That is a quite important discipline for us now and has been always, that is something we just are executing on right now.
Thanks a lot.
Thank you. As a reminder, ladies and gentlemen, to ask a question today, please press star one on your telephone keypad. We now move on to our next question from Rasmus Engberg from SHB. Please go ahead.
Yeah. Hi. Good morning. I was wondering, you talked about the price increase for premium satellite in Sweden. What about the third-party packages? If I have a premium package right now in fiber, what will the price increase be?
Yeah. It depends actually in what countries and so forth. There's many different partners that we're having. You will see price inflation in all our products, in all our product lines. That goes, as I said, for the advertising revenues on free TV, advertising prices, you will see increases. You will see that in DTH, you see that on our OTT product, and you also see that in the third-party network. Again, understand that is, of course
Is of course a good discussion. I think it is important to understand that we have invested so much more into content, and that is the reason why we do these price increases. It's not that we do price increases out of defensive, and we have to do that because the products that we have doesn't work. We do that because we have invested so much more in content. Just look at Finland, if you look at it right now, where we have gone from nowhere to everything. Where we basically from next spring will be broadcasting the Premier League, the Champions League. We have the ice hockey, the Jokerit. Look at the setup that we have in Sweden. That of course, will hopefully should take shares from our competitors. That's the whole ambition.
Of course, make it easier for the consumer to choose, and not necessarily have to have three or four subscriptions, but actually can settle with Viaplay. That is, of course, what we would like to do, so add many more customers. That is the ambition with the investments.
Yeah. Can I ask you, if I calculate backwards, I think you had SEK 11 million of acquisition-related costs in Q4. Is that roughly right, or?
Yes, that is correct.
Okay. Yeah. Finally, you talked a bit about changing your accounting relating to free TV emerging market. Did I understand it correctly that there's sort of SEK 200 million that will be removed from sales, but it will not really have an impact on the EBIT. Is that what's going to happen, or?
Yes, that's correct. There's two components to that one. It's A, that we divested Hungary, it's B.
Yeah
The accounting change in Czech and the combined effect is the SEK 200 million.
Okay. The Hungary was about SEK 100. I guess it's half that is an accounting difference.
Exactly. There's no EBIT impact on the accounting.
Okay. Is that some sort of combined sales, or what is the impact that you're selling someone else's channels, or is it something else?
No, it's the agency business part of the ad sale.
Okay. All right. Good. I think that was it. Yes. That was it for me. Thank you.
Thank you.
Thank you. We now move on to our next question from Mikael Lasén from Carnegie. Please go ahead.
Yes. Hi, good morning. Three questions from me. Actually, I had questions about esports also and the margin outlook there, I guess that you already answered that. Maybe if you look at the multi-channel side, if you can also elaborate in the same way there, the cost development and the top-line outlook now for 2016. That's the first part.
Yeah. We are not giving any concrete forecast on the development of the businesses. What we have said is, and giving you as much as we can, is that the traction right now of these businesses is very good because of the content that they are having. That is, of course, something we continue to invest in. That also goes for Zoomin.TV and also for Splay Multichannel Networks and DreamHack. Therefore, it is early to talk about margins here. It is important for us to grow the presence and to get out even more. It is an investment phase, these companies that they are in.
Yeah. Okay. Fair enough. Ukraine there, the options that you have, one is, of course, to close that business. If you do that, what type of cost would you incur then in Q1?
Yes, that is one of the option. We have provided for costs that we are ready for the two alternatives that we have looking at this business.
You have already provided for that?
Yes. We have a small provision for that.
Okay. Good. The third part is the free TV Scandi side. You are growing really strongly in the AVOD side. Could you maybe just sort of indicate how much of your revenue that is right now, approximately?
We have not given concrete figures, but of course it is the big driver of revenue in the free TV is still the advertising and, of course, the mini-pay businesses as well. That is the main driver. The reason why we mention it is, of course, that it is quite important for us that when we see PUT level decline, particularly amongst the young title groups, and at the same time, we see video consumption increasing, that we have products now which cater for that change in consumer behavior. That is more to, of course, if we wouldn't have these products, then we would have lost these customers and wouldn't have made any money on them. That is, of course, important, and that's why we are focusing and investing into advertising video on demand as well.
Viagame, which is set to grow in 2016 also in Sweden.
Okay. Thank you.
Thank you. We move on to Ottilia Bologan from Goldman Sachs for our next question. Please go ahead.
Good morning. Actually, it's Lisa Yang from Goldman Sachs. My first question is actually quite general about your guidance for 2016, where you expect higher profit growth. Is it possible to kind of help us understand the moving parts between the different segments? I guess the others' profitability will be better. Free TV Scandi could be better as well. Free TV Emerging Markets get nice operating leverage. Is it kind of fair to assume that Pay TV Scandi, the profitability could actually decline a bit? Any kind of color on that would be helpful. Secondly, on the price increase you're putting through in Pay TV Nordic, what is kind of weighted average price increase just to have a sense of where we should forecast premium ARPU growth for 2016.
The last question is quite small, but I'm just wondering what the impact of the Nickelodeon sale in Q4 was. Thank you very much.
I think what we have said and what we are striving to do is, of course, to grow profitably for the group, as you correctly point out. One of the big drivers here, as you also can see, is free-to-view emerging markets, which has very strong performance, I must say, this year and also looks with the content and the product that we're having next year. That is, of course, one of the very important drivers also when it comes to profitability. I think the revenue drivers, of course, you know, it is the digital businesses to a large extent. It is, of course, Viaplay we expect to grow, and it is, of course, also the acquired businesses, the esport businesses, and the Multichannel Networks which will facilitate the growth.
As well, we have made the savings, which means that we also are trying to make up for the currency effect, which will hit us as well, and also the investment in content. Profitable growth for the group is the aim. When it comes to price increases, it varies very much from the different countries, so I cannot give you an average. I think we can discuss that with you if there are specific things that you would like to know. Of course, we will help you. As I said, Viaplay goes from SEK 299 to SEK 449 for the most expensive package. You also have the opportunity to SEK 399 if you want that. We have Viasat growing 15% on the DTH from SEK 515 to SEK 580, something like that.
It's very different from country to country, and of course, we have made a lot of investments, particularly as well in Sweden and Finland, and also now Norway. That's of course where you also will see price increases. When it comes to, what's the last one now? Viacom. Yeah, the Viacom, sorry. I don't know, Maria, if there's anything specific we can
No, we haven't broken down that, but Viacom is one of the components to the underlying sales growth, but we also see strong underlying sales growth following basically increased market share, ad prices and the AVOD sales growth.
The whole idea with these partnerships is, of course, that we can aggregate like we have done in Bulgaria or in Czech and now in the Nordics as well, can aggregate a higher reach with all the parties, all the ratings that we get on board. We are selling in Bulgaria, as an example, the Fox advertisement, the Disney, and whatever, Viacom and so forth. That gives us a bigger reach, and therefore, we will be able to hopefully be more relevant on the campaign planning and get the right prices on the campaigns as well, since we will be able to deliver even stronger campaigns to the advertisers. That's the whole idea behind this so-called partnership.
Okay. I guess people seem to focus a bit less on the free-to-air emerging market side, but are you confident that this kind of inflection point is kind of we have finally reached it, and the markets are kind of really growing again, and the competitive landscape is actually improving or stabilizing?
Yeah, I think it's a combination of perhaps a bit better markets as well we would like to see, but also our leverage and the fact that we have invested quite a lot in these markets over time now. Then if you look at it, also the digital businesses that we have in these markets are quite substantial now. As I said, in Bulgaria particularly, we are growing very fast, by the way, like we do in Czech as well. We are actually ahead of the curve. What we have seen happen now in the Nordics is something we understood or understand at some point when the pipes become big enough in these markets as well, will also happen.
We have invested already in an early stage in possible consumer trends, changing trends, and that is what we see the benefit from now that as last quarter, we had the flat line in Bulgaria. I think it was up 30%, something like that. This quarter as well, it is up some 17%. It is because of the investments that we also have made in digital businesses as well. We are increasing the relevance on our traditional business and also the new businesses, which combined help us to take a bigger share of the advertising pie.
Great. Thank you very much.
Thank you. That concludes the question and answer session. I will now hand the call back to Jørgen Madsen Lindemann for his concluding remarks.
Thank you all for your time today. We will announce our Q1 result on April the 20th and hope to meet with as many of you as possible before then. Please do call with any questions, and we look forward to keeping you up to date with our further progress. Thank you for now, and goodbye.
That concludes today's conference call. Thank you for your participation.