Earnings Call: Q2 2014

Jul 17, 2014

Good morning and good afternoon, ladies and gentlemen, thank you for holding. Welcome to MTG's Q2 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 zero for operator assistance. May I also remind you that you can find presentation slides for this call at mtg.se. 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. Thank you, operator, good morning and good afternoon, everyone. It has been a busy quarter, also one that again has demonstrated the benefit of the investments that we have been making in our businesses. This is our highest-ever quarterly sales number, we have, at the same time, also grown our operating profits. The sales growth reflected both the content and digital acquisitions that we have made and the organic growth in our Viaplay and emerging market MiniPay channel businesses. We have also just completed the acquisition of Trace, which has further expanded our footprint from 38 to 131 countries across six continents with now 131 million MiniPay subscriptions. This reflects our focus on investing in businesses with relevant content, digital presence, and geographical expansion potential. These results also demonstrate the benefit of our uniquely integrated and balanced combination of our online and offline advertising subscription and content production businesses. This enabled us to monetize the changes in consumer behavior, such as the rising video consumption levels across our markets. We've been capitalizing on the shift from linear to on-demand viewing for some years now with our Viaplay Catch Up free TV and broader digital businesses and accelerating this development through our MTGx team. This can be seen clearly in the performance of our combined Nordic and free and pay businesses, in particular, which delivered 3% combined organic sales growth and 6% profit growth, even when all three TV advertising markets were down and traditional premium subscribers' volumes also fell. Our key objective is to be the leading digital entertainment business in each of our scale markets, we are making progress towards this goal each quarter. Now, as usual, let's briefly review the performance of our businesses and start with the Scandinavian free TV operations, where sales were down in declining TV ad markets. The media house target audience share was up in Denmark to a record level since 2001, down in Sweden and Norway. There's been quite some commentary recently about the decline in commercial PUT level, people using television. I wanted to take the opportunity to discuss this with you, as for us, it has been going on since 2010 and is happening across Western Europe and the U.S. It accelerates in some months and then decelerates in others, as was the case in the first half of the year when the Olympics boosted commercial pod in Sweden, for instance, and it then fell later in the period. It is important to remember that TV remains the impact media of choice for advertisers, reaching 80% of households each week with attractive demographics, large prime time audiences, and offering cost-efficient returns for advertisers. CPTs or prices have risen as pod has declined, which of course reflects both the supply and demand equation and the strength of TV as an advertising medium. We of course discuss all of these consumer trends and shifts in behaviors with our customers, the media agencies and research bureaus, and it is clear that TV and online video are set to be the big winners of advertising market share moving forward. This is why we have been at the forefront of developing online ad sales through our well-established Catch Up and other services which MTGx has further accelerated. The most recent development here is our new MTG TV Reach advertising product in Sweden, which serves a unique combined reach of 70 million monthly video views through our Viaplay services, our Splay multi-channel network and partnerships with some of the biggest YouTubers, our cooperation with Viacom, and our local cooperation with U.S. TV networks and publishing groups. This structure, of course, also provides for greater segmentation and targeting, creating bundling and programmatic solutions, which are being driven by our new group-wide data intelligence unit called MTG iQ. To put some numbers on all of this, our Scandinavian online advertising sales were up 87% in Q2, with IRM forecasting full-year 2014 growth of 53% in Sweden and 40% in Norway, and continued high growth next year. Furthermore, MMS is now measuring the online audience shares in Sweden, and we can see that our online share has increased and is higher than our offline linear share. All in all, we are investing in products that embrace the consumer trends we have just described and will drive them moving forward. This is what will enable us to shape the future of entertainment, and we are happy that we are capturing and driving the growth in total online video consumption with both our AVOD and SVOD services. This shows the strength and opportunity in our integrated model, which has enabled the 3% sales growth and 6% profit growth for our combined Nordic business. That was despite falling advertising markets and premium subs decline. On the cost side, for our free TV Scandinavian operations, we continue to balance our investments against the market conditions and performance of our ratings. We actually managed to reduce our OpEx despite the launch of TV6 in Norway. Based on the current market situation and forecast, we expect full-year OpEx at constant exchange rates to be up low to mid-single digit percentage points when including the Olympics. This compared with our previous expectation for mid-single-digit percentage point increase in OpEx, excluding the Olympics. Let's move on to the Nordic pay-TV business, where revenue was up 5% at constant exchange rates due to the growth in the Viaplay subscriber base and the higher price points. Our satellite subscriber base continued to decline and was partly offset by the growth in our third-party IPTV base. However, premium satellite ARPU was up again following the price increases introduced over the past year, and this trend is continuing with another 5% increase in our Norwegian premium price last month. OpEx was up 4% at constant exchange rates and primarily due to the Viaplay growth. Profits were up for the second consecutive quarter, and our EBIT margin increased for the first time in over two years. We retain our previous outlook for continued growth and full-year margin expansion this year for the segment. We move on to the free TV emerging market business, where sales were down 4% at constant exchange rates. This was due to the 17% decline in the Czech Republic that reflected the tough comms and price competition. As we said before, this should be seen in the context of the 47% growth in Q2 last year. Our sales in Q2 this year are actually still up 22% compared to Q2 2012. Q3 sales will be down again. We do expect the competitive situation to reset and settle this year, that 2015 can be a year of growth. The good news is that the Baltics and Bulgaria delivered double-digit constant exchange rate sales growth of 12% and 26% respectively, and the pan-Baltic audience share at a new record Q2 level of 48.7%. OpEx was stable in Q2 despite the investments that we have made in Tanzania and the consolidation of Netinfo in Bulgaria. Moving forward, advertising markets remain volatile. We do expect advertising market share gains in almost all of our markets for the full year. The key point here, as before, is operational gearing to recovery when it comes, as the markets are still below 2008 levels. We have considerably higher audience and market shares today. We move over to our pay-TV operations in the emerging markets, where sales were up 8% at constant exchange rates, driven by higher mini-pay subscriptions volumes. The wholesale mini-pay channel business has added over 4 million subscriptions in the last year. We have now also launched our TV1000 Russian Kino movie channel in Israel. Volumes were down in the quarter due to the termination of two contracts in Slovakia and the impact of the geopolitical situation in Ukraine, the local economy, and consumer spending. The satellite pay-TV subscriber base was also down due to both the situation in Ukraine and the ongoing uncertainty regarding VODOKH's licensing status in Russia. OpEx was up significantly in the quarter, which partly reflected the one-off and timing effects that we talked about last year, which boosted EBIT by SEK 25 million. Segment profits were therefore down and also reflected the Russian and Ukraine currency headwind that reduced EBIT by approximately SEK 10 million. Trade will now be consolidated from the beginning of Q3 and add to our sales and profits. The Russian government is in the process of approving recently proposed legislation that would ban advertising on pay-TV channels in Russia from the beginning of next year. Right now, we're analyzing precisely how much such legislation would impact us and what actions we can take to mitigate the effect. Our Russian advertising sales totaled to SEK 103 million in 2013 on our MiniPay channels, which was less than 10% of segment revenue. Based on where we stand today, and please remember that things can change, we estimate that the negative impact in 2015 will be approximately half of the sales. Also remember that such a change would also likely benefit CTC Media in terms of the shift in advertising money. Finally then to the Nice Entertainment Group, DRG, and Radio segment, where sales more than doubled at constant exchange rates following the 2013 acquisition of Nice Entertainment Group, DRG, and November Film. Sales were up 24% on an organic basis and reflected the growth in both our content and our radio businesses. This including a number of scale production for Strix Television, in particular, including Blå ögon or in English, Blue Eyes for SVT in Sweden. MTGx continues to develop according to plan and facilitate our digital development across our territories, and we have just launched our advertising-funded esports streaming service that provides live and on-demand gaming content to the global audience. Our DreamHack Hearthstone tournament in our own esports studio in Stockholm on June 14th-16th attracted almost 900,000 started streams and attracted most viewers from the U.S. and then Germany, Sweden, Russia, and U.K. This is already a truly international product. This is a very exciting new venture and a perfect example on what we want to do in the digital space. It's a product that can travel globally, that helps us reach a younger audience group than before, but still is within our core video business. In summary, Q2 has again demonstrated that we have the right model to capture new opportunities and the prevailing consumer trends. We can see that we are doing the right things to monetize rising video consumption levels by creating and delivering content and experience that consumers love. We have invested to make sure that we are best positioned to capitalize on the changes in behavior and spending patterns, while at the same time, our cash conversion levels have remained high and gearing low, despite the paying out of a record dividend during the quarter. That concludes our comments on the results, and we will now be happy to answer your questions. Again, we have a lot of people on this call today, and we want to answer each of your questions. To allow time, please limit yourself to no more than two short 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 one on your telephone keypad and you will enter a queue. Should you wish to cancel, please press star two. We will pause for just a moment to allow the queue to assemble. We will take our first question from Martin Arnell of ABG Sundal Collier. Please go ahead. Yes. Hi, guys. This is Martin here. My first question is on the free TV business. How much more is there to do on costs here, and what costs are you stripping out? Could you please update us with your target for cost growth for the full year, excluding the Olympics? Thanks. Yeah. Hi. Jørgen here. I think what we are doing, of course, is that we are understanding the different performance of the shows, the market development, and also, I think very important, what is needed in our online business as well. As you know, our content is traveling not only on the offline world but also on the online world. The content that we show on TV3 in Sweden or Denmark, whatever, also goes on Viaplay. You have the sport going on Viaplay as well. You have a lot of AVOD services. It is a balance for us to make sure that we invest exactly what is needed to get more audience, of course, and also to make the right size in connection to the market. Okay. Can you comment on the cost for the full year, if you still target mid-single digit cost growth for Scandi ex-Olympics? I think the outlook we have right now is low to mid-single digits, including the Olympics. Okay, thanks. Also on this trend with the decline of linear television. Apart from this Catch Up service and the Viaplay service, can you explain a bit more on the initiatives that you are taking and are there any news coming out when, for instance, if including the linear channels on your online platform? Yeah. I think what you should look at when you talk about the consumer shift, that some consumers go, as you have seen now in Q2, but has also been there for many years now, that some, they are moving from linear TV, then they move to online world or somewhere else, then they come back. As I said as well, these PUT levels, they go up and down. You can see in Norway it is up 4% in Q2 and 12% for the first half. The PUT level was up in Sweden, of course, in Q1. We have, I think since 2010 or 2009 and 2010, we have invested now in this consumer trend and to make sure that we had products going forward when we saw these trends happening. It's not only in Sweden, it happens all around Europe. Therefore, our AVOD service we have invested in, as you know, the Viaplay services we have invested in as well, the whole Splay services and also the sports service that we have actually had some products quite a while now. That's why it is important to see that the combined business in Nordic now. When you see that advertising goes down, you see that premium subs are also going down in spite the fact we are growing our sales combined free and paid by 6% and profit by 6%. It is a thing which is very important for us to make sure that we have content where the consumers are. Also combined online viewing and free TV viewing is up. You have more online viewing in, for instance, the second quarter in Sweden. Look at the money, as I said as well, we increased our sales with 80% on the AVOD services versus last year, which is quite strong increase and of course, also increase in watching customers there. We are happy that we are getting more traction to the online products. Combined, the model that we see is that when people are leaving, for instance, TV, we would like to make sure that they come our way. Hopefully when they go back to TV, it will also be to our content. Okay, thanks. Just one final. For me, as a consumer, it would make sense to have just one big paid platform or Viaplay platform in Sweden, for example, with you and your competitors on the same platform. Is that something that you see for the future to drive the bigger volumes? Of course, we would love to host such a product. Goes without saying. Okay, thanks. Our next question comes from Stefan Nelson of SEB. Please go ahead. Thank you. Hi, Jørgen Madslien. Following up on Martin's question first, could you give us maybe your best guess or assessment on how over time the linear viewing decline will evolve in percentage points? How much do you think that you can catch up on the online side of that, and how much will be taken by other competitors? Topping up that with how much do you think that the market can stand of price hikes over time for linear advertising? Hi, this is Jørgen. We don't know. The reason why I'm saying we don't know is because you have a market declining in Sweden in the 2Q, when it comes to PUT level. You have a market in Norway going up. You have basically all our markets in Eastern Europe, the PUT level increases. I think what we are focusing on and our products, what they are designed to do, is to capture both. Is to capture the linear world and to capture the online world. As I said as well, we have our new Reach product as well, meaning that we have a broader product now to the advertisers, which we can combine, for instance, with our linear TV channels. We see that as a combination, just not isolated free and online, but it is a combined product. All the media agencies we are talking to, they do forecast that the offline, the linear world, and the online video world is set to have very strong growth. That is our goal. Last year, I can tell you the PUT level declined 1% in Sweden, then it grew again in Q1, and now it's down again in Q2. It is very volatile. As I said, things we have seen the last couple of years, that is why we invested so heavily in the online world. Sure, I understand. Just trying to get the big picture. When you are all talking about balancing costs, if you are planning for a free TV business that is growing in total, or if now this combined operations has more of a flat development and planning your costs for that situation more. It doesn't sound like it when I hear you now that you are more seeing this as a growth area still. No, of course, we do see our free TV operation as a growth area. It goes without saying. The problem is right now that the markets are down. We see, of course, market growth in other territories as well, and it was also forecasted to grow in Sweden, but it looks like right now that the market was down 2% in Q2, but it's still forecasted to grow for the full year by IRM. Again, I think it's important to look at the combined setup, because if we only would have our free TV business, then we would not have a chance to capture all the new trends and consumers, meaning that when they go online, we don't have a product. That is exactly why we have invested. When you look at our content, it travels on free TV, it travels on our AVOD services, on our SVOD service and so forth. I think that, for instance, the Olympics was a good demonstration of that, where we had free TV content, paid TV content. We launched new channels. We had it online as well. It's not for us to save money on content. It is to make sure that we have the right content for the different platforms, and that is what we are looking at right now. That's also why we invested as well with Viacom. We bought Viacom content for our AVOD services in order to have a bigger product, a bigger reach product. We have teamed up with a lot of international players as well to be able to make sure that we can sell on their platforms as well when people go onto them in Sweden and other territories. It is an area where we would like to do much more. Free TV will continue to do good, as I said. It is a reach media, and 80% of the population is reached by free TV as well, and it is not something which will stop overnight. Okay. Makes sense. My second question regarding the Russian ad ban. If your assessment is that the sales impact could be somewhere SEK 50 million, is that also what you would see running through the P&L down to the EBIT line as well? Is there some kind of margin to consider there? Yeah. What we said as well is that we're looking right now, still these early days, we need to understand the full impact. We look at it right now is that we have SEK 103 million in sales and approximately, we say 50%, as we can see right now, is going to the EBIT line. Of course, something will happen in the market. I don't know if everybody will stay in the market, meaning that it might be so that we have the chance to sell more and so forth, and that is something we do not have under control yet. Again, it is next year. We still have six months or so to find out how we mitigate. Of course, it is irritating that it is happening. It goes without saying, we were very proud of our advertising business. It will benefit CTC, hopefully, that there will be more advertising for free TV in Russia. Okay. I know you said two questions. I just have to ask. Your DTH business that's declining. What is preventing you and Telenor to take a step to merge this business, which obviously has huge synergies on the cost side? I don't know that we sit together properly and find out how that should look. I think that has been discussed for many years now, as I said, I think quite important for us is that we are focused on the business we can control and business that we can do something about. That is the businesses that we are progressing with right now and developing, as you can see, it was the best sales quarter ever for us. We are focusing on the stuff that we can control. You still expect it to happen eventually? We have always said that there's no reason for having two DTH platforms in the Nordic. Okay, thanks. Our next question comes from Mikael Laszlo of Carnegie. Please go ahead. Yeah. Hi. Maybe I can continue on the first topic here with the online/offline, and if you could maybe comment on how we can monitor this ahead. We know that the TV viewing is declining slightly, but also that the cost side is increasing. The top line is more difficult to monitor. Have you any comments on this? Can you clarify? I'm not really sure I understand the question. Yeah. The problem is the cost for MTGx, for example. We know that quite well, but not the performance in terms of sales. Okay. I think the simplest way to monitor on an ongoing basis is the statistics in the market and so on. It is MMS and IRM. That you probably, most people already know. I think that is the only real thing that you can see in terms of movements in the market, what trends are and so on. Started streams, shared viewings and so on. Yeah. We do not break up our online revenues versus the linear revenues because as Jørgen also said, we start selling them in packages now as well. It becomes more and more blurry over time to which one is what. Okay. The total, as Jørgen was saying, is looking okay. All right. Can you maybe also talk more in detail about what MTGx is actually doing, what they have been doing this quarter? Yeah, I can do that. They have been doing a lot. Of course, when we see such a growth in the online world, of course, we need to make sure the products are state-of-the-art. They recently made a big deal with an American company who can make sure that we can monetize and we can correctly on all these customers coming in and also to provide them with a good user experience. MTGx has developed Viaplay as well. We constantly develop the user experience on Viaplay. As you know, it's very important for us, not only the content is strong, but also the user experience. They have launched esports. They have launched a new food vertical together with Splay, and I can continue. It is very exciting times right now, some things are doing extremely well, you will see that going forward, of course. Something we will try would probably not work that well, these things will close down. It is very much supporting all the business that we have in all our territories, we have very good growth when it comes to the online business there. Then of course, create some global products like the esports product became overnight because it has bigger traction outside our normal markets than inside where we actually marketed it. I don't know if you want more specific, but I hope they have a pipeline of interesting future products as well, which will surprise the consumers. Okay. Thanks. My last question, if I may. Nice MTGx radio, that side grew quite a lot this quarter. Can you explain the drivers ahead, how we should look at the coming quarters? It's quite volatile. I agree. It is quite volatile. I think it's a lot of seasonality in this business as it is just before. I think the key driver right now has been a lot of drama. They've been extremely successful, as Jørgen I think mentioned as well, on the drama side. Of course that is driving a lot of revenue, top line, but the margins are probably lower, although they of course bring in additional profits to the normal business. I think that, we expect them to do a lot more strong content and they'll be able to sell that more to both our channels and other channels. Okay. Our next question comes from Terence Tao of Danske Bank. Please go ahead. Thank you. I was just wondering on pay TV Nordics. I've noticed that the underlying cost base has sort of come off in terms of growth, in Q2. Is that mainly driven by lower promotion costs, or could you just elaborate a bit on what we should expect going forward? If you take one step back, I think we increased costs last year, for example, to a higher level. We had the Olympics in Q1. Obviously it's natural that it's coming down a little bit in Q2 now. I think, having said that, of course, there are some quarters you want to spend a little more on marketing and sales, and some you hold back slightly a bit. It's going a little bit up and down, but it's coming down slightly from last year's levels and the Olympic effect. Okay. Could you remind us if there's any major sports rights that are up to be renewed or going to mature over the coming 12 months that we should be aware of? There are constantly some in the market. I think the latest one was Danish football with Danish Superliga, which we managed to prolong for six years, which was quite an achievement. The discussion about rights and when is it good for the rights holder to put them on the market and so forth. I think we have good models around the rights that we are having. We are confident when they come on the market. A final question. I might have missed it, what was sort of the EBIT contribution, the EBIT loss through MTGX in this quarter? I think we discussed before around SEK 150 million-SEK 160 million annually, that we're investing in that and roughly equal across the four quarters. I don't have the exact number, that's still the value. Okay, thank you. Our next question comes from Rasmus Engberg of Handelsbanken. Please go ahead. Yes. Hi. I wanted to ask you first about this business, the Nice MTGx and radio. I think you said in a previous call that you thought that could be around break even for the full year. Is that still doable, you think? I think what we said was that the ambition was that we will have it in break even and making money in this segment, which is still the ambition, I think. We'll see what happens. How is the seasonality there? Is the Q3 in line with Q2, or is it much worse or much better? There's so many different units in there, it's just difficult to. I think it's a little bit like Free TV, where Q4 is stronger than Q3 in the second half. Okay. Q3 is weaker than Q2 or the same or? Yes. Okay, good. Also, with regards to the Czech Republic, do you think that comps are easing in the second half? It's kind of difficult to know whether one should look at just one year back or two year back in terms of that. What is your sort of take on the base comps or the rate of decline in the Czech Republic compared to the first half? I think the main comp that we should remember is that in the fourth quarter, we had quite high spend, particularly in Czech. There you will have the easier comps, I think. Otherwise, if you strip out 2013, which was a very, very strong year, and you exclude the comps 2013 and take versus 2012, you can still see that it's valid to compare with 2012. Okay. If I may, there seems to have been some rather significant cost cutting in Free TV emerging markets in this quarter compared to the first quarter. Is this impacted by some sort of one-off, sort of because of the World Cup, or have you reset your cost base lower in this operation? No, I think it's, as Jørgen has said before, including in Scandinavia as well, we're obviously looking at what the markets are doing. We're trying to balance and looking at the efficiencies on the spend we have. Yes. While investing, of course, in the digital space at the same time. Sure. That's the only thing that it is. It's nothing, fundamental change of philosophy or anything. My question really is, I suppose there would have been reasons to hold back something in the second quarter, given the World Cup, which is a fairly tough comp. Yeah. It's not a major effect. I think that. Okay. All right. Thank you. All right. See you soon. As a reminder, to ask a question, please press star one on your telephone keypad. We will take our next question from Adrien de Saint Hilaire of Exane. Please go ahead. Hello, guys. Good afternoon, everyone. A couple of questions. One is more focused on the short term, one is more on the long term. Actually, two on the long term. On the short term, Jørgen, I think you referred to the forecast for the full year in Swedish advertising and pointing to growth. Do you have any indications that in Q3 the market has indeed rebounded? That's the first short-term question. The two long-term questions, one is, can we get some explanation about why the number of MiniPay subscriptions went down in this quarter? I don't think it has happened many times, so maybe any change in market trends here? Thirdly, and this is really more for long, long-term questions, many of your peers in Europe are investing in multi-channel networks. I was just wondering what your thoughts around this kind of business were, if you see this as an interesting area of investment and development. Yeah. First on Q3, it is still early days, I have nothing else for Q3 than IRM. Just to remind you that IRM for Q3, they believe that the margin will go up with around 0.5%. That is what they have said for Q3. When it comes to the contracts on MiniPay, it is lost contracts in Slovakia and Ukraine. I think still important is, of course, that we are up year-on-year, but we have lost two contracts in Slovakia and Ukraine. When it comes to the multi-channel networks, it's very interesting actually. Luckily, we managed to team up with the biggest multi-channel network in Sweden called Splay, where we managed to become an investor. It is, of course, an area which we are looking at right now. It goes without saying that it is very interesting to see what is happening in this area and also with the content that we are having. I think that was your question. Just one last thing, if you look at the MiniPay business as well, I think interesting now as well is of course that we moved the position forward with the acquisition of Trace. Now we have gone as well from 38 countries to 131 countries where they have some kind of relationship with cable operators. Of course, we hope that we will bring our current content there as well to many of these territories. There's an opportunity for us, of course. Now with Trace as well, we are moving around the 131 million subscriptions. That has actually moved our positions forward quite a lot. Sure. Well understood. I think it's interesting that Trace, being a French company, will be recorded in the emerging markets, but fair enough. They have big also in France. Now we have a lot of customers in France as well. There's a good reason for coming to Paris. That's nice. Yeah. Thanks, Jørgen. Our next question comes from Terence Tao of Danske Bank. Please go ahead. Yes. I just wanted to, a reminder of since you consolidated the free TV emerging market a couple of, I think it was one year ago, or maybe even two. The profitability development in Bulgaria and the Baltics, just to get a sense for what has been the line drivers in that unit as a whole. I think both of them, the way this segment works is that we are investing in some of our areas, like Ghana and Tanzania and those kind of things. Then you have growing profits in Bulgaria and the Baltics. In Czech as well, but now, not. We have problems in the last year, we have lost some revenues, of course. Longer term, compared to 2012, 2011, and 2010, of course, Czech has gone on quite well as well. Bulgaria, could you give us any sense for, is it high single digits or low teens? How should we model that? No, I think if you look at the profitability, the only thing I can say is that we're doing quite well in Bulgaria, and we have built and our team there has been build a very strong product. We think that online, we are doing fairly well in the Nordic countries. In Bulgaria, they are extremely strong on the online side and one of the largest online sales houses in the country. They're doing well. Okay, thank you. Our next question comes from Rasmus Engberg of Handelsbanken. Please go ahead. Yes. Hi. I just wanted to ask you in retrospect, do you think that the TV companies, you included, sold yourself far too cheaply in the upfront agreement? I mean, considering the development we have right now, where spot prices appear to be very high, but there's nothing to buy. That's the first question. The second question is just on the working capital situation we have in this quarter. Is that going to reverse in the third or fourth quarter, or how should we look at that? I think in hindsight, it's always easy to look back. Of course, we all should have increased prices a bit more because there's this shortage of TRPs in the market. If you look at, no one expected that in that way. It would be very difficult for anyone to do it actually at that point in time, probably. As we discussed before, pricing power is or should be very strong for broadcasters in a supply/demand imbalance. On the working capital, yes, there's a seasonality going up and down, and this quarter, I think compared to previous years, we had weaker working capital, and that was mainly due to the fact that we had some prepayments of programming rights and some sports rights as well. That will swing back in the second half, but it's difficult to say whether Q3 or Q4. Second half, we expect a much stronger development of working capital than we see in this quarter. Just to come back to the first question, is it fair to assume that you and your competitors are going to be fairly aggressive in asking for price increases for next year? It seems to me like a fairly logical thing. I think that we should be able to remember as well that we're not market leaders. We're not deciding prices in the markets to that extent, because that's the market leader normally is doing that. We would, of course, hope that they increase prices. They didn't do that this year, I think so. It's not up to us entirely. Thanks. Our next question comes from Stefan Nelson of SEB. Please go ahead. Thanks. Maybe I missed this, I just noted that you have raised prices in Norway on the DTH side again in June. What's the prospects of doing the new increase in Sweden especially because it's a year ago right there as well? What we can say is, of course, that you constantly look at if you are priced right. That goes for our DTH product, that goes for whatever we do, Viaplay and so forth. It is an ongoing analysis to see how can we improve the products, what can we buy to make sure that there are strong attraction to the products so they become more value to the consumer. This is, of course, constantly an ambition for us to make sure that we have so strong products so we can continue to increase the prices on them. You don't have any planned price hikes for Sweden or not, that you want to talk about at least? No, as I said, it is constantly an analysis. What kind of content do we get in? How does it look like? What does the competition do and so forth. There's many factors when we look at the prices. In general, of course, we are happy with the products that we are having. Of course, that's also why that we are increasing prices regularly. Okay, thanks. Our next question comes from Martin Arnell of ABG Sundal Collier. Please go ahead. Yes, hi again. I have a question on the balance sheet and your buyback mandate. Could you just tell us what would have to happen for you to start buying back your own share? I'm just trying to get a feel for how you view the potential to use the balance sheet ahead. I think nothing has changed from before. As you remember that we have used our mandate before. At these times, I think as well it's good to have a strong balance sheet. It gives you opportunity. In being more specific on that, I think it's not, I don't get a specific view right now. It's a board discussion, as you all know. We have the mandate, but we have not decided yet to use it, so we will see. Okay. Thank you. That concludes the question and answer session. I will now hand the call back to Jørgen Madsen Lindemann for his concluding remarks. Thank you, operator, and thank you all for your time today. We will announce our Q3 results on October the 23rd, and I look forward to keeping you up to date with our progress during the coming weeks and months, of course. We typically have a capital market day at this time of the year, and you will have noticed that we have not had one this year. This is due to the change in our corporate calendar, but we will be hosting a capital market day in the fourth quarter, and we'll get back with the date. Thank you for your continued interest in MTG, and I wish you all a wonderful summer.