Good morning and good afternoon, ladies and gentlemen, and 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. May I also remind you that you can find presentation slides for this call atmtg.com.
I will now hand the call over to your host, MTG President and CEO, Mr. Madsen Lindemann, who is joined on today's call by CFO, Maria Redden. Please go ahead.
Thank you, operator, and good morning, everyone. 2015 was a record year for us and ended with an all time record high sales quarter. We have better products than ever before, more customers and higher sales. Our bulk cutting businesses are performing very well on an underlying basis and the new digital businesses that we have created or acquired are tracking ahead of plan. Organic sales were stable in the quarter and reflected 5% growth in the broadcasting businesses, offset by lower revenues for our content production business.
We gained market shares in 7 out of our 8 free CV markets and our group wide digital revenues were up 40% on an organic basis. Profits excluding nonrecurring items were down on a reported basis, but profits would actually have been up 8% if taking into account the DKK80 1,000,000 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 our buyer play and our play services continue to perform beyond expectations, but we also bought a number of companies in the second half of twenty fifteen that established clear category leadership positions for us in the multi channel network sector and also in the e sports spaces.
On a pro form a basis, MTT X Ventures generated 94% full year revenue growth to DKK970 1,000,000. And 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 and our content is very popular. We will contribute short form content from Xummin, from ESL, from Viasat Sport, from VIA PLAY, from Splay and our free TV shows. It's a great promotional window for our content to reach millions of Spotify customers. Our Trace business is also spreading its wings and will announce at MIP TV in Cannes in April that it will launch Trace Play, the 1st global SVOD platform dedicated to urban entertainment.
The priority launch territories will be Sub Saharan Africa, it will be France, the U. K. And the USA. We have also continued to optimize the portfolio in our capital allocation by exiting a number of businesses. We sold SAPA, our cable business in Sweden.
We sold our free travel operations in Hungary, our Russian and international pay TV channels businesses and our stake in RadioNova in Finland. Furthermore, CTC Media has now completed the sale of 75% of its operating businesses, and we expect to exit the CDC Media investment during Q1 if all goes to plan. And 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 country based organization in order to bring our product development and decision making even closer to the customer.
And we have transformed the way in which we buy content so that we have far greater flexibility to move rights between products and increased monetization potential. The reshaping of the organization has led to painful but necessary decisions and is expected to generate savings of approximately SEK 600,000,000. 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 months to come, bioplane wires that are showing the European handball championship, the eyes of the World Cup, the English, the Spanish, the Italian, the French, the Dutch, the Danish League, the Champions Football 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 affect the value of our product offering heading into 2016. This is also why we will launch a brand new channel in Sweden in April, TV3 Sports. This follows the example of what we have done in Denmark with the same channel brand. The new channel will include 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 DKK 250,000,000 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 feature business. Now as usual, I will now briefly review the performance of each of our business areas before we take your questions. So if we 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. ABOD 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 type groups was down again in Q4 in each of the markets with October November down double digit percentage points year on year with the decline moderating to lowtomidsingledigit 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 Corporation. 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 profits in Q4 as well for the full year and despite falling POC levels demonstrate the TV remains the most powerful high impact and cost effective and scale rich media. We do expect commercial part levels in our title groups to continue to decline in 2016, but 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. If we then move on to the Nordic Pay TV businesses, where 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 6 years. VIABLY had its best 4th 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 their customer intake and loyalty in all countries. Usage levels in terms of started streams have been higher than ever.
Starter streams were up 30% compared to Q3 and up 60% compared to Q4 last year. We have continued to break records in January, and Sunday 17th was our best day ever so far in terms of started streams. The Swedish quality index presented a 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 Viable Play movies and series price twice in last 18 months from $79 to $89 in September 2014 and now to $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 $2.99 to 4.49 Sweden, for example, and 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. And the increase has also been made on the ViaSat side, both for the satellite and third party subs. The increase the price increases here for the top tier DTH packages in Sweden was 14% from DKK 5.15 to DKK 5.85 per month and the buyer play and buyer surprises are now more lined and our fantastic value for money with an unrivaled offering of sports movies, series and kid shows as well as locally produced dramas that will premiere this spring.
We had higher programming costs already in Q4 with the addition of Spanish and the Italian Football Leagues and the investments made in sports in Finland. And this will have a full quarter effect impact in Q1. We will then have the French league and new Premier League deals 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 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 merchant 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 31% with a 15% margin, which clearly demonstrate the high operational gearing in these businesses. Bulgaria was again a 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 1 linear broadcaster and digital entertainer in Bulgaria. WeBox 7 had 2 50 percent more video views compared to last year and its app has now been downloaded over 600,000 times. Sales for Board6 III 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 5th Prima channel, Prima Max during November as well as the new company 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 200,000,000, but with a small positive impact on our profits. We do expect continued underlying growth for the segment in 2016 and continued margin expansion. And 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 trade.
Total profits were down due to the disposal of the Russian and the international channel businesses. And finally now to NICE Entertainment, MGG X and the MGG 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 live entertainment sales were down due to the lower number of corporate events production. The higher operating costs reflect the consolidation of the newly acquired digital businesses and the associated M and A costs. We have invested further in the development of these businesses during Q4, especially in Turl's U.
S. Expansion. The radio and nice businesses were profitable in the quarter and for the year. Turl continues to perform above expectations. Sales increased by over 100% in 2015 to €65,000,000 That is well above the €50,000,000 projection that we provided back in July when we announced the acquisition.
Turland attracted 241,000,000 in Q4 and almost 900,000,000 for the full year. To put that into perspective, this means that Turtle attracted more views in Q4 than in the whole of 20 14. We have also acquired Dreamhack, which is the leading esports organizer of the world's largest digital festivals. DreamHack organized 2 major events in Q4, which is total attracted 126,000,000 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.
Zoom in sales were also strong, up more than 60%. NTG X Ventures generated pro form a sales of close to $1,000,000,000 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 extension 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 DKK 50,000,000.
NICE and radio are both expected to report sales and earnings growth in 2016 and the non venture part of MGX has from 2016 been moved to the operations. We do expect that the total segment would be profitable in 2016, but not necessarily in the first half of the year. So 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 $400,000,000 of currency and M and 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 DKK 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're 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 Merchant Market segment and the inclusion of the up scale expenditures in the segment with NICE 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. So that concludes my comments on the results, and I will now hand over the call to you, Maria, for your comments.
Thank you, Jorgen, and good morning, everyone. Our Q4 profits were negatively impacted by SEK80 1,000,000 of FX effects, primarily reflecting the movements in U. S. Dollars, but also the Norwegian krona and the Russian ruble exchange rate. This was slightly more than we estimate in Q3, and this is due to the weakening of the Norwegian krona, and the effect was equally split between the Nordic free and paid 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 DKK 250,000,000, which is in line with what we have previously been communicated. 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, and we generated savings of approximately $50,000,000 in Q4. We expect incremental savings of approximate $415,000,000 in 2016, and the remaining $100,000,000 of the $600,000,000 target is to be delivered in 2017. The cost for the program is expected to approximate $700,000,000 of which $550,000,000 will impact our cash flow.
Of the $550,000,000 cash impact, approximately $160,000,000 of payments were made now in Q3 and Q4, and we expect the majority of the rest 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, and I would therefore like to provide you with an update on how we treat these content rights from a P and L perspective and what the cash flow impact will be. So starting with the Summer Olympics, we will divide the write cost evenly between pay TV Nordics and free TV Scandinavia. The free TV segment will take all of the cost 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, etcetera, will be taken during the events period. We have started to take some of the costs for La Liga and Serie A in Q4, but the full impact will come in Q1. The new Premier League contract will start to impact our P and L from the second half of the year.
The Q4 cash flow was negatively impacted by upfront payments from newly acquired and extended Portrait and payments relating to the cost restructuring. Moving forward, we expect the cash flow in 2016 continue to be negatively impacted by the transformation and return to more normalized levels in 2017. We also expect significantly quarterly fluctuation, this partly reflects in the rights payment. This year, we have changed our organization. We transformed our cost base and we've taken significant steps in regards to our portfolio.
Doing all this, while at the same time growing our underlying profit, provide me with a lot of comfort for the future. Our ambition is clear. We want to accelerate growth and grow our profits in 2016, and this is despite further FX headwinds and the forced divestments online video verticals out there, our SVOD, our esports and the multichannel network. We are therefore in a good position to benefit from consumer shift and actually come out of this transformation stronger than ever before. That's it for my comments.
So back to you now, Jorgen.
Thank you, Maria. And that concludes our commentary on the results. So over to you then, operator, to start the Q and A session, please.
Thank you, sir. Ladies and gentlemen, we are now ready to register questions. Our first question today comes from Victor Hoglund from SEB. Please go ahead.
Yes, good morning. So if you can just repeat what you said around Turtle there on the growth in core additives here very well. And then if you can maybe give some flavor on the city status, if there is any reason to be worried around that or if it's if you're comfortable that it will be as what we all hope and expect, I guess? And then if you can go in a bit on the ViaPlay, if the price increases has resulted in churn or customer service, What kind of trends you see on that? And lastly, if I may, thank you very much.
On the Nordic market on the free TV side, the put is going down, price increase is coming up. I guess, what do you see here? What can 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? Or what can you yes, what's in the toolbox to handle this?
Or is it EBITDA a problem? Thank you.
Yes. I because one question we didn't hear, was that regarding CTC and status on CTC? Was that question, sorry?
Yes.
Okay, good. If I I would take most of the questions and Maria, she will comment on CTC. I think when you talk about the Turtle and the growth that we are seeing, what we commented was for full year. So full year, Turtle managed to make revenue of 65,000,000 euros and that was up 100% versus 2014. I think positive for us, of course, is that when we spoke to you in July, when we just acquired Tern, we talked about that we expected the revenue to come in at around €50,000,000 but actually it came out at €65,000,000 so tracking much stronger than we anticipated.
So I think 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 And we have done that by adding much more relevant content. Already today, we broadcast the Premier League, the FA Cup and the Champions League and so forth. And now with the addition of La Liga and the CERa and also the French league from summer, we also have the World Cup coming up. We have Rio coming up, which every second will be broadcast and via play there as well.
We have handball and so forth. So therefore, what we have done is that we have increased the relevance of buyer play and therefore we have higher customer intake. And what we see then in Q4 is, of course, that we have the best quarter, Q1 ever for Viaplay and even more usage. And then, of course, it helps us 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.
So we continue to invest in the product and of course make sure that our customers that they like what they see and also you see that because of the lower churn and more usage. When it comes to the advertising markets, 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. And 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 type groups and that reach is very strong.
So the fact that the advertising mile goes down is not necessarily collating 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 and ice socket and many more things. And now we have launched a new sports channel as well, which also will carry advertisement.
Proceeds to
be proceeds to be received in Q1. And what is pending is some final approval from the old passcode on the issue of the license. So 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 MDD Ventures. The losses that you mentioned, does that include the transaction costs, which I think are about SEK46 1,000,000? Because I think originally what you were saying is that Turtle was profitable or breakeven ish business. So I'm a bit surprised by the size of loss, although the revenues are, of course, very impressive.
That's the first question. The second question, I think there's 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 2017. And then lastly, well, you mentioned a review of the disclosure, which is indeed appreciated. Just wondering, are you 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.
Yes. When it comes to the last question about the Don is when it comes to reviewing the portfolio, no, we are not done. And 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. So you should expect to see more shift from us or more changes when it comes to our portfolio going forward. When it comes to the carriage agreements, yes, we do have long lasting carrier agreements with our partners.
And as you can see, with the net intake of I think in the 3rd part, net voice here, I think it was 37,000 subs in the quarter, premium subs. So 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 socks together with us on the content that we're having. So we have long lasting partnership, have had that for many years. And what we have done also may be contrary to others is that we have continued to invest in the product. So when we made agreement with whatever, Tele Denmark or Telesee some years ago, we didn't tell them that we also would deliver La Liga and Serie A and so forth.
And 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 so forth as well. So we are constantly adding to the portfolio, which hopefully makes this very important to the customers and therefore our content should be very relevant. When it comes to the M and A cost on ventures, Maria, if you have
Yes. If looking at 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, dollars 4,000,000 to $6,000,000 of M and A costs reported in the segments within the legal the MTGX in other businesses.
Okay. Okay. Very clear. Just, Jorgen, to come back on your point about carriage agreement. I mean, my question was more referring to the free TV channels, because I think this is where Canal Digital and SBS have a conflict.
So are your agreements well in place for all your TV3 and someone channels in Sweden,
Denmark and Norway? Yes, they are. But it
is a you know, and Norway?
Yes, they are. But it is we have more cooperation with our partners than many of our many of our competitors in the market. So when we talk to a partner, there could be Com Hem in Sweden. Then we are talking about delivering, of course, our free TV channels to them, which they then can capitalize on their basic packages. And then of course, we also talk about delivering premium content to them.
So the package that we are delivering for Com Hem to go, the base is, of course, bigger than many of our competitors because that we have very strong free to be channels and also a very strong pay to be offerings. So that is a discussion we are having on ongoing basis also to understand the need of what they would like our partners. And yes, these distribution agreements are secured long term. But of course, it is a constant discussion on what to do more. And 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.
So there's many touch points we have with the partners and therefore we have long lasting relationship and long lasting contracts.
Great. Thanks.
Thank you. Our next question comes from Sami Zekauskas of Nordea. Please go ahead.
Yes. Hi. Good I have two questions. Firstly, I would ask about the pricing outlook for Scandinavia. Last year, you raised ad prices quite a bit, but how do you see it this year?
And then 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 Activision?
Or does it open new opportunities elsewhere?
Yes. 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, and therefore, deliver the right target groups to the customers. So we definitely do expect to have price inflation on our products in Sweden, but not just because we want to, because that we actually have very strong tire growth delivery historically and also foresee that for next year to come with these drives that we have acquired investment that we have done. So but to give you a specific outlook is very difficult.
As you can see, right now, we have strong growth, for instance, in Norway. And that, of course, means that they should be able to be more relevant to their advertisers than they were in the past. And the same, of course, goes for Denmark and for Sweden. So it is something you deserve and that you only do by investing in the product and growing your shares. And that is, of course, what we aim to do.
When it comes to e sports and the total future, I think as you we have seen very strong growth. And the fact that we have seen this happening in U. S. Does not change the relationship that Turtle have with the different publishers as well. Turtle is a global company, and of course, they want global traction as well and to be part of global tournaments.
So that we don't see. I think it is fair to say that the interest in e sport is very high right now. And therefore, we are super happy that we managed to get Dreamhack on board as well. And the company actually, we have very strong expectations to also to grow the relevance of e sport even further. Already now, as you know, e sport is as relevant as we we talk about followers and interests like the NHL and is forecasted to be as well with the like the NFL going into 2017.
So focus is to make sure that we grow turtle, but competition will come. And I reckon that we will see more entering this space because it is a very interesting area to be in. And our job is, of course, to make sure that the turtle stays bigger and continues to grow.
Thanks. I would have one more follow-up. Actually, it's Maria. Could you repeat what you said about the Olympic Games content investments that how they will be divided across the quarters?
Yes. We will take half of the clock on free TV and half of cost on paid TV. The paid TV is divided equal over the 2 years, and the free TV is fully charged at the time of the event, which is August.
Our next question comes from Martin Arnel from DNB Markets. Please go ahead.
Yes. Good morning, everyone. I have my first question is on the other businesses. I'm trying to get my head around all of that, of course. And how confident can you really be in 2016 that the results here will not be worse than expected?
I'm thinking about nice development and the investment growth phase you are in the Esports business.
Yes. 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 e sports and so forth, we do expect it over for the full year to do better in the segment. NICE, we do as well, we do expect NICE to grow to I think 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, there, particularly before Norway, is a star performer, I must say, and just continue to grow. So with that in mind, I think we do expect that what we're talking about here is something which will materialize.
That is said, of course, we will not miss an opportunity to continue to grow Turtle or the other digital digital businesses. But 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 will go for. It is not an EBIT optimization exercise right now with the multi channel networks or with Turtle. It is to make sure that we grow even faster than we do today.
Jurgen, when do you think it will be an EBIT story?
Yes, but 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 and investment in product, then of course, you could make it even possible. That is not a 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 Returnal and Dreamhack Management to make sure that we are the pioneers and we do that we become the global leader or continue to be the global leader of SwissBorg. So to give you guidance to say that would happen in 2017, 2018 or 2016 second half 2016, that is not something I can give you now or will give you now.
Of course. And just also on ViaPlay, these price increases, I understand them, of course. But can you just elaborate on how you and around the potential churn risk here? And also, I mean, the local sports are more tilted to your competitors see more from now
on? Yes. 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 buyer place subscribers. And I think that is the game here, of course, is to make sure that we, the subscribers comes to us and they don't go to some of our competitors.
And the important thing is that the content that we have seen right now and the impact, as you can see in Q4, has been positive. So more people are coming to Via Play. And 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.
And I think that is quite important. Of course, it should be easier to choose that. 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, yes?
Buy a place to 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, Via Play is the place. And for SEK 449 a month, inclusive all the movies, inclusive all the series, as we also DKK 99 price point that we have on series and movies and kids cut and their own production. Well, what is it? NOK 500 per Norway or something like that.
So that, of course, the only reason we have that price, NOK 99 is because our competitors, they, particularly Netflix, see that that's a good price point, which probably you could argue it isn't. So therefore, that is a very strong entertainment product, and that is something we have invested in a lot. And also, you can see, it's very well recognized by the consumer since we are now ahead of Netflix when it comes to the Swedish OTT sales battery index.
And just final question for me. On your strategic portfolio review work, should we expect more here in 2016? And what did you say about Ukraine earlier on the call?
Yes. You should expect more. And Ukraine is one of the business, of course, you look at to say what can we do with that business. The business has 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. So we need to find out what to do with a business like that. And that is, of course, the review we are doing and that also goes for other parts of our business to make sure that the money we invest, we to make sure that the money we invest, we'd only do if we do where we can see the highest returns. And that is a quite an important discipline for us now and has been always, and that is something we are just executing on right now.
Thanks a lot.
Thank you. We now move on to our next question from Rasmus Enberg from SHB. Please go ahead.
Yes. Hi. Good morning.
I was
wondering, you talked about the price increase for premium satellite in Sweden. What about the 3rd party packages? If I have a premium package right now in fiber, what will the price increase be?
Yes, it depends actually in what countries and so forth. So there's many different partners that we're having. But you will see price inflation in all our products in all our product lines. So 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 in OTT product and you also see that in the 3rd party network. So again, understand that is, of course, a good discussion. I think it is important to understand that we have invested so much more in the content, and that is the reason why you do these price increases. It's not that we do price increases out of defensive and we have to do that because whatever the products that we have doesn't work. We do that because that 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 ball cut in the Premier League, the Champions League. We have the AISOC and the Jokari. Look at the setup that we have in Sweden. And that, of course, we hopefully should take shares from our competitors. That's the whole ambition.
And of course, make it easier for the consumer to choose and not necessarily have to have 3 or 4 subscriptions, but actually can settle with ViaPlay. That is, of course, what we would like to do, so many more
investors. Yes. Can I ask you, if I calculate backwards, I think you had $11,000,000 of acquisition related costs in Q4? Is that roughly right or
Yes, that is correct.
Okay. Yes. And then 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 €200,000,000 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 great. I mean there's 2 components to that. 1, it's A, that we divested Hungary and then it's B, the accounting change in check and the combined effect is the €200,000,000
Okay. So but the Hungary was about €100,000,000 So I guess it's half that is an accounting difference?
Exactly. But there's no EBIT impact on the accounting account.
Okay. And 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 bonus part of the ad sales.
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 Larsen from Carnegie.
Three questions from me. Actually, I had questions about multichannel 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.
Yes. We are not giving any concrete forecast on the development of the businesses. But what we have said is and given you as much as we can is that the traction right now of these businesses is very good because of content that they are having. So that is, of course, something we continue to invest in. And that also goes for Zoom in and also for Display, Multi grow the presence and to get out even more.
So it is an investment phase, these companies that they are in.
Yes, okay. Fair enough. And Ukraine, 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. I mean that is one of the option. And we have provided for cost, so we are ready for the 2 alternatives that we have looking at this business.
So you have already provided for that?
Yes. We have a small operation for that.
Okay. Good. And the third part is the fleet to the Scandi side. You are growing really strongly in the AVOD side. Could you maybe just sort of indicate how much of your revenues that right now approximately?
We have not given concrete figures. But of course, it is the big driver of revenue in the Free2B is still the advertising and of course, the mini pay businesses as well. So that is the main driver. The reason why we mentioned it is, of course, that it is quite important for us that when we see pot 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. So that is more to of course, if we wouldn't have that these products, then we would have lost these customers and wouldn't have made any money on them.
So that is, of course, important. And that's why we are focusing and investing into advertising video on demand as well and a market which is set to grow in 20 16 also in Sweden.
Okay. Thank you.
Thank you. We move on to Ottila 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 'sixteen where you expect higher profit growth. I mean, 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 to ask candy could be a bit better as well, free to imagine markets get nice operating leverage.
And is it kind of fair to assume that Petri Scandi could that the profitability could actually decline a bit? So any kind of color on that would be helpful. Secondly, on the price increase you're putting through in PayTV Nordeck, what is the kind of weighted average price increase? Just to have a sense of where we should forecast premium ARPU growth for 2016. And 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.
Yes. 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. And one of the big drivers here, as you also can see, is 3 TV Merchant Markets, which has very strong performance, I must say, this year and also looks with the content as a product that we're having next year. So 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 a digital business to a large extent.
It is, of course, bioplay. We expect to grow. And it is, of course, also the 5 businesses, the e sport businesses and the multi channel networks, which will facilitate the growth. And then as well, we have made the savings, the savings which means that we also are trying to make up the currency effect, which will hit us as well and also the investment in content. So therefore, 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. We can I think we can discuss that view? If there are specific things that you would like to know, of course, we will help you. As I said, ViaPlay goes from 299 to €449 for the most expensive package.
You also have the opportunity to €399 if you want that. We have ViaSat growing 15% on the DTH from $515,000,000 to $580,000,000 something like that. So 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 Norway. So that's, of course, where you also will see price increases.
And then when it comes to what's the last one, Viacom, yes, the Viacom, sorry. I don't know Marie, if there's anything specific we can.
No, we haven't broken down it. Viacom is one of the components of the underlying sales growth. But we also see strong underlying sales growth following an basically increased market share, ad prices and 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 we get on board. So we are selling in Bulgaria, as an example, the Fox advertisement, the Disney, whatever, Viacom and so forth. And 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 is the whole idea behind this so called partnership.
Okay. And I guess people seem to focus a bit less on the free to air emerging market side. But are you confident this kind of inflection point is kind of we have finally reached it and the markets are kind of really growing again as the landscape is actually improving or stabilizing?
Yes. 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. And then if you look at it, also the digital businesses that we have in these markets are quite substantial now. And as I said in Bulgaria, in particular, we are growing very fast, by the way, like we do in Czech as well. So we are actually ahead of the curve.
So 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 mines as well, will also will happen. So 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 mine in Bulgaria, and I think it was up 30%, something like that. And this quarter as well, he's up some 17 percent. So it is because of the investments that we also have made in digital businesses as well. So 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 buyer.
Great. Thank you very much.
Thank you. That concludes the question and answer session. I will now hand the call back to Jorgen Madsen Lindemann for his concluding remarks.
So thank you all for your time today. We will announce our Q1 result on April 20 and hope to meet with as many of you as possible before then. So 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.