Good morning and good afternoon, ladies and gentlemen, and thank you for holding. Welcome to MTG's Q4 and Full Year 2014 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. I also remind you that you can find the presentation slides for this call atmtg.com.
I will now hand the call over to MTG President and CEO, Jurgen Mattsson Lindeman, who is joined on today's call by MTG CFO, Matthijs Hammansen. Please go ahead.
Thank you, operator, and good morning, everyone. Q4 was another quarter of positive growth for MTG with sales of 6% at constant exchange rates to record levels and EBIT excluding associates up 2%. For the last three quarters combined then our sales have been up 10% at constant exchange rates and our reported profits up 8%. And this is in line with our objective to capitalize on the changes in consumer behavior in our markets and to migrate the business from high margin, but lower growth traditional linear businesses to high growth online and on demand services that are available everywhere. Our goal is to be the leading digital entertainment company in each of our markets and we are progressing towards this by both growing organically and acquiring complementary new businesses.
So just to give you a few headlines on our digital development, we have seen a fourfold increase in our total play services started streams in 2014 with mobile representing almost half of this online viewing in Q4. When adding via play and our other online services, our combined revenues for these digital services almost doubled in 2014. Our Nordic businesses are the engine room of the group's profitable growth with our combined advertising and subscription funded TV businesses delivering 3% sales growth and 7% profit growth in Q4. As in the previous two quarters, growing video on demand revenues from our via play and web TV catch up services have more than made up for the falling linear viewing levels. Before we go to the segmental business performance, I would like to update you on the Russian situation.
Firstly, the ban on advertising is now in place for our pay TV channels in Russia. So we immediately lose the DKK88 1,000,000 of ad revenues we had last year, subject of course to the amendments currently being passed that may enable us to show advertising on channels with 75% Russian content. As we mentioned before, approximately half of this revenue effect would be will impact our pay TV Emerging Model profit in 2015. The sharp fall in the ruble is also affecting our Russian Paycheek operations. The ruble is now at an all time low against the kroner down almost a third compared to the average 2014 rate and down almost 20% since the beginning of December alone.
If rates stay where they are, the reported profits for our Russian pay TV business in 2015 are currently expected to be negatively impacted by a further SEK 100,000,000. Secondly, and as previously discussed with you, we are in the process of adjusting to the changes in the law regarding foreign ownership of Russian media assets, which takes effect from the beginning of 2016. This affects both our pay TV channel businesses and also our holding in Media. CDC has a team of advisers in place and is exploring alternative solutions that would enable it to comply with the amended law. There's a process underway, but there's nothing more we can say at this stage.
It is obviously a major focus for us and we will provide further information when we are in a position to do so. And the same applies of course for our own pay TV channel business. The rapid and large currency movements we have seen in the recent weeks months are also affecting our broader business. The substantial strengthening of the U. S.
Dollar in particular is having an impact on the cost of our acquired programming commitments. The U. S. Dollar is now at 5 year high versus the kroner of 20% compared to average 2014 rate and up more than 10% since the beginning of December alone. Based on these changes, our content cost across the group will be inflated by approximately DKK 200,000,000 in 20.15 net of currency hedging that we do to smooth out these impacts over time.
Achias will explain this in more detail later on this call, but this combination of a strong dollar and a weak ruble and the speed and scale of the swings are unparalleled. It should not, however, detract from the fact that our operations are performing well and we will take actions to mitigate the currency effects by balancing costs, optimizing our investments and evaluating our portfolio as we discussed at our Capital Market Day. As usual, I will now briefly review the performance of each of our business areas before we take your questions. So let's start with the Scandinavian Freaking Operations, where sales were down 5% at constant exchange rates, but reported profits were up. Our sales were up in Norway, stable in Denmark, but down in Sweden.
The Norwegian TV ad market is estimated to have grown in the quarter, while the Swedish and Danish markets are estimated to have been down. The high level of growth in our AVOD or online video advertising sales continued and sales were up 77% in Q4. We added digital first content creators from Rykster and also FCCE to our offering in Q4 and our new Juice Play online gossip vertical has generated lots of interest in Sweden and Denmark since it launched in December. Our own Splay next generation digital media house is by far the largest AVOD service in Sweden by starting streams and now has 75,000,000 views per month and nearly 10,000,000 subscribers on YouTube. Commercial part or linear viewing in our target groups was down low double digit percentage points in Sweden, mid single digit percentage points in Denmark, but up mid single percentage points in Norway, which partly reflects the inclusion by the new measurement system of Ewing at people's 2nd or weakened homes.
Put and price are correlated. And as we have said before, it is supply and demand driven and reflects TV's position as a national reach media delivering large scale predictable and measurable prime time audiences with an attractive return of investments for advertisers. There is a time lag in this correlation though as put moves all the time whereas a large part of the TV advertising revenues are booked through annual agreements. We're now in the process of closing the upfront deals for 20 15 and have increased our advertising prices in all three countries with the highest price increases in Sweden. There is limited growth expected for the Scandinavian advertising market in 2015, but we do expect to benefit from higher prices and continued growth in our AVOD revenues and carriage fees from 3rd party networks.
OpEx and programming costs were down in Q4 and stable at constant exchange rates for the year as we trimmed our investment to reflect the market conditions. The restructuring that we have undertaken in Sweden in recent weeks will result in a non recurring charge of SEK 21,000,000 in the first quarter, but then yield savings moving forward. Despite this, we are investing in programming and do expect some cost increases moving forward. We then look at the Nordic Pay TV business where revenues were up 6% at constant exchange rates and reported profits up 12%. ViaPlay is the principal growth driver and signed a number of new agreements during the quarter including the Swedish Telco Tele2 and Google's Comcast, which are further boosting the availability of our service.
Total viewing levels more than doubled for the month of December compared to last month of 2013. And the use of kids content after we include Nickelodeon was up amazing 6 86% with overall series content up 100 and 75%. Q4 was the Q1 when Apple's iOS was not only the biggest device platform for us, but also bigger than the PC and smartphone and tablet usage continue to rise. Moving then from VIAFLEZ OR VIAFET, our combined satellite and 3rd party operated premium subscriber base grew both quarter on quarter year on year as the lower satellite volumes were more than offset by higher third party network volumes. The growth in the 3rd party base this quarter reflected the usual seasonal uplift with the start of the new football seasons as well as coverage of the Finland's major ice hockey team games in the KHL.
Our premium satellite ARPU was also up again following the previously introduced price increases. Our profits were up for the 4th consecutive quarter and our operating margins increased year on year as anticipated. The margin was slightly down quarter on quarter due to marketing on the back of the Nickelodeon deal as well as higher content costs driven by currency changes. As previously indicated, we are not providing forward margin guidance as this business is all about growing the overall subscriber volumes, given the fact that ViaPlay now addresses so many more homes. Shifting the focus now from the Nordic to the international operations where our free TV merchant market sales were down 5% at constant exchange rates, but reported profits were up 9%.
The sales growth in the Baltics and Bulgaria was offset by the 15% decline in the Czech Republic due to tough comps and the highly competitive market environment. Our AVOS sales for the region were up 64% in Q4. The Czech comps should ease next year. And please remember that our Q4 and full year sales in Czech Republic are still well above the 2012 levels and our share viewing continued to rise. The Czech ad market was down in Q4, but upfront advertising agreements for 2015 are being done at largely the same prices as last year and we also expect to benefit from continued growth in our AVOD revenues and carriage fees from 3rd party networks.
The Bulgarian business performed strongly with sales up 12% in a flat advertising market and online net info contributing its 1st full 4th quarter. We have now also switched to a new Pivometer system owned by international provider Nielsen, so that we now have more reliable data than from the previous locally owned provider. Our market positions in the Baltics remained very strong and our operations grew their sales in declining Latvian and Lithuanian advertising market, but a growing Estonian market. Segment OpEx was reduced in the quarter and primarily is the Republic. So moving forward OpEx will grow as we are investing, but we will as usual adjust our investments to market conditions and operational performance.
And now to our Pay TV operations in the emerging markets where sales were up 15% at constant exchange rates and driven by the consolidation of the TRACE. Sales were down 5% on an organic basis, which was primarily driven due to the unstable geopolitical situation in Ukraine, which has impacted both our satellite platform and our channel business. Profits were down compared to last year due to the performance of our Ukrainian satellite business in We are closing down our joint venture, Radhuka satellite pay TV platform in Russia due to the ongoing uncertainty around the licensing requirements and we wrote down the value of these assets already in Q4 2013. The closure has resulted in a net positive effect of kroner 80,000,000 in this Q4. The number of MiniPay subscriber was stable compared to Q3, while our Ukraine satellite subscriber base fell further.
Moving forward, our sales and profits will positively be impacted by the consolidation of Trace, which launched the TRACE Music Star singing talent competition with mobile operator Airtel across 13 African countries in 2014. Segment sales and profits will be impacted in 2015 by the ban of advertising and the depreciation of the ruble, as I mentioned before. There are many moving parts right now. But based on where we are today, the pay TV merchant market should breakeven for the full year. And finally then to NICE Entertainment, NGGX and NGG radio where sales were up 36% on a constant exchange rate basis and up 16% on an organic basis following strong growth in our content and radio business.
Strix Norway new andoprimetime production for NRK in Norway is rated at over 46% and is our largest ever reality show per production. This follows a successful fall when 1 weekend saw 5 of our shows each delivering more than 40% share total Norwegian TV viewing. We also had record viewing for The Farm in Slovenia. Our prolonged TV drama of Marching for 7th season on ITV in the U. K.
And our events business closed a multiyear deal with Norwegian bank DNB. EBITDA continues to develop according to plan and facilitate our digital developments across the group And operating profits did not change much this year on year as higher earnings in the radio operations were offset by the investments in WGX and a different revenue mix for NICE. Moving forward, our ambition is to deliver a profit for the segment in 2015 as continued investment in NGT ex are offset by the profits from the radio and the content businesses. So in summary for the group, another quarter of profitable growth that again demonstrates that investments that we have made are paying off and that we are managing the transition and shaping the future of our digital entertainment businesses. We remain in a very healthy financial position with high cash conversion levels and low gearing with access to substantial and well diversified funding structures.
And this provide us with a platform for continued investment and shareholder returns. And the Board is therefore proposing to increase our dividend by 5% to DKK 11 for 20.14, which represents a payout ratio of 57% and That concludes my comments on the results. But before we answer your questions, I will hand the call over to Matthias for his thoughts and more information about the currency effects that I referred to earlier. So over to you, Matthias.
Thank you, Jurgen, and good morning, everyone. I'd like to try to give you a little bit more insight to the currency impacts and dynamics that we see today and also moving forward a little bit. As everyone is aware of, we have seen massive volatility in the FX markets over the past few months and we have a basket of currencies that create both transactional and translational impacts for us over time, which you all know of course. We have talked about this before, but these currencies now have remained fairly stable for a long time and any movements have tended to balance out each other historically. So we have not really had any reason to talk in detail about it.
Right now what we see is not really the case at the moment as we have seen both the dollar appreciate significantly and the ruble depreciate significantly with little compensating movement in other currencies like Norwegian kroner, etcetera. So the dollar has had a gradual and building impact on our cost basis, but the ruble effect is sudden and of course unseen. That's why we are highlighting this today for you. And we think we need to explain the ruble effect so you see the impact. And also we wanted to make sure that the dollar effect is understood both on a short and long term basis as a mere comparison of spot rates would probably lead to the wrong conclusions given all the various different factors and components that comes into play in the net effect.
There are 2 main effects for us as we said. Firstly, the appreciation of the dollar, which is gradually inflating the content cost across the group and secondly, the depreciation of the ruble that is causing a negative translation effect for our Russian pay TV business. So if we look at the first one, the dollar. In the impact of the dollar appreciation against the SEK, in which we booked the majority of our acquired content costs, the hedged dollar SEK rate that we have visibility on in our 20 15 P and L is now approximately SEK 0.65 more expensive than in our 2014 P and L. And as you know from before and also as you've seen probably in our annual report, we have around $300,000,000 worth of U.
S. Dollar content cost annually. So this 0.65 kroner increase in the rate is equivalent to approximately DKK 200,000,000 increase in our dollar cost for 20 15. The spot rate, of course, has increased even more since the end of the year. And that prevails throughout 2015, we will have an approximately additional impact of around DKK 250,000,000 in 2016.
And for the 2015 impact, around half of that DKK 200,000,000 impact relates to the free TV Scandinavian business and around half to the Nordic pay TV business. And there's only a marginal impact on the Korean pay TV Emerging Markets businesses. The second impact is the Russian ruble translation effect. The ruble dollar rate, as you know, has been stable the last few years in the low 30s rubles to the dollar. And then in December, it shot up to around RUB 70 and is now trading probably around RUB65.
And as you may remember, our carrier agreements in Russia are denominated in U. S. Dollars, So our channels have become much more expensive for the local cable operators. And therefore, we have renegotiated the new terms with them in order to keep carriage in order for them to be able to record these channels. And as a result of these renegotiations, our ruble revenues are actually up in local currencies.
But when we translate those back into Swedish krona, we get a material negative effect as the ruble has now fallen by approximately onethree against the krona when comparing the spot rates we have today against the average rate last year. And the gross effect on revenues of this is approximately SEK 130,000,000 that we lose. And given that we have some local currency costs as well, we have a positive SEK 30,000,000 on the cost side, which gives them the net effect of minus €100,000,000 Obviously, we have many other currency movements that affect the group, but these translation and transaction effects are largely neutral or slightly positive as we see it right now for 2015. So overall, based on the currency levels we see today, we have DKK 200,000,000 of increased costs due to the dollar and a SEK 100,000,000 negative profit impact from the ruble. And if we look at the phasing across the year in 2015, the dollar cost impact will gradually increase during the year and be around SEK 20,000,000 negative in Q1 year on year, while the ruble profit impact is roughly equal quarter to quarter, so approximately SEK 25,000,000 in Q1.
And excluding all of this, I think let's be clear, as Jurgen said, that the business continues to perform well. We talked about at the Capital Markets Day the need to balance the cost to optimize investments and also to continue to manage the overall portfolio of assets we have. And these currency impacts that we see right now, the sudden shifts also of course only accelerates these considerations as we now seek to mitigate these currency effects. That's it for my comments. And back to
you Jorgen. Thank you, Matthias. Yes, now we are ready to take everyone's questions. As usual, we have a lot of people on the call and we want to answer each of your questions. So please limit yourself to no more than 2 questions each.
Operator, can we ask the first question please?
Thank you, sir. Ladies and gentlemen, we are now ready to register
Hello. Good morning, everyone. I hope you can hear me well. Thanks for all those details. I'm sorry, Matthias, I didn't get you on the SEK 260,000,000 of additional impact on 2016.
You could just repeat that point first? And secondly, you don't to guide on margins in the pay TV Nordics business for 2015. Is that because of the currency headwinds? Or is there something else underlying?
If I take the first question there, Elyse. I think what we're trying to say is the big currency swings we're right now seeing the dollar rate. If you multiply that swing, whatever you put into your assumptions with $300,000,000 exposure we have every year, that obviously gives a fairly big swing. And only in the last year, I think it's the dollar secrete is up DKK1.4. And if you multiply that with DKK300,000,000 that gives a pretty big number of more than DKK400,000,000 overall effect.
What we're trying to explain right now and which should be fairly known, so I think that's but what we also try to do right now is to make sure that people understand the phasing of it, because all the hedging and everything that we do, of course, makes the timing of these impacts a little bit difficult. So for 2016, as we see right now, we see at least €250,000,000 additional impact from these U. S. Dollar rates.
Okay. So just to clarify, so you have SEK 200,000,000 from the dollar in 2015, SEK100 1,000,000 from the ruble and then in 2016 we have SEK250 1,000,000 from the dollar?
As it looks right now, yes.
Okay. Thank you. And so on the question on the margin on PayTV and please?
I think the reason why we're guiding for the margin historically was to make sure you understand that we were back on the track in the path we talked to you about in 2012. And I think from now on, I think that we discussed as well at the Capital Markets Day is now more a question around growing the absolute profits of the business and probably less so about the actual percentage of revenues. So it's the whole argument about profitable growth in the Nordic business that we talked about at Capital Markets Day.
Okay. And just one follow-up on the free TVscandi business. Do you consider the minus 5% in Q4 as a good run rate for 2015 despite the gross ad price increase you've implemented?
No. That you cannot say. I think it is if you look at what the IIM what they have forecasted for full year 2015, 2015. Then they have forecasted a decline in the Swedish market of 1.4% and a growth in the Norwegian market of 0.3%. That is what the forecast is right now.
Okay. Thanks, our next question from
Lisa Yang of Goldman Sachs.
Please go ahead.
Thank you. We will take
our next question from
Lisa Yang of Goldman Sachs.
Please go ahead. Hi, Lisa. Hi, Lisa. Hi, Lisa. Hi, Lisa.
Hi, Lisa. Hi, Lisa. Hi, Lisa. Hi, Lisa. Hi, Lisa.
Hi, Lisa
take our next question from Lisa Yang of Goldman Sachs. Please go ahead. Your line is open.
Good morning, everyone. My first question is a follow-up from Adrian's question on free to wear skandi. Given the price increase will really only impact from Q2, is it fair to assume that for Q1 your revenue decline could still be about 5% and then we'll see a kind of gradual improvement to flat or even slightly positive from Q2 with the price increase? That's my first question. The second one is on AVOD.
I mean you gave a lot of figures and you see quite a lot on the growth and how it compensate the linear the decline in linear viewing. But how much of free to ask Andy does AVODnet represent as a percentage of revenue? And if you have linear viewing shifting to online on a profit basis is that like for like? And last question is on Pay TV Emerging Markets. So can you just remind us of the €100,000,000 impact
from the
Pay TV ad ban? How much of that was already in 2014? So how much we should expect for 2015? Thank you very much.
Yes.
When you take the first question, when it came to the yearly contracts, you are absolutely right about the time line meaning that the negotiations are taking place right now. But as you know, we are not forecasting about the development in these negotiations. So I cannot give you more when it comes to Q1. When it comes to the all the digital products, I think it's fair to say when you look at it, it is growing quite rapidly for us on a combined basis. And we have doubled the group's digital revenue in 2014.
But if you look isolated for instance on advertising video on demand, it is still low single digit part of FreeTV. But it's growing and more important is of course that the combined digital products that we're having are making sure that in spite that advertising market goes down and a top level decline that we are growing the combined Nordic business. So there is a swing where we right now offset the decline in traditional business with the digital business that we're having. So we are capitalizing on these consumer trends as we also discussed at the Capital Market Day. When it comes to the advertising ban in Russia, there's 2 things.
It is around DKK 90,000,000 which is going to hit us here in 2015 and half of it will impact our EBIT line when it comes to the advertising ban in Russia. Latest from the Russian market is though that there is a new amendment to the advertising ban law, meaning that if you have channels which contain 75% of local Russian content, you are allowed to carry advertising. And that is something we're looking at right now to see how many of our channels if any would apply that and how we would be able to facilitate that. But you are right on the
What percentage of your content is now local?
Yes. We have different channels. We have a channel called T1000 Russia Kino, which we might be able. That is what we're looking at right now since the law came through last week. And we are looking at what it would take for us to become to comply with that law.
So it is too early still. But that is one of our challenge which might be able to
do that. Actually I have a last question on CTC. I think they were expected to announce a decision on what they're trying to do
Yes. I think if you relate to what the company has announced on its website, then they have engaged advisers, tax advisers, bankers
and so forth in order to facilitate the
mitigation of that is what they have announced. So that is what they have announced.
Okay. Thank you.
We now take our next question from Stefan Nelson of SEB. Please go ahead. Your line is open.
Thanks. Just thought I'd come back to
the currencies. I mean, what can you do to mitigate these quite huge currency effects over the next 2 years? [SPEAKER STEPHEN ROBERT BINNIE:]
I think what we're talking about generally is general things that we can do to offset any cost inflation on the dollar effect, make the business more efficient basically and prioritize investments and so on. I think that's the general thing we're talking about. When it comes to the currencies itself, obviously, we already started last year, for example, to hedge not all our U. S. Dollar sports contracts, not only in the rolling 12 months forward that we do with have done historically over as long as I can remember.
But the contract in sports right now Donnel we hedge over the full contract probably 3 years if it's a 3 year contract. But already that has helped us not to delay that effect.
Okay. But I mean, is there there's no possibility to renegotiate the deals given this kind of unexpected huge change in currency rates? You will have to carry all of this basically and try to find other ways to solve it or
Of course, we will try to do that as much as possible. And in some markets where it's very, very tough like Russia then obviously larger chance to do it than in some other markets. Please. But American Studios they are not always willing to do it.
Okay. So all is equal, we should basically see all this or most of it fall through in the P and L, I mean, from
I think from a U. S. Dollar point of view and content cost, yes.
Yes. Okay, good. And then the just a second question. Maybe just given all the kind of headwinds you're facing with Russia and structural declines and dollar and all, I mean, are you considering any way to kind of strategically review your assets and see if there are pieces in the more consolidation puzzles that you can work with? I mean this is happening across Europe and the world right now.
But that is an ongoing project of course. That is to make sure that we optimize the business and we look for opportunities. So that has not changed. As Matthias said, what we're doing right now is, of course, we increase the focus. Of course, you review again the assets that you're having, what you can do more of, what you should do less of and so forth.
But there's no change in the fact that we want to do better business and want to optimize the business independent of what we see here.
Okay. Fair enough. Thanks.
We now take our next question from Rasmus Enberg of Handels Please go ahead. Your line is open.
Yes. Hi, guys. I was wondering, if I remember correctly, you have something like would it be around €5,000,000,000 of sales in euro denominated currencies that you don't talk so much about. I guess there will be a sort of partly offsetting effect on the FX side from that, right?
Hi, Rasmus. Yes, I think I don't really recognize the numbers itself. But what you can largely say is that the dollar denominated inflows are linked or pegged to the sorry, the euro denominated inflows or the currencies pegged to the euro It's largely equivalent to the euro outflows we had for sports rights and so on. Yes, yes. That is largely neutral effect you can
say. Sure. Yes.
But what we're talking about here is it's a one-sided leg basically the outflows of U. S. Dollar only. And that's what we say why we say as well that the rest of all the currency mixes are largely neutral for cyclical. Yes.
Sure. Yes. And then I just wanted to ask you, you haven't you didn't really talk at all about how Via Play did in this quarter. Did it continue to grow very fast? Or was there a slowdown compared to the Q3, which was extraordinary strong?
Or how did you do?
It was a very strong quarter for ViaPlay as well in many ways. I think what we of course are measuring as well is the usage of the products that we have or the content that we have. And just to give you the 2 figures, then if you look at the kids content after we managed to make the exclusive deal as well with Nickelodeon, then the kids content started streams were up 700% in December versus December last year. Then we have invested as well in a wide range of exclusive series. And if you look at that KPI, then you will see that the starter stream was around 175% in December versus last year December.
So the product continues to perform very well. And as I also mentioned with the new partnerships that we made now with Tele2 and with Comcast and so forth, it is of course helping to get Via Play out to more customers. So we are very happy with the development.
Yes. And then just going back to the question earlier about Russia, I would assume that this is urgent. This needs to be sort of addressed probably in the first half of the year because you're not going to make the best deal around Christmas 2015, right?
Can you just repeat that we continue?
Yes. The question was about when you will are likely to announce something on Russia. I'm just trying to make sure that this is not something that's going to come around year end.
No. What I can assure you is, of course, that it is a big focus area for us and we are we're accelerating the process as fast as we can to make sure that we exactly do not end up in a situation of 31st December 2015. So it is a high priority for us and that is something as you also can see from the CTC announcement that they are very much focused on as well with all the advisers that they have taken on board.
Have you also taken on advisers?
Yes. We have done the same. Yes.
And just then some sort of housekeeping questions there. Firstly, you had a one off in the pay TV side. Was that a reversal of the impairment you took earlier? Or what was that in
In the emerging markets you talked about? Or
Yes, yes.
No, that was the effect of the close down of Raduga. Actually technically we have negative equity there. So we got a positive impact from that net of close down costs.
Right, right. And then normally in the Q4, you used to have a very high negative contribution or rather payment to minorities or how you want to call that. It was still in this quarter. Well, is there something changing in that business? Or why is that?
I would assume a large part of that is the Czech Republic, but is there something offsetting that in this quarter?
You're right. The large part is the Czech Republic. And I have to come back to you if there is anything material at all. So I can't think of it right now.
Okay. All right. Thank you.
We will take our next question from Bilet R. Of Danske Bank. Please go ahead. Your line is open.
Thank you. So two questions. Just one sort of short term question regarding Q1 considering that you had the Winter Olympics last year. Could you give us some sort of updates on what kind of revenue uplift did the Olympics provide within Q1? And also should margins go up year on year given that you eliminated a lot of the costs?
I think we haven't really discussed any financial impact on free TV for competitive reasons. We tried to avoid that last year as well to the extent possible, I think. But you're absolutely right. We will have a negative impact on top line and also on and we will have a negative impact on the cost line as well, but that will obviously be offset by more spending on OPs and the currency impact as well that we talked about here. Remember just to reiterate that the Q1 overall has a negative SEK 45,000,000 negative impact on content costs in Q1 versus last year also.
Okay. And then in terms of these FX changes and I mean at the CMD you talked extensively about cost optimization and portfolio management. To which extent do you believe that you can offset these costs longer term through lower overhead costs? Or is this primarily going to be offset by a top line measure?
No, I think what we discussed of course at the Capital Markets Day was profitable growth. And given these currency impacts, I think that for 2015 is going to look a little bit more challenging to achieve if we don't look at other measures and accelerate those measures that we did talk about at Capital Markets Day. So that's for sure. And I think when it comes to the overall longer term, if the currency, the U. S.
Dollar particularly will prevail at these levels, then obviously we will have to cut out a little bit more of the inefficiencies and so on that we see in the business. But that's a longer term discussion and better efficiency we have to take out.
Okay. Thank you.
We will take our next question from Sami Zarqamis of Nordea. Please go ahead. Your line is open.
Thank you. I have two questions. The first one is related to pay TV Nordics. It seems that the churn from satellite to third party networks was quite high in the Q4. So could you discuss this development?
Is it driven, for example, by the fiber rollouts in Sweden? And then the second question relates to also Pay TV Nordics. You already discussed ad price increases, but what about pay TV? Can you discuss potential and plans for price increases in the pay TV Nordics and also in wire play? Thanks.
When we look at the Q4 when it comes intake of customers, then we grew. We had an increase in 3rd party network intake of customer. So that offset the negative development we had on the TTH platform. So I don't know you talked about the churn in 3rd party network, if I understood the question right?
I meant churn from satellite to 3rd party networks.
Yes. I don't think that you can give a correlation exactly there to be honest. We of course people are moving around. A lot of people are moving and then they might take our products then in IPTV or they might take now bioplay or something else. I think for sure is that we grew combined Viaplay and our premium base.
And I think that is what we are focusing on right now. When it comes to ad prices, then it is again as I said it's still too early to say. There are negotiations right now taking place as we speak about the prices for 2015. So it is very difficult to give comments there. When we talk about price increases as such, yes, but we have recently increased prices well on bioplay from NOK 79 to NOK 89.
And also we have made a range of increases when it comes to our DJ's platform as such. But in general, I think it's important to understand that we constantly analyze our price points, our products relevance in order to make sure that they are priced correctly also taking the competition into consideration. And particularly looking at BioPlate, it is obviously that with the traction the product has right now and the usage and the price point at DKK 89 for a full month of movies and series that is definitely a product which has much more potential in it. And also as you saw last year, we also increased prices when it comes to our sports offering. So we are very mindful about making sure that the products are priced correctly in accordance with the consumer demand and of course also the competition.
Okay. Thanks.
That concludes the question and answer session. I will now hand the call back to Madsen Lindemann for his concluding remarks.
Thank you all for your time today. Of course, I appreciate that these currency swings do create a complex situation and position. But I would also emphasize again that our operations are well positioned and performing well on an underlying basis. We will announce our Q1 results on April 22 and our AGM will be held on May 13. And I very much hope to meet as many of you as possible before then.
But so far goodbye for now.
Thank you. That concludes today's conference call. Thank you for your participation.