Good morning and good afternoon, ladies and gentlemen, and thank you for holding. Welcome to MTTG's 4th Quarter 20 13 Earnings Call. At this time, all participants are in a listen only mode. After the presentation, participants will May I also remind you that you can find presentation slides for this call in the Investor Relations section of mtg.se. I will now, as usual, hand the call over to Madsen Lindeman, MTG's President and CEO, who is joined on the call by MTG CFO, Matthijs Herrmansen.
Please go ahead.
Thank you, operator, and good morning and good afternoon, everyone. Let me start by taking a somewhat longer view reflecting on what we have done over the last 18 months. During this time, we have managed to acquire even more relevant and must see including premium sports and movies. We have further expanded our agreements with leading content producers like Viacom and Disney and partners such as Telia, TDC and Telenor and launched many more channels and digital services on many different networks, platforms, screens and devices in order to reach even more customers. These investments in our 3 core strategic areas content, digital and geographic expansion are now paying off in accelerated growth.
Have delivered the 5th consecutive quarter of accelerating sales growth with a 40% constant exchange rate growth in Q4 and an organic growth rate of 6%. All 5 of our business segments reported local currency sales growth for the 2nd consecutive quarter as we gained audience shares, grew our subscriber basis and increased our market shares in almost all of our markets. We are continuing to invest in this momentum and have recently launched new figure TV channels in Norway and Tanzania, entered the Turkish market, closed the acquisition of the NICE Entertainment, launched a new platform for our wire play services, expanded into the fast growing online multi channel network business in Bulgaria and Sweden. And we were the 1st commercial broadcaster in Europe to be awarded exclusive rights to broadcast the world's biggest sporting event, the Olympic Games. Since the opening ceremony last Friday, we have broadcast more Olympic coverage than ever seen before in Sweden.
Viasa Sport has delivered world class coverage and we have recorded ratings for the Swedish media house with over 50% target audience share every day. The Viplay app is the most downloaded app in Sweden at the moment. The competitive environment is more intense and interesting than ever. And the TV advertising market remains a mixed picture, but investments that we are making are in general positioning us well to capitalize on the ongoing shift in consumer behavior and revenue models. We have a non cash and non recurring impact in these results due to the impairment of the extendable assets on our balance sheet related to the Raroka TV joint venture in Russia.
It is a relatively small business, but the lack of visibility is frustrating and Matthias will take this later in his comments. Now as usual, let's briefly review the performance of our businesses and start with the Scandinavian 3 gs operations, where we are in better shape with higher ratings and sales. We still have things to fix and improve and we have continued to invest but less than expected. And now we are showing the highlights of 20 14, the Winter Olympics, which are on air on TV3 and TV10 in Sweden as we speak. Looking at Q4, sales were up for the second consecutive quarter and stable for the whole year.
Our sales were up in Sweden and Denmark, but down in Norway. The Swedish and Danish tea advertising markets are both estimated to be have been stable in the quarter, while the Norwegian tea advertising markets estimated to have shown low levels of growth. All three markets reported higher average commercial share target audience shares for both the quarter and the year. Sweden has been up every month since the launch of the 4th schedule in September and Denmark reached its high Q4 level since 2000, following the new distribution deals and addition of TV3 Sport channels and Norway was boosted at the end of the quarter by the launch of TV6. Our online audience shares and revenues have also continued to grow in each of the 3 Scandinavian countries.
Paris Hotel is a perfect example of how we can create massive incremental online viewing at the same time as making sure that online also drives traditional linear viewing. We recently further strengthened our leading position in the AVOD space by the agreement with Viacom, which will provide us with exclusive video on demand content from the MTV and Comedy Central channels across the whole of Scandinavia and an exclusive sales agreement. This will boost our viewing and add market shares as the previous linear 3 to 3 sales collaborations with Viacom has done. Office for the Scandinavian FreeTV business was up 5% at constant exchange rates in the quarter and 4% for the year. The increase was slightly lower than anticipated and reflected the later than expected launch of TP6 and adjustment of our program investments to market development.
We are now in the progress of closing the upfront sales for 2014. We have stronger products today, which is why we have increased our prices in each country. Moving forward, please remember that the Winter Olympics are now boosting sales, but also cost and will therefore adversely impact profits for the Scandinavian free to be business in Q1. Now let's move on to the Nordic pay to be business, Where we are on track with the plan, we set out more than a year ago, competition remains fierce, but our products are stronger and more broadly available than ever before. And we have again demonstrated the upward price flexibility for our premium services.
Revenue were up at 7% at constant exchange rates, which again reflected ViaPlay subscriber intake, ViaPlay price increases, ViaSat price increases, higher HD penetration and the full consolidation and expansion of the TV3 Denmark sports channel business. The premium subscriber base excluding ViaPlay was up on a quarter on quarter basis for the first time since Q4 2011 as a third party subscriber intake more than offset the ongoing satellite decline, but these volumes remain volatile moving forward as they depend on 3rd party marketing and sales activity levels. Viaplay continued to report strong subscriber intake and we further raised prices for the top tier packages in Sweden and Finland during the quarter. We've also rolled out a new infrastructure for ViaPlay, which will significantly enhance the ViaPlay customer experience. OpEx increased significantly as expected and we invested in content, buyer play and the consolidation and expansion of the Q3 sports channel business.
EBIT margin came in at 12% for Q4 and 11.6% for the full year, which is within the range that we previously provided. We continue to expect a margin expansion in 2014, but again, please remember that the Winter Olympics would boost sales and adversely impact Q1 profits for the Nordic Pay TV business too. Now moving on to the Free TV merger market business where we have seen high levels of growth throughout 2013 and we have continued to invest in this positive momentum. It is now of course tougher to grow given the soft market conditions, very difficult comps and competitors that are investing more in order to regain shares. Q4 was another quarter of outstanding growth with sales up 18% at constant exchange rate.
This was driven primarily by our sales corporations, but also by healthy underlying sales performance and the acquisition of Netinfo, the leading digital company in Bulgaria. Our Pan Porch and Bulgarian Media House audience shares reached record new all time high quarter levels in Q4, but we have continued to face ratings pressure in the Czech Republic. OpEx was also up significantly due to the sales corporations as well as the launch of Prima Zoom in Q1, further investments in programming and the preparation for the launch of TV 1 in Tanzania. Moving forward, the 2013 sales corporation will now fully will now be fully analyzed in the comps. Our competitors in the Czech market is determined to regain market shares by offering price discounts and investing in programming, including the earlier launch this year of their spring schedule.
We can already see that our Chegg sales will therefore be down year on year in the Q1 and this will make growth hard to come by for the whole segment. Our Q1 result will also be impacted by the investments that we're making in the new channel in Tanzania and the broadcasting of Winter Olympics in the Baltics. And now moving on to our Pageau operations in the emerging markets where we have enjoyed continued healthy growth during the year and profits have been flattered by one offs, but have still been higher on an underlying basis than we expected at the beginning of the year. Sales were up 20% at constant exchange rates and were driven by MiniPay subscription volumes and Russian ad sales on our pay channels as well as some positive timing effects. The wholesale mini pay business added close to 1,000,000 subscriptions in the 4th quarter alone and our satellite business subscriber base grew by 24 1,000.
We continue to roll out our HD channels in Russia and the rest of CIS with growing, but still low volumes. Leaving aside the non cash radical asset write down that we take at a group level, segment operating profitability improved significantly compared to the previous quarter and exceeded expectations. However, please note that Q4 was boosted by the seasonal impact from the Russian ad sales and also included positive one off effect of around $15,000,000 We're continuing to invest as previously indicated and there is no change to the expectation for the rising profitability levels in 2014. And now finally to the MGD Studios, MGD X and radio segment where we clearly now have scale on the Studio side and we're investing in the group wide acceleration of our digital development and capabilities. This is an important and relevant business for us and represents 14% of group sales in Q4.
Sales were up 87% at constant exchange rates and primarily reflected the consolidation of the acquired businesses NICE, DRG and November Film. The underlying 13% organic growth was attributed to be strong to a strong performance by MGD Studios, driven by solid performance across the board. The newly acquired NICE Entertainment has scored another hit with award winning feature film The 100 Year Old Man, which premiered in December and is now ready for distribution to over 40 countries. We have completed the acquisition of NICE Entertainment, Taken together with the previous complementary acquisitions of DRG and November Film, we have now quadrupled in size and in revenue terms. We are the clear number one content production group in the Nordics with an expanding emerging market footprint, production companies in 15 countries and a leading global distribution capability.
MTG Studios profit were also up significantly in the quarter, which is the strongest sales quarter of the year. Moving forward, please remember that Q1 is then the seasonally weak sales period and this obviously has a major impact on profitability in this quarter. Our region and Baltic radio business continued to make money, but this was partly offset by reduced losses for our Swedish radio business, where we have been making changes to improve performance. Our digital expansion is accelerating ahead of plan as MTG drives our efforts to MCG drives our efforts to grow on demand video consumptions across our markets through online advertising, subscriptions and other revenue models. Splane multichannel network business in Sweden and the NetInfo Online in Bulgaria are just two examples of the exciting new areas for us.
Net info is a clear leader in the Bulgarian online space. Splay is growing fast and has had over 360,000,000 video views across 88 channels since its launch in February last year. The channel had 2,700,000 subscribers and this adds interesting and relevant opportunities for our advertisers to engage in attractive audience groups and that is particularly in Sweden. So in summary, 2013 was a year of investment, operational accelerations in our 3 key strategic growth areas: content, digital and geo revenue expansion. And these investments are paying off in accelerated growth as our products become more relevant and broadly available.
Competition is intense. Comps are tough. Market growth and penetration vary, but we are well positioned to capitalize on the changes in consumer behavior and we are in very healthy financial position. We'll continue to invest in this momentum that we have created and also to return cash to shareholders as you can see from today's announcement of our highest ever dividend payout ratio. That completes my comments on the operational performance.
So now over to you, Matthias.
Thank you. As you've seen, we reported 14% revenues growth in the quarter, which is the 5th consecutive quarter of improving growth rates. When adjusting for negative FX effects and the growing contribution from acquired businesses, our underlying organic growth at constant exchange rates were up 6%, which is at the upper end of our peer group. And also for those of you who haven't remembered, it's the highest ever growth and revenues in the history of the group. We achieved record sales growth levels for both our emerging market free TV and pay TV operations last year.
Our Scandinavian free TV operations have returned to growth. Our Nordic pay TV business have continued to perform at the upper end of our expectations and our studio businesses have now been scaled up substantially. OpEx has grown as we invest in organic and acquisition led growth. The 10% growth on an organic basis indicates that we're on track with the investments that we outlined to you more than a year ago. And it's clear that these investments are paying off now in driving our top line growth.
Operating profitability is obviously impacted by our current investments, but the combination of a higher contribution from CTC Media and various non cash net financial items, which primarily is a CDN option revaluation, has resulted in an increase in the net income and earnings per share in the quarter, when excluding the non cash and impairment items that we told you about. As you've seen as well, we decided to impair the full value of our investments in Raduga in the quarter. And just to give you a feeling for the scale of this fifty-fifty joint venture that we have there, revenues that we had in 2013 from this was less than 0.5% of the group's revenues. And also you may remember from last quarter that this type of joint venture with no controlling influence have to be deconsolidated from 2014 based on new IFRS rules, which is independent of this impairment that we talked about. The reason for this prudent approach that we have taken is that the ongoing uncertainty and lack of visibility surrounding the licensing status and the requirements for the business moving forward.
And it's to be clear as well, we're obviously supporting the company in all the efforts in trying to fix the situation and clarify that for the future, but we're committed to the to the business. Our return on capital employed remains very healthy at 29% and we have a 25% return on equity ratio for the year. CapEx levels as you've seen has increased as predicted and as disclosed due to the investment that we're making particularly in our new playout center in the U. K, our ViaPlay platform and also the new MCG X development that we talked about. Looking at the cash flow and the cash flow from operations totaled SEK1.3 billion for the year, which is down from SEK300 1,000,000 from last year and reflects of course the earnings development as we've seen.
Our full year cash conversion level however is continued to be very high with 77 74% of the earnings converted into operating cash flow. We have made acquisitions during the year with a total value of SEK905 1,000,000 and our financial position still remains very strong in spite of that with a net debt of 0.5 times trailing 12 months EBITDA. We also have SEK 5.6 €1,000,000,000 of available liquid funds at our disposal and we have recently refinanced our long term facilities on attractive and improved terms and structures. In the beginning of this year, we also started to diversify our funding sources by issuing short term commercial papers in Sweden. And we are also at the moment considering looking into further diversification possibly into the local Swedish bond market, which we are still exploring.
We therefore have the financial flexibility and firepower to invest in future organic and M and A led growth of the business, but also continue to deliver healthy cash to their shareholders. The Board has therefore proposed an annual dividend of SEK 10 point 50 for 20.13, which represents a record high payout ratio of 56% excluding the non recurring items and is also comfortably in line with our policy to pay out at least 30% of recurring net income each year. So with that good news back to you
Jorgen. Thank you, Matthias. Yes, that concludes our comments on the result and we will now be happy to answer your questions. Again, this time we have a lot of people on the call. So please, strict yourself to maximum 2 short questions so we can make sure that we can answer all your questions.
Okay. Operator, we are ready with the first question.
Thank you, sir. Ladies and gentlemen, we are now ready to register questions. We will now take our first question from Lisa Yang of Goldman Sachs. Please go ahead. Your line is open.
Good afternoon. I will leave myself to 3 questions. The first one is on PayTV Nordic and I think the stabilization in the satellite subscriber base is a very encouraging sign. So just wondering if you can give us more color. Do you think the subscriber base going forward could basically stabilize?
And is there is a sign of the situation, especially in Denmark, has improved? Secondly is on free to our emerging markets. I'm just wondering why the cost increase was so high in Q4? And how much of that was related to the start costs associated with Tanzania? Was there any kind of cost moving around from Q1 into Q4?
And third one is your basic margins at PayTVNordic for 2014 and the cost growth. I mean Q4, it's still growing 11% despite the ease of comps and the phasing out of investment in the HD channels and some of the sports costs. So just wondering what kind of sensible run rate do you expect to see going forward? And really what kind of margin improvement do you expect to see in 2014, excluding the cost of the Olympics? Thank you.
Yes. I will answer your first question on the pay TV in Nordic and subscriber. I think, of course, it is good news. And as we also discussed that in the 3rd quarter call that we have made a lot of good campaigns with our partners on the cable networks. Of course, why the cable networks or 3rd party networks grew in Q4, because there was a lot of good campaigns around our products.
When it comes to DTH, we have enhanced the product. We have invested in the product, as you know, over 2013 as well with Premier League coming in with sports channels and also with the deal we made with Telenor around the prosimme channels and so forth. So the content has improved. It doesn't change with the fact that we do see that DTH will decline going forward. And it's going to be offset by increased third party channels that is difficult to say and that we cannot say anything around at this stage.
But yes, it is of course enlightening and very good news that we managed to grow the combined premium subscriber base in Q4.
The second question there on FreeTV Emerging Markets cost growth in Q4. I think one of the big drivers is obviously the consolidation effect of net info. We also continue to invest in programming I think over the Q4. And then finally as well we started to take cost for Tanzania as well which were the key drivers of that. And as you remember as well last year in 2013 was the 1st year we entered into these sales corporations as well which year on year had an effect as well.
The third question, I didn't really understand. So maybe I don't know if you can repeat it or?
Sorry, the I guess it was the cost growth guidance for Piacomir Nordic. I mean in Q4, it looks like it was still very high despite the fact that you have faced some of the Champions League or Premier League costs on HEJI channels costs should have phased out theoretically in Q4. So just wondering why should we see that similar run rate going forward?
No. I think we continue to invest. All the investments we've done throughout 2013 of course would carry with us into 2014. I think the if you look at on the profitability side, I think that's where we stick to the guidance or the expectation that we will be up 14% versus 13%. And that obviously gives you some flexibility depending on the cost base as well depending on how we see subscriber develop etcetera is developing.
And any kind of guidance on the margins on PayTV Nordic?
Not more than what we disclosed. Okay.
I think
just remember as well that the Olympics was forced coming in, in Q1. So that will have a small impact in the Q1. But overall, as we stated in the report as well, for the full year, we still stay with the view that margins on 2014 will be up again on
Great. Thank you.
Our next question comes from Stefan Nelson of SEB. Please go ahead. Your line is open.
Thank you. Hi, guys. I also thought talk ask a bit about pay TV. If you don't mind, I'll take the questions one at a time. But first, if you could give us an understanding if the stabilizing the the THIRD party in Q4 is it an Olympic effect?
Or how is the mix in the different markets?
I think what we have said and of course the Swedish platform is continuing to do very well and the TTH platform. The issues that we have had historically has been mainly in Denmark. So no change there actually. Of course, right now it is cool that we have the opportunity now to show the Olympics also to all the detached customers. As you have seen as well, we have launched the right range of new Olympic channels.
So of course, we expect and hope that that enhance their product understanding with us and their satisfaction. So we continue to invest in the platform and the Swedish platform is doing good.
Okay. So we should expect that the situation in Denmark is still a bit more difficult. Is that what you're saying? Or is it that state like
Historically, the situation in Denmark has been the main issue. It is still an issue to the it's improved a bit. Of course, as you can see the figures as well. But it is still an issue in Denmark and the Swedish platform is strong and that is part
of the biggest.
Okay, great. My second question a bit more long term. I mean, how do you think we should look at kind of the pay to be margins in the
basically we'll get another hit on the margins at that stage.
And then you have to basically we'll get another hit on the margins at that stage and then you have to work them up the next 2 years? Or should we see the profit as more even from here on? Kind of just kind of elaborate a bit on how you're looking at this longer term?
Yes. It is all fairness. It is on purpose that we have made these long contracts. But then exactly we know what we can expect going forward from until at least 2016, 2017 in terms of the movie cost and the large extent to large extent the sports cost that we're having as well. But we don't know the competition at that stage there.
And we don't know what is happening and therefore it is very difficult to guide or to give you any forecast on margins. I think good news is that we every day get more and more Pay TV subscribers in our business, inclusive via play. And that is, of course, very important going forward because the more customers we have, the better opportunities hopefully we have to prolong these agreements going forward as well. And that is, of course, our focus is to make sure that we are very strong in terms of customers when we are going to prolong these content deals. But how the competition will look like in 2 years from now, it is very difficult to predict and what content to go on.
After. I think good news is that we have secured now the Champions League. We have, as you know, now Olympics coming in again in 2016, the Summer Olympics and so forth. So there's a wide range of things which of course will help us going forward and hopefully will encourage customers to come our way.
Okay. Could you give us any feel for how the kind of the cost inflation of sports is looking if you feel that the pressure is as strong or if your main competitors kind of started to pull back a bit for upcoming negotiations?
Yes. I think that I think good content, relevant content, strong content like sport that is there's always somebody who finds that interesting to buy. And therefore, you should not see decreases in very high sports content, very important sports content. That goes without saying. But I can't give you any guidance or anything around that because it simply depends on the competition.
It depends on how the market looks when we have to prolong these contracts.
Okay, great. And finally
on the ARPU. So that
was, I guess, slightly less positive growth given that you raised prices quite
a bit. It's still just
up 2%. So apart from FX, are you starting to see more of a kind of a percent. So apart from FX, are you starting to see more of a kind of a shaving off the subscriptions to smaller packages that that trend is starting to impact on the premium subs?
No, I don't think you should draw any major conclusions from that. I think the only thing that we see is, of course, the penetration of multi room is not as high as it used to be in HD as well. It's getting closer to full penetration. But thinking about as well as excluding FX, it's up 4% still. So it is still quite okay from our point of view.
And we discussed the longer term outlook that we should see low to mid single digit growth on ARPU. That's for us, it's nothing really new, I think.
Okay, great. Thanks so much.
Our next question comes from Adrien de Saint Hilaire of Exane. Please go ahead. Your line is open.
Good afternoon, Jorgen. Good afternoon, Matias. Thanks for taking those questions. I'd like to focus please on Free TV Scandinavia. Jorgen, you said that the Olympics would have an impact on the margins of the business in Q1 in Free TV Scandinavia.
Could you be a bit more specific for the full year? Would you expect margins to come down? Or would you expect absolute profits to come down? Or are you confident you can recoup part of the investments throughout the year and maybe manage to get flattish margins and improved profits? That's the first question.
And the second question is, if you could comment a bit on your advertising performance Olympics at
this
stage or not? The Olympics at this stage or not?
Yes. Hi. It is very difficult to forecast unfortunately on the markets going forward. What we look at of course also when we look at investments, we look at the official IIM or we look for Sweden and for Norway and we talk to DRB in Denmark and so forth and also get an understanding of the market development for the year. But as you remember 2013, we started out with high market expectations, then it certainly came down every quarter and all that.
So it is very, very difficult for us to forecast how that would how the markets would involve. I believe when we look at the OpEx and when we look at it's going to be mid single digit exclusive to Olympics like it has been the previous year. So that is what we're looking at. But Olympics, of course, is an extraordinary item which comes into Q1. About the advertising performance, yes, we are selling goods in relation to the Olympics and we are if we look at it right now and we look at what I am assessing market estimate the market to be then we are doing good.
We have good traction on the Olympic product which we should of course have as well. It is a very good content. So there has been very well received by the advertisers. Very early we were sold out when it comes to sponsorship as well. So we will have growth on the back of the Olympics in Q1 in terms of sales.
Great. Okay. Thank you for the effort, Jorgen. I've got one follow-up question for Matthias. Can you tell us about how much you have invested behind MTG X in 2013, so more in H2 2013?
And how much incremental investments there will be in your P and L in 2014 coming from MTGX?
Yes. This is Juergen here. I think we were discussing your question. We needed to precisely, so we answered precisely. Can you say it again please?
Sure. I remember in the previous release you mentioned that you were planning to invest SEK 70,000,000 behind MTGX in H 2013. So I was wondering how much you have eventually invested? And also I was trying to think about how much you will invest incrementally in 20 14 compared to those SEK 70,000,000 just to assess
It's okay. We get it now.
Sorry for
being a little bit confused here. The SEK70 million that we approximately SEK70 million was pretty much bang in line what we had the actuals. And I think for SEK14 million, I think you can extrapolate that into a full year effect and slightly up compared to that. And on top of that, just to be uncertain clear, that's why we talked about CapEx as well a little bit. We have increased the CapEx levels as well because we're investing in, for example, a brand new AVOD platform, for example, across all our territories.
So that's the CapEx is coming up a little bit on top of what the OpEx numbers have you heard.
Sure. Okay. Thank you very much, guys.
Thank you.
Our next question comes from Baidh Dhar of Danske Bank. Please go ahead. Your line is open.
Thank you. Could you just remind us first of all, did you say that you will raise prices on ad prices in Denmark for 2014? And can you remind us how big part of free to be EBITDA is?
I can help you with the first one at least and that is we what we have seen of course on the back of the performance the free to go raise and have had 2013, we have increased a lot of our target groups. And therefore, we have a better product, which, of course, we would like to capitalize on. And therefore, we have increased prices in the different markets on the back of increased or better products. When it comes to the profitability, we as you know, we are not giving out each of the markets. So that one I cannot help
you with.
Okay. And then I got a bit of a longer term question regarding Pay TV Nordics. Now since you've lessened more into ViaPlay and you've obviously stated that you're platform agnostic, the exclusivity deals with SBS in terms of the different satellite platforms are more or less gone. Could you elaborate on whether in the future there is room for 2 satellite providers given that you're expanding into digital product areas rather than DTH?
Yes. I think first of all, I think we've always said that there shouldn't be 2. But now that they are 2, I think what we are focusing on is of course to enhance our platform and that we do in many different ways as you know. And also now when you Via Platinum, all our ViaPlay all our DTH customers now premium customers, they have ViaPlay as well as a multi screen service. So we have very strong focus on enhancing the DTH experience for our clients.
Okay. Thanks.
Our next question comes from Maarten Arnell of ABG Sundal Collier. Please go ahead.
Yes. Hi, guys. My first question is on Nordic Pay. Could you just elaborate on the new infrastructure in ViaPlay? And also could you comment on if you expect continued intake from 3rd party networks?
Yes. First on Viaplay and the infrastructure, I think what we have been doing the last year is, of course, that we have invested a lot in content, as you know. So that is, of course, very important that people, they have something good to look at. At the same time, what we have done is, of course, that we have invested in the user experience. And that is why we have now changed to a new system.
We have teamed up with some of the big American companies who is also doing OTC already and have actually quite enhanced setup right now in order to make sure that we are at the same time giving good content experience also give very strong user experience. And I think you can see that already now when you look at the Olympics for instance where there's a wide range of features which are new and we can see for sure is enhancing the viewing as well and have got already now knock on wood very good feedback from the user experience. So that is a very important area for us. At the same time, of course, we have good content to show on this infrastructure. When it comes to the 3rd party networks, as I said earlier, it is unfortunate not us who is controlling all the customers in the 3rd party network and the marketing.
They have a lot of other things they probably market. But we can see when we do strong marketing campaigns together with the 3rd party networks, it pays off. And that was what we saw in Q4 as well around the Christmas campaigns. And of course, we hope and we encourage our partners there to do even more when it comes to our products and marketing in order for them to sell more products in their networks as well. But to give you a forecast on 3rd party network sales that I cannot do unfortunately.
Okay. Thanks. And then the second question on Czech Republic. Could you just repeat there a little bit what you see there? I think you mentioned that you see sales being down in Q1.
And what do you expect after that if the situation stays as it is at the moment?
Yes. I think what we know is what we can see right now and that is Q1. And there we have seen where CME has been very aggressive or the model has been very aggressive in pricing in 2013. That for sure has come the other way now in 2014 where they are very aggressive discounting in order to get shares back and also investing quite heavily as well. And then of course, to some extent that of course hurt us at least in Q1 now and that is what we can relate to right now.
The channel the media the portfolio we have in Czech is still very strong, but we have said throughout 2013 that it was to some extent the various change behavior from the competition, which also led to our very strong sales increases. And we said that also in Q3 that you should not expect going forward the same levels of growth because of semi being so aggressive. And that is what we can see right now. That is what we have the visibility for Q1.
And what are you doing in terms of ratings? How are you investing? Are you ramping up?
Yes, we are. But again, we had a dip in the second half in twenty thirteen. And I think what is important is that we now find the right content again, and that is what we're doing right now. So it's just not just an investment game. Again, as it is in the other territories, it's about finding the right content and that is what we are trying to do.
But yes, we are investing a bit more as well in order to make sure that we meet them somewhat, the CME guys.
Okay. Thanks very much.
Our next question comes from Rasmus Engberg of Handelsbanken. Please go ahead. Your line is open.
Yes. Thank you. Thank you. Good afternoon, guys. Can I start with asking you again what you said about MTG X?
Did you say SEK 70,000,000 for Q4 or SEK 70,000,000 for the second half of the year as a sort starting level?
It was the latter, euros 7,000,000 around €70,000,000 for the second half of the year. Okay. All just to be clear, so all in line what we discussed before this year.
Yes, yes. Sure. And can you there are so many moving parts in that, MTG X, radio and studios. Can you give us a ballpark figure of what the pro form a sales was in Q4, if you had that full consolidation of your acquisitions?
Not off the top of our heads. We don't have it just we'll take a look and then come back
during the quarter. And can I ask you, do you anticipate that that business area, if that's what we should call it, if that will be profitable or breakeven or loss making for the year?
I mean, we don't normally give guidance on segment profitability. But of course, we expect to improve the radio Swedish business 2013. We expect the studios business to be profitable as well. So
And that is up against
Some hints on the ex Yes.
Sure. Thanks. And then just my final question. When I look at what you report of Bulgaria, Czech Republic and the Baltic, on the EBIT line there, you're massively down compared to the Q2. And if I look back historically, the Q4 has tended to be somewhat bigger than the second in terms of EBIT.
So I'm just trying to figure out whether that is due to a very big cost increase in Q4 or whether it's because at norm sales in Czech Republic in the second quarter.
I think it's like we've said before. It's we've done investments, as Jorgen said, that in Czech. We had some ratings declines there as well. So that's impacting our top line. On the cost side, we have net info adding to that as well.
So and finally, the Tanzanian investment that we're starting to make before the launch. So I think those are the three effects basically.
Okay. Thank you.
Our next question comes from Anders Vennberg of Brummer. Please go ahead. Your line is open. Please go ahead caller. Your line is open.
Sorry, my question has already been asked. So please go on.
Okay. Thank you. Our next question comes from Janssen Hasson of Bluebay Asset Management. Please go ahead. Your line is open.
Hi, guys. Thanks a lot for taking my questions. A couple of things on the Czech competitive environment. So you mentioned that there's aggressive price discounting coming through with CME. And I just wanted to understand, I mean, are we talking about going back to the levels of 2012?
Because I understand that after they put in price increases last year, there was a rumor that you guys did as well. So has that eroded your ability to increase prices in the market, if that's something you were considering? And then secondly, where do you see sort of market share settling maybe in 2014? I understand you typically sign up with the ad agencies sort of by November of the previous year. So you should have a good idea for what your market shares are looking like.
And how have those developed now that you have the buying agreement with TV Barandov as well?
Yes. Again pricing, it is very difficult to say anything around Q1. I think what we are seeing is that definitely the customers and the way we're talking about and talking to the pricing is going down from 2013. And that is of course, I reckon in order to gain some of the customers back to gain back shares. And that varies from different segment, different customers and so forth and so forth.
And hopefully some customers are more difficult to get back because they were happy being with us and saw our delivery. So it is too early to give you anything actually on check right now. And the yearly been So I cannot help you on that one. I think very important for us is that we focus on our business and make sure that whatever campaigns we get in and demographics that we get in, we deliver the campaigns with the customers are giving us. I think it is I think perhaps we could get more money back to the market and that is of course still to be seen because a lot of money went out of the market last year.
Remember the market went down because of the increased pricing. But I cannot give you any more visibility to see if we don't have it right now. So that will be guessing and that is probably not so
good. Yes. So just on so then last year, did you try and follow CME's lead on price increases? And has there sort of backtracking, has that harmed your ability to do so maybe this year if you were considering it?
I think our strategy is, of course, always to make sure that the return of investment on the product that we are selling is optimal for the customers. And TV is a very strong medium. And yes, we increased prices last year because TV is a very strong reach medium. And therefore, of course, we increased our prices. But we didn't increase the prices to the extent that we priced ourselves out of the market like somebody else eventually did.
So that it's and we do that as well this year, of course, discuss what our advertisement can do to different customers' products. And that is an ongoing discussion. So our prices will reflect that as well. Great.
Thank you.
Our next question comes from James Harpel of Alta Capital. Please go ahead. Your line is open.
Thanks. Our question actually was has been answered.
Could you give us a second?
Just actually we'll have just one our first question was answered. Can we ask like one question just? Has is
that okay? Yes.
Okay. So has your total ad share of the total market shares in TV ads in Czech Republic and Bulgaria have changed? If it does, do you believe it's sustainable?
Yes. I think what you saw in 2013 was that we increased our share in both Bulgaria and of course in as well in Czech that you could see the results that we came out, the growth rates were much higher than the market growth. And what we are seeing right now is, of course, a strong effort from our competitors to come back. And that's, of course, something which we need to understand what to do about.
Are you talking about CME?
Yes. No. There are other companies there as well. A lot of TV companies coming in as well.
Okay. Okay. Thank you.
Our next question comes from Josef Unger of Bank Austria.
Hello. Good afternoon. I would like to ask you concerning your margins, for instance, the EBIT DA margin, because we compared your company with other companies like ProSiebenSat 1 or British Sky Broadcasting or Mediaset. And we found out that your margins are a little bit lower than your competitors. And I don't know why.
Could you tell us something about it?
I think the main reason I think is that we are right now investing quite a lot organically in expansion, for example, into Africa, into Turkey, into new territories and also into digital. And one of the reasons is probably if you compare to some of the other companies is that we do a lot of organic investments as well. So I think that's probably one of the key reasons why you would find it like that.
Yeah. Okay.
That concludes the question and answer session. I will now hand the call back to Madsen Lindeman for his concluding remarks. That concludes the question and answer session. I will now hand the call back to Juergen Madsen Lindemann for his concluding remarks.
Thank you, operator, and thank you all for your time today. We will announce our Q1 results on April 25 and our AGM will be held on May 13. And I very much hope to meet with as many of you as possible before then. We have an exciting year ahead of us with many new opportunities. So thank you for your continued interest in our journey and goodbye for now.