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. If any participant has difficulties hearing the presentation, please press star followed by 0 for operator assistance. I also remind you that you can find the presentation slides for this call at mtg.com. I will now hand the call over to MTG President and CEO Jørgen Madsen Lindemann, who is joined on today's call by MTG CFO Mathias Hermansson. Please go ahead.
Thank you, Oliver Reeder, and good morning, everyone. Q4 was another quarter of profitable growth for MTG, with sales up 6% at constant exchange rates to record levels, and EBIT excluding associates up 2%. For the last three quarters combined, our sales have been up 10% at constant exchange rates and our reported profits up 8%. 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.
Just to give you a few headlines on our digital development, we have seen a fourfold increase in our [inaudible] services started streams in 2014, with mobile representing almost half of this online viewing in Q4. When adding Viaplay 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 Viaplay 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, we immediately lose the SEK 88 million 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 will impact our pay TV emerging market profit in 2015. The sharp fall in the ruble is also affecting our Russian pay TV 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 million.
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 CTC Media. CTC Media has a team of advisors in place and is exploring alternative solutions that would enable it to comply with the amended law. There's a process underway. There's nothing more we can say at this stage. It is obviously a major focus for us. We will provide further information when we are in the position to do so. 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 and 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 five-year high versus the SEK, up 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 SEK 200 million in 2015, net of currency hedging that we do to smooth out these impacts over time. At TS, we explain this in more detail later on this call. 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. We will take actions to mitigate the currency effects by balancing cost, optimizing our investments, and evaluating our portfolio, as we discussed at our Capital Markets Day. As usual, I will now briefly review the performance of each of our business areas before we take your questions. Let's start with the Scandinavian free TV operations, where sales were down 5% at constant exchange rates. Reported profits were up. Our sales were up in Norway, stable in Denmark. 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. Sales were up 77% in Q4.
We added digital-first content creators from Rickster and also [FCCE ] to our offering in Q4. Our new JuicePlay 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 started streams. Now has 75 million views per month and nearly 10 million subscribers on YouTube. Commercial pot, or linear viewing, in our target groups was down low double-digit percentage points in Sweden, mid-single-digit percentage points in Denmark. Up mid-single percentage points in Norway, which partly reflects the inclusion by the new measurement system of viewing at people's second or weekend homes.
Good, 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 on investments for advertisers. There is a time lag in this correlation, though, as spot 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 2015 and have increased our advertising prices in all three countries, with the highest price increases in Sweden. There's limited growth expected for the Scandinavian advertising market in 2015, but we do expect to benefit from higher prices and continue growth in our AVOD revenues and coverage fees from third-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 structuring that we have undertaken in Sweden in recent weeks will result in a non-recurring charge of SEK 21 million in the first quarter, yield savings moving forward. Despite this, we are investing in programming and do expect some cost increases moving forward. We 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 Chromecast, 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, The usage of kids' content, after we included Nickelodeon, was up amazing 686%, with overall series content up 175%. Q4 was the first quarter when Apple's iOS was not only the biggest device platform for us, but also bigger than the PC as smartphone and tablet users continue to rise. Moving from Viaplay to Viasat, our combined satellite and third-party operator premium subscriber base grew both quarter-on-quarter and year-on-year, as the lower satellite volumes were more than offset by higher third-party network volumes. The growth in the third-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 fourth consecutive quarter, 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 emerging market sales were down 5% at constant exchange rates, 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 AVOD sales for the region were up 64% in Q4. The Czech comps should ease next year. Please remember that our Q4 and full-year sales in the Czech Republic are still well above the 2012 levels, and our share of 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. We also expect to benefit from continued growth in our AVOD revenues and coverage fees from third-party networks. The Bulgarian business performed strongly, with sales up 12% in a flat advertising market and online Net info contributing its first fourth quarter.
We have now also switched to a new people meter 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 markets, but a growing Estonian market. Segment OPEX was reduced in the quarter and primarily is the Czech Republic. Moving forward, OPEX will grow as we are investing, but we will, as usual, adjust our investments to market conditions and operational performance. 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 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 particular. We are closing down our joint venture Raduga satellite pay TV platform in Russia due to the ongoing uncertainty around the licensing requirements. We wrote down the value of this asset already in Q4 2013. The closure has resulted in a net positive effect of SEK 18 million in this Q4. The number of mini-pay subscribers 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 RUB, as I mentioned before. There are many moving parts right now, but based on where we are today, the pay TV emerging markets should break even for the full year. Finally to Nice Entertainment Group, MTGX, and MTG 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 annual prime-time production for NRK in Norway, is rating at over 46% and is our largest ever reality show production.
This follows a successful fall when one weekend saw five of our shows, each delivering more than 40% share of total Norwegian TV viewing. We also had record viewing for The Farm in Slovenia, our DRG distribution business for long TV drama Doc Martin for a seventh season on ITV in the U.K., and our events business closed a multi-year deal with Norwegian bank DNB. MTGx continues to develop according to plan and facilitate our digital developments across the group. Operating profits did not change much this year-on-year, as higher earnings in the radio operations were set by the investments in MTGx 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 MTGx are offset by the profits from the radio and the content businesses.
In summary for the group, another quarter of profitable growth that again demonstrates that the 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. This provided us with a platform for continued investment and shareholder returns, and the board is therefore proposing to increase our dividend by 5% to 11 SEK for 2014, which represents a payout ratio of 57% and is comfortable in line with our policy to pay out at least 30% of recurring net income each year.
That concludes my comments on the results, but before we answer your questions, I will hand the call over to Mathias for his thoughts and more information about the currency effects that I referred to earlier. Over to you, Mathias.
Thank you, Jørgen, and good morning, everyone. I'd like to try to give you a little bit more insight into 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.
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, etc. 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. 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 trades would probably lead to the wrong conclusions given all the various different factors and components that come into play in the net effect.
There are two main effects for us, as we said. Firstly, the appreciation of the dollar, which is gradually inflating the content cost across the group. Secondly, the depreciation of the RUB that is causing a negative translation effect for our Russian pay TV business. If we look at the first one, the dollar, the impact of the dollar appreciation against the SEK, in which we booked the majority of our acquired content cost, the hedged dollar SEK rate that we have visibility on in our 2015 P&L is now approximately SEK 0.65 more expensive than in our 2014 P&L. As you know from before, and also as you'd seen probably in our annual report, we have around $300 million worth of US dollar content cost annually.
This SEK 0.65 increase in the rate is equivalent to approximately SEK 200 million increase in our dollar cost for 2015. The spot rates, of course, have increased even more since the end of the year. If that prevails throughout 2015, we will have an approximately additional impact of around SEK 250 million in 2016. For the 2015 impact, around half of that SEK 200 million impact relates to the free TV Scandinavian business and around half to the Nordic pay TV business. There's only a marginal impact on the free and pay TV emerging markets businesses. The second impact is the Russian RUB translation effect. The RUB dollar rate, as you know, has been stable for the last few years in the low 30s RUB to the dollar.
In December, it shot up to around 70 RUB to the dollar, and it's now trading probably around 65 RUB. As you may remember, our carriage agreements in Russia are denominated in US dollars. Our channels have become much more expensive for the local cable operators. 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. As a result of these renegotiations, our RUB revenues are actually up in local currencies. When we translate those back into SEK, we get a material negative effect as the RUB has now fallen by approximately one-third against the SEK when comparing the spot rates we have today against the average rate last year. The gross effect on revenues of this is approximately SEK 130 million that we lose.
Given that we have some local currency costs as well, we have a positive SEK 30 million on the cost side, which gives them the net effect of minus SEK 100 million. 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. Overall, based on the currency levels we see today, we have SEK 200 million of increased cost due to the dollar and SEK 100 million negative profit impact from the RUB. 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 million negative in Q1, year-on-year. While the RUB profit impact is roughly equal quarter-to-quarter, so approximately SEK 25 million in Q1.
Excluding all of this, I think let's be clear, as Jørgen 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. These currency impacts that we see right now, these sudden shifts, also, of course, only accelerate these considerations as we now seek to mitigate these currency effects. That's it for my comments, and back to you, Jørgen.
Thank you, Mathias. 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. Please limit yourself to no more than two questions each. Operator, can we have the first question, 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 1 on your telephone keypad, and you will enter a queue. Should you wish to cancel, please press star 2. The first question comes from Adrien de Saint Hilaire of Morgan Stanley. Please go ahead. Your line is open.
Hello. Good morning, everyone. I hope you can hear me well. Thanks for all those details. I'm sorry, Mathias. I didn't get you on the SEK 260 million of additional impact on 2016, if you could just repeat that point first. Secondly, you don't want 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, [inaudible] , I think what we're trying to say is the big currency swings we now right now see in the dollar rate. If you multiply that swing, whatever you put into your assumption, with $300 million exposure we have every year, that obviously gives a fairly big swing. Only in the last year, I think the dollar SEK rate is up SEK 1.4. If you multiply that with 300, that gives a pretty big number, more than SEK 400 million overall effect. What we're trying to explain 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.
For 2016, as we see right now, we see at least SEK 260 million or, sorry, SEK 250 million additional impact from these U.S. dollar rates.
Okay. Just to clarify, you have SEK 200 million from the dollar in 2015, SEK 100 million from the ruble, and then in 2016, we have SEK 250 million from the dollar?
As it looks right now, yes.
Yeah. Okay. Thank you. On the question on the margin on pay TV Nordics, please.
I think the reason why we were guiding for the margin historically was obviously to make sure you understand that we were back on the track and the path we started to talk to you about in 2012.
I think from now on, I think that we discussed as well at the Capital Markets Day, it is now more a question around growing the absolute profits of the business and probably less so about the actual % of revenues. It is the whole argument about profitable growth in the Nordic business that we talked about at the Capital Markets Day.
Okay. Just one follow-up on the free TV Scandia business. Do you consider the -5% in Q4 as a good run rate for 2015 despite the gross ad price increase you have implemented?
No, that you cannot say. I think it is if you look at what the IRM, what they have forecasted for full year 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, Jørgen.
Thank you. We will 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 TV Scandia . 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 will see a kind of gradual improvement to flat or even slightly positive from Q2 with the price increase? That is my first question. The second one is on AVOD. I mean, you gave a lot of figures, and you stated quite a lot on the growth and how it compensates the declining linear viewing. How much of free TV Scandia does AVOD represent as a % of revenue?
If you have linear viewing shifting to online on a profit basis, is that like-for-like? Last question is on pay TV emerging markets. Can you just remind us of the SEK 100 million impact from the pay TV ad ban? How much of that was already in 2014? How much we should expect for 2015? Thank you very much. Yeah. When you were saying the first question, when it came to the yearly contracts, you are absolutely right about the timeline, meaning that the negotiations are taking place right now. As you know, we are not forecasting about the development in these negotiations. I cannot give you more when it comes to Q1. When it comes to all the digital products, I think it is fair to say when you look at it is growing quite rapidly for us on a combined basis.
We have doubled the group's digital revenue in 2014. If you look isolated, for instance, on advertising-led on demand, it is still low single-digit part of free TV. It is growing. More important is, of course, that the combined digital products that we are having are making sure that in spite of that advertising market going down and cut-level decline, that we are growing the combined Nordic business. There is a swing where we right now offset the decline in traditional business with the digital business that we are having. We are capitalizing on these consumer trends, as we also discussed at the Capital Markets Day. When it comes to the advertising ban in Russia, there are two things. It is around SEK 90 million, which is going to hit us here in 2015.
Half of it would 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. That is something we are 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 arrive on the figure that it is around SEK 90 million revenue and around half of it in lost EBIT. What percentage of your content is now local? We have different channels. We have a channel called TV1000 Russkoe Kino, which we might be able that is what we are looking at right now since the law came through last week.
We are looking at what it would take for us to comply with that law. So it is too early still. But that is one of our channels which might be available to do that.
Actually, I have a last question on CTC. I think they were expected to announce a decision on what they plan to do between Q1 and Q2. So is it a kind of timeline that you are expecting as well regarding your decision regarding the CTC stake?
I think if you relate to what the company has announced on its website, then they have engaged advisors, tax advisors, bankers, and so forth in order to facilitate the mitigation of to comply with the mass media law. 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. I mean, what can you do to mitigate these quite huge currency effects over the next 2 years?
I think what we are talking about is general things that we can do to offset and cost inflation on the dollar effect, make the business more efficient, basically, and prioritize investments and so on. I think that is the general thing we are talking about. When it comes to the currencies itself, obviously, we already started last year, for example, to hedge our U.S. dollar sports contracts, not only in the rolling 12-month forward that we have done historically over as long as I can remember. So the contracts in sports right now in dollar, we hedge over the full contract, probably 3 years if it is a 3-year contract. That has already that has helped us now to delay that effect, for example.
Okay. I mean, there is no possibility to renegotiate deals given this kind of unexpected huge change in the 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. In some markets where it is very, very tough, like Russia, then obviously, it is larger chance to do it than in some other markets. But that is an obvious one we would look at least. But U.S. studios, they are not always willing to do it.
Okay. So all SEK, we should basically see all this, or most of it fall through in the P&L, I mean, from?
I think from a U.S. dollar point of view and content cost, yes.
Yeah. Okay. Good. Then there is a second question.
Maybe just given all the kind of headwinds you're facing with Russia and structural declines in U.S. dollar and all, I mean, are you considering in any way to kind of strategically review your assets and see if there are pieces in a more consolidation puzzle that you can work with? I mean, this is happening across Europe and the world right now.
That is an ongoing project, of course. We have to make sure that we optimize the business and we look for opportunities. That has not changed. As Mathias 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.
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 Engberg of Handelsbanken. Please go ahead. Your line is open.
Yes. Hi. Hi, guys. I was wondering, if I remember correctly, you have something like would it be around EUR 5 billion 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. Yeah. I think I don't really recognize the numbers itself. What you can largely say is that the euro-denominated inflows are the currencies pegged to the euro.
It's largely equivalent to the EUR outflows we have for sports rights and so on. That is largely a neutral effect, you could say. What we're talking about here is it's a one-sided leg, basically, the outflows of U.S. dollar only. That's why we say as well that the rest of all the currency mixes are largely neutral or slightly [inaudible].
Yeah. Sure. Yeah. I just wanted to ask, you didn't really talk at all about how Viaplay did in this quarter. Did it continue to grow very fast or slow down compared to the third quarter, which was extraordinarily strong? Or how did it 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.
Just to give you two figures, then if you look at the kids' content after we managed to make an exclusive deal as well with Nickelodeon, then the kids' content started streams were up 700% in December versus December last year. We have invested as well in a wide range of exclusive series. If you look at that KPI, then you will see that the start of streams was up around 175% in December versus last year, December. The product continues to perform very well. As I also mentioned, with the new partnerships that we have made now with Tele2 and with Chromecast and so forth, it is, of course, helping to get Viaplay out to more customers. We are very happy with the development.
Yeah. Just going back to the question earlier about Russia, I would assume that this is urgent.
This needs to be addressed probably in the first half of the year because you are not going to make the best deal around Christmas 2015, right?
Can you just repeat that? Do we continue?
The question was about when you are likely to announce something on Russia. I am just trying to make sure that this is not something that is going to come around year-end.
What I can assure you is it is a big focus area for us. We are accelerating the process as fast as we can to make sure that we exactly do not end up in a situation to the 1st of December 2015. It is a high priority for us.
That is something, as you also can see from the CTC announcement, that they are very much focused on as well with all the advisors that they have taken on board.
Have you also taken on advisors?
We have done the same.
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 talk about, or? That was the effect of the closed-down of Raduga. Technically, we had negative equity there. We got a positive impact from that net of closed-down costs.
Right. Right. Then normally, in the fourth quarter, you used to have a very high negative contribution or rather payment to minorities, or however you want to call that.
It was 0 in this quarter. Is there something changing in that business, or why is that? I would assume a large part of that is the Czech Republic. Is there something offsetting that in this quarter?
You are right. The large part is the Czech Republic. I have to come back to you if there is anything material that offsets. I can't think of it right now.
Thank you.
We will take our next question from [inaudible] of Danske Bank. Please go ahead. Your line is open.
Thank you. 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? Also, should margins go up year-on-year given that you eliminate 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. You are absolutely right. We will have a negative impact on the top line. We will have a negative impact on the cost line as well. That will obviously be offset by more spending on OPs and the currency impact as well that we talked about here. Just reiterated, the Q1 overall, that's a negative SEK 45 million, negative impact on content cost in Q1 versus last year also.
In terms of these FX changes, 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 sort of top-line measure?
I think what we discussed, of course, at the Capital Markets Day was profitable growth. Given these currency impacts, I think that 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 the Capital Markets Day. That's for sure.
I think when it comes to the overall longer term, if the currency, the US dollar particularly, will prevail at these levels, obviously, we will have to cut out a little bit more of the inefficiencies and so on that we see in the business. 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 Sarkamies 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 third-party networks was quite high in the fourth quarter. Could you discuss this development? Is it driven, for example, by the fiber rollouts in Sweden? The second question relates to also pay TV Nordics.
You already discussed ad price increases, what about pay TV? Can you discuss potential and plans for price increases in the pay TV Nordics and also in Viaplay? Thanks.
When we look at the fourth quarter, when it comes to intake of customers, we grew. We had an increase in third-party network intake of customers. That offset the negative development we had on the DTH platform. I don't know. You talked about the churn in third-party networks, if I understood the question right.
I meant churn from satellite to third-party networks.
Yeah. I don't think that you can give a correlation exactly there, to be honest. Of course, people are moving around. A lot of people are moving. They might take our product in IPTV, or they might take Viaplay or something else.
I think for sure is that we grew combined Viaplay and our premium base. I think that is what we are focusing on right now. When it comes to ad prices, 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. It is very difficult to give comments there. When we talk about price increases as such, we have reasonably increased prices well on Viaplay from 79 to 89 SEK. We have made a range of increases when it comes to our DTH platform as such. 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.
Particularly looking at Viaplay, it is obvious that with the traction the product has right now, the usage, and the price point at 89 SEK for a full month of movies and series, that is definitely a product which has much more potential in it. Also, as you saw last year, we also increased prices when it comes to our sports offering. 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 Jørgen 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.
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 22nd, and our AGM will be held on May the 13th. I very much hope to meet as many of you as possible before then. So far, goodbye for now.
Thank you. That concludes today's conference call. Thank you for your participation.