Good morning and good afternoon, ladies and gentlemen, and thank you for holding. Welcome to the MTG Q2 2013 Results Conference Call. At this time, all participants are in listen only mode. After the presentation, participants will have an opportunity to ask questions, at which time instructions for the Q and A session will be given. May I also remind you that you can find presentation slides on MTG's website at mcg.se.
Before we begin, may I remind you of the forward looking information and Safe Harbor statement under the U. S. Private Securities Litigation Reform Act of 1995 that this report contains forward looking information based on the current expectations of MTG Management. Although management deems that the expectations presented by such forward looking information are reasonable, such forward looking information is subject to risks and uncertainties and no guarantee can be given that these expectations will prove correct. Accordingly, the actual future outcome could vary considerably when compared to what is stated in the forward looking information due to such factors as the prevailing economic and business environments in certain markets and the impact of the eurozone crisis in particular commercial risks related to expansion into new territories political and legislative risks related to changes in rules and regulations in the various territories in which the group operates exposure to foreign exchange rate movements and the U.
S. Dollar and euro currencies in particular and the emergence of the new technologies and competitors. These risks and uncertainties are described in more detail in the 2012 annual report, which is available from the group's website at w w w.mtg.se and in the group's registration statement on Form 20 F, which is available from the website of the U. S. Securities and Exchange Commission.
I will now hand the call over to Juergen Madsen Lindeman, MTG's President and CEO,
ahead. Thank you, operator, and good morning and good afternoon, everyone. Our second quarter results show a clear positive momentum across the business as we invest in our business to drive future growth and build our market positions for the long term. The highlight of the quarter comes from the free to go regions in the emerging markets, which delivered exceptional sales growth and continued market share gains despite a soft advertising environment in the majority of our countries. This was the 2nd quarter in a row when we reported higher cheap advertising market shares than the commercial incumbent in the Czech Republic.
It is also worth noting that we were profitable in Ghana on a quarterly basis for the first time. Our Scandinavian 3 GB Media Houses reported higher viewing shares in all territories, and revenues were stable year on year at constant exchange rates. Our Nordic Pay TV business reported accelerated growth, which reflects the strategic investments that we've been making in content and technology and VIA Play has continued to deliver very healthy subscriber growth with its market leading content offering. Our Pay TV business in the emerging markets delivered good growth, and the higher than anticipated profitability levels did include some positive one off timing and currency related items in the quarter. We will therefore outperform our previous breakeven expectation, but we are continuing to invest as planned in the further development of the business.
We have made significant content investments over the last year and the benefit of this can be seen in the important strategic partnerships where we have renewed and extended these partnerships with the leading third party content distributors in the Nordic region. These companies such as Telenor TVC, Boxer TV 2 Norway and Rigg TV. We are, of course, encouraged by the fact that these long term partners see the value of our strengthened content and product portfolio and package offerings of genre specific relevant content for their customers. And these deals will further increase the penetration of our channels with our partners. We launched FGG X, our digital accelerator in June as a group wide initiative to provide platform for the development of our existing and new digital offerings.
We have led the way in this field with our free TV, A Watch services and pay TV, S Watch services and exciting new products such as Lite TV and VIAGEN. Now is the time to step up the speed and ambition for the group and MGD X would provide the X factor for us in this key area. We have also now enhanced our studio presence with acquisitions of DRG and Novemberfilm. These are important deals for us as was the acquisition of Abrica Latino last year. We are committing to creating, producing, owing and distributing more high quality, original, local and relevant programming in all of our markets, and you should expect us to do more in this area moving forward.
With half of twenty thirteen behind us, we can see that the actions we are taking are having the desired effect with significant momentum in our core operations, and we will continue to develop and invest in this momentum despite the fact that we are now in the smallest sales and earnings quarter of the year. We continue to generate healthy cash conversion levels boosted by the ongoing quarterly dividend from CTC Media. We paid out our highest ever annual dividend in May and still ended the quarter with very low gearing. We continue to review a number of organic and M and A driven opportunities to invest in the future growth of the group and shareholder returns. Now as usual, let's briefly review the performance of each of our businesses and start with the Scandinavian 3 gs operations where sales were stable at constant exchange rates.
Sales were down year on year in Sweden and Denmark, but we're up in Norway. No independent market data has been published for actual TV advertising market performance in Q2 at this stage, but we expect the Danish market to have declined again in the quarter, the Swedish market to have been at around the same level as last year and the Norwegian market to have grown again. Our combined order and change Sweden, our largest market, showed clear improvement year on year and was up from Q1 2013 underscoring the positive momentum in our programming schedules. We still have work to do with the challenge, of course, and are focused on making further improvements. The new distribution agreement with 3rd party operators that I mentioned earlier have enabled us to secure additional distribution for TB10 through inclusion in Connect Digital's digital cable offering.
Denver, our combined target audience share was up both year on year and quarter on quarter and achieved its highest commercial share viewing level since Q2 2001. The gains reflected the addition of the TV3 sports channels and higher penetration for TV3 following its inclusion in additional third party networks. Again, the distribution agreement that we have signed has made TV3 Sport 2 available to an additional 600,000 UC digital cable subscriber this month and TV3 products have now been included in the Boxer Terrestrial Network. And finally, turning to Norway. We delivered sales growth at constant exchange rates for the first time since Q3 2011.
Our combined audience share also improved versus last year and the previous quarter. As previously announced, we will launch a new and for the new channel. Our AVOD offerings have continued to grow in each of the 3 Scandinavian countries and we increased both revenues and traffic year on year in all three countries. Our Danish operations reported another quarter with more traffic during the 3 month period than in the whole of last year. OpEx for Scandinavian Free to Free Business was up 4% at constant exchange rates in the quarter, and we expect our full year OpEx at constant exchange rates to be in the higher end of the mid single digit percentage point range, which we previously communicated as we invest to further increase our audience share and gradually regain market shares advertising market shares.
Now, let's move on to the Nordic Pay TV business. Revenues were up 7% at constant exchange rates, which reflect the consolidation of the TV3 sports channels in Denmark, ViaPlay subscriber intake and rising premium satellite ARPU. The overall subscriber base continued to grow when including ViaPlay, but the satellite subscriber base was down in the quarter as anticipated. On the other hand, premium satellite ARPU continued to grow in the quarter as anticipated following year on year growth in the HD subscriber base and price increases. We do still expect that the number of 3rd party subscribers will be higher at the end of 2013 than at the end of 2012.
We have also launched a new product for our DTH subscribers and enhanced their TV entertainment package by making ViaPlay available as a multi screen service as a part of our ViaSat satellite offering in Sweden, Norway and Denmark. We raised prices for the stand alone top tier Viaplay package earlier in the year, and we have now raised prices for the combined ViaSat and Viaplay package. The ViaSat platform has meanwhile been further strengthened since the beginning of the year with the inclusion of 2 SBS free TV channels and 2 CMO pay TV channels in and TV2's SafeBot channel and on demand library in Norway. At the same time, our football channels have been made available on the Canal Details cable platform in Norway. OpEx increased significantly year on year as expected as a result of our investment in premium movie and sports content and the evolution of bioplaying as well as the consolidation and expansion of the TV3 sports channel business.
The operating market of 11% in the quarter is in line with our 10% to 12% outlook for the full year. Moving on to the free TV merchant market business where the segment delivered another quarter of outstanding growth with 31% sales growth at constant exchange rates driven by very healthy underlying sales growth and higher advertising market shares in almost all of our territories, boosted by the sales cooperation and the consolidation of LNG. This was an exceptional performance and to be clear, this overall growth level is unlikely to be repeated moving forward. As we discussed on the last quarterly call and it's worth reiterating now, the sales collaborations are structured in the way that we acquire partners' commercial inventory at fixed annual wholesale prices and then sell the inventory as part of the media house offering at the seasonal price variations. This, of course, creates a substantial sales seasonality, so please remember this for Q3, which is the weaker sale period of the year.
OpEx was also up significantly in the quarter driven by the effect of the sales cooperation as well as the launch of Prima Zoom and further investments in programming to drive the ongoing momentum. We expect a similar level of OpEx growth in the second half of the year as in the first half. All of the operations except Hungary were profitable in the quarter with our Ghanaian free TV business reporting its 1st ever quarterly breakeven result since launch in 2008 and ahead of our launch in Tanzania in the second half of this year or beginning of the next year. And now to our pay TV operations in the emerging markets where sales were up 9 percent at constant exchange rates following continued growth in the wholesale mini pay business as well as further year on year satellite subscriber growth and growing advertising revenue for our Russian channels. The satellite platform in the Baltics, Russia and Ukraine added 28,000 net subscribers in the last year.
The total satellite subscriber base was down from the Q1, but up year on year. The different Q1 to Q2 growth trend last year was driven by the Euro 2012 Football Championships, which were co hosted by Ukraine. Overall, with the satellite platforms in both Russia and Ukraine, subscriber intake in January very is very Q4 weighted and this is expected to remain the case. The wholesale mini pay business has added more than 17,000,000 subscriptions since last year and over 4,000,000 in Q2 alone. Sales of our premium aged tea challenged packaging, Russia, Ukraine and the CIS, which began at the beginning of December last year, are progressing according to plan, and we are making it available on an increased number of third party networks.
OpEx was up significantly year on year, but was down from the Q1 of the year driven by some positive one off timing and currency related items. Operating profitability improved significantly compared to the previous quarter and exceed the previously provided expectations for breakeven EBIT result for the full year 2013. However, please note that approximately half of the Q2 EBIT is attributed to be positive one off timing and currency related items. The rest of the improvement relates to growing contribution from Russian advertising sales, which are heavily seasonal and higher subscription revenues from the MiniPay business. We are continuing to invest as previously indicated, and there is no change to the expectation for rising profitability levels in 2014.
Finally, just a quick word on the other business segment where the reported sales and cost decline primarily reflect the sale of BIN24 operations in May last year. Sales were actually up 9% in the quarter at constant exchange rates when excluding the contribution of bit 24, but including the contribution from acquired businesses. However, sales for our Swedish radio operations have continued to decline and the operations will remain loss making. The acquisition of Digital Rights Group in the U. K, November, Finland and Norway will contribute to the performance of MTG Studios operations going forward, but revenues for the segment will depending on production schedules and forward sales.
Our investments in FGGX, our group wide digital acceleration initiative that is that I highlighted earlier, will be included in this segment from Q3. And as we announced at our Capital Market Day, we expect this to add up to DKK 50,000,000 of incremental operating costs in the second half of this year. Please remember that the majority of revenues generated by our digital operations would be accounted for in our Broadcasting segment. And now over to you, Matthias.
Thank you. We reported 3% revenue growth in the 2nd quarter as you've seen in our report. However, when adjusting for the 3% negative currency impact and all our M and A activity, our underlying organic growth at constant exchange rates was actually 7%. And as you have seen, the Swedish krona continued to be strong. And for the first half of the year, the euro and euro related Overall, OpEx grew as planned by 9% as constant exchange rates.
We are on track with the investments we outlined to you last year, and we can already see that the investments, particularly the investments in content, are valued by our distribution partner and our consumers, our group profits were lower year on year, but we still reported an operating margin of 13% in the quarter when excluding associated companies. The cost for our central operations were higher in Q2 than prior quarters, and this reflects mainly 2 things. One is our increased M and A activity, which drives additional costs. And the second point is that share price related costs for our long term incentive plan has also been impacted by the strengthening of the share price. So these are 2 factors that you should probably consider when we move forward as well into the second half of the year.
Our effective tax rate in the quarter was 29%, and we continue to expect the full year 2013 overall tax rate in the P and L to be in the 25% to 30% range as we discussed earlier quarters. Our asset light operating structure continues to enable us to generate very high cash conversion levels and 80% of the trailing 12 month EBITDA for our wholly owned operations was converted into cash flow in the quarter. Working capital today is at an all time low level, and we expect it to increase from that level throughout this year due to the overall scaling of the group and also from our increased programming investments. We ended the quarter with a net debt position of DKK206 1,000,000 following the payment of DKK666 1,000,000 in the dividend payment to our shareholders in May, and this represented a 42% dividend payout ratio and was the highest in the history of the group. Our ambition continues to be that we want to be the fastest growing broadcast entertainment company in Europe.
We continue to focus on investments that will accelerate our future growth and development. And in addition to that, bolt on acquisitions that we announced in June continue to reflect this ambition to drive growth both organically and through our M and A. And now back to you, Kieran.
Thank you, Matthias. That concludes our comments on the result, and we will now be happy to answer your questions. We have a lot of people on this call today and want to answer each of your questions. So to allow time, please limit yourself to no more than 2 short questions each. Operator, can we have the first question,
please? Thank you, sir. Ladies and gentlemen, we are now ready to register We'll now take our first question from Anjouin Deseng Halleres from Exane Paribas. Please go ahead.
Good afternoon, everybody. Thanks for sharing all those information, especially group organic growth, much appreciated. I've got a few questions, please. The first is related to Free TV Scandinavia. I think in the past you used to give us by country how you performed versus the local ad market.
So I was wondering if you could do the same again. And the second sub question on this topic is, can you give us your outlook for your ad revenues going into Q3 and potentially Q4 if you can see as far as Q4? That's the first question. The second question is about Czech Republic. Jorgen, you mentioned that the increase you had in Q2 was obviously partially not let's say one off but local press was saying that now Nova has struck a Local press was saying that now Nova has struck agreements with media buyers.
What do you expect as a consequence for Prima in terms of ad growth in H2? And a third question on this given your solid financial position?
Thank you. Thank you. Thank you. Thank you.
Thank you. Thank you. Thank you. Given your solid financial position? Thank you very much.
Yes.
On the first issue, when it comes to the market development for Q2, we believe that the Danish market will be down. In the Q2, it's important to note, of course, that there's no official figures yet, but we expect the Danish market to be down, and we expect to have outperformed the market. So we have gained market shares in Denmark. When it comes to Norway, of course, we're happy that we managed to increase now year on year sales, but we have again no official market figures there yet. On the other hand, EIM forecast a higher growth in Q2 than we performed, so we believe that we will lose market shares in Norway in the second quarter.
When it comes to Sweden, we believe that is still difficult to say, but we believe that the market would be somewhat around the market last year. But again, I think I'm will come out the 3rd quarter sorry, the 3rd September with the Q2 result. So we have to wait and see how we have performed on the market, but we expect the market to be plusminus the same as we saw in the Q2 in the Nordics. When it comes to the outlook for the market here, what we can relate to, of course, is the forecast from EIM. It is also important to notice, of course, that it is the smallest market the smallest quarter of the year.
What is for sure though is that we believe that the Danish market will continue to decline. But according to IAM, we will see smaller increase in the markets in Sweden and in Norway. But I can't give you any more outlook than that, unfortunately. When you look at Q2 in Czech, yes, it was an amazing performance, 47% sales growth, and it is unfortunately unlikely to happen again. And of course, it was on the back of the sales cooperation.
As we said, it was on the back of launch of Zu and of the back of right pricing towards the media indices and the agencies, of course. And for us, it's important to continue to have this strong product and that's of course our focus. And we have a very strong reach now. We have a very strong lineup of channels. And that, of course, should make us able as well to grow in the Q3 as well.
But the visibility, of course, is, as we said, for the markets is not long it's not that easy. So therefore, it is difficult to say. But yes, we do believe that we continue to grow in Czech. When it comes to when we want to buy out the partner, we have a very good partner, and we have had the partner for many years now. And we have a very good cooperation, and we are happy with the partner.
So I think that is something which will continue as well going forward. And I think just one thing on the Scandinavian market as well also when we now are happy about the fact that we managed to gain shares sorry, during shares, which of course is very good for us. And of course, that is the whole assumption for coming back to gain market shares in Norway and Sweden as well. But also so you just are clear, there will be a lag as well. It is not just because that you perform in 2 months, then automatically the market will follow you.
That is unfortunately not the case. But the assumption for increasing your market share is, of course, that you continue to increase your commercial share during performance, and that is our focus right now. The good thing is that we are increasing, and that, course gives us hope as well that the things that we invest in going forward also will do well.
Okay. Thank you very much.
We'll now take our next question from Stefan Nelson from SEB. Please go
ahead. Thank you. Hi, Jurgen Mathias. I'll start with one question on the Pay TV side. Could you update a bit on the subscriber trends?
We see the details continues to decline. Is it still due to Denmark? Or are you seeing increased churn in Sweden? And also the 3rd party subbasis is declining a bit now where you expect it to improve to the end of the year? And obviously also if you have seen any impact on churn rates from your price increases, which I guess should support your sales going forward?
Yes. When you look at the loss in D change, it is still Denmark. The good thing is that Sweden continues to have a very strong platform. And of course, we are very optimistic now as well when we have launched a new product where we include Viaplay now as a multi screen service. It is, of course, a very strong product.
So the loss is better still. When you look at the 3rd party partners, as I said, we have just launched or just negotiated a wide range of new partnership and new contracts. And of course, we do expect to have even a closer collaboration with our partners there. And also, as we said, we do expect that we will have a higher outgoing base of 3rd party networks in 'thirteen than we had in 2012. So we do believe that we will increase the 3rd party networks.
The price increases and churn, we have not seen anything. Of course, it is just it has just been announced. But still, I think important is that it is a price increase because you have the product. And we see very good traction on the product, particularly as we mentioned on Viaplay as well, but also on DJ's platform in Sweden, which is very strong. So we do not anticipate churn as such because of the price increase.
Okay, great. And my second question comes to costs in Eastern Europe in general. First of all, given that you're actually losing some ratings in the Czech Republic, if this means that you will invest more in order to protect your at least commercial share viewing. And when it comes to Eastern pay to be costs in Eastern Europe, if you know this new guidance means that you're actually going forward not going to invest as much as you anticipated and we should also expect lower growth due to that?
Yes. When it comes to free TVEs, it is the same growth in the second half as we have in the first half, but obviously in terms of OpEx. But of course, we will look at how to improve, of course, the check ratings. We want, of course, PREMI to be strong as it used to be. There's no doubt about that.
But it would be the same growth in the second half as we had in the first half. And then it was East, can you repeat the question again, Suraj?
No. Just apart from the one offs, if you're basically implying that the profitability should improve again next year on these higher numbers. And this means that you're actually not investing as much as you have previously anticipated.
No. I think the good thing, as we said as well, about Pay TV is that it is on the basis of more subscribers intake in the quarter. Good, we have made some enhancement of the contract. And it is also on the basis of better advertising And as you know, it unfortunately sometimes goes up and down in advertising sale as well. So looking at the visibility as well when it comes to Pay is, it is a bit difficult.
Obviously, we're very happy with the development of the Q2, but we continue to have the strategy about enhancing the product. The country is about to being digitalized, as you know, and it is a long, long journey for us. So we will continue the path which we have laid out when it comes to investment in pay CDs.
Okay. So I shouldn't read too much into the slower growth rate and the declining detached sub base quarter by quarter in that case? Or
No. I think what we of course as we said as well, one of the things was this one off where we had the year 2012, of course, which helped a lot and the sales. And of course, therefore, we see a bit higher churn on that one. But we expect to be relevant in the market. We have invested in the content.
We are the leading premium paid movie supplier in the market. And of course, it's good news for us that we see also on the MiniPay side that we can continue to attract more and more customers. And 4,000,000 subscriptions intake in Q2 is of course very good.
Okay. Thanks so much.
We'll now take our next question from Lisa Yang from Goldman Sachs. Please go ahead.
Hi, good afternoon. My first question is on your cost guidance. I mean, can you give us a little bit of color of what you're thinking in terms of content spending in the second half of the year in both free TV and pay TV Nordic? Especially in pay TV Nordic given that you have the phasing out of the new Champions League Premier League and the cost of the HE channels, I mean, should we expect much easier comps? And also on next year, I mean, just thinking, can you give us any color on how you expect to allocate the cost of the Olympics?
And to what extent that could be another hit on your PayTV margin for example? And second question is regarding your distribution agreements that you just renewed for your free to air channels. Is that going to change the level of carriage fee we have seen so far? And what level of growth do you expect for this year and next following those renegotiations? Thank you.
Hi, Lisa. Mathias here. I tried to ask your first question and I leave it the next to Jorgen. I think second half cost guidance, if you start with Pay TV Nordic, I think the easiest way to the easy angle on that question is probably to say that the margins we can we expect to continue to be in the same range as we've had as we outlined the last 6 months, I think. There is no change to that.
And then we've seen that we have some better traction on the top line side, of course, as well. But margin guidance stays the same, so that should be fine. On Free TV Scandinavia, I think we were quite clear on the overall full year cost guidance, the higher end of the mid single digits at constant exchange rates. I think what's when it comes to weighting, I think the weighting is heavier towards the 4th quarter than the Q3. But it's obviously a step change compared to the first half if you see what the first half was.
The third question and then I think you're going to answer the question on free TV margin market and we can take it afterwards if you didn't pick that up. When it comes to Olympics next year, we haven't discussed that yet internally how which where the biggest impact will be and so on and then over what time period. So we will have to come back to that when we get there.
And when it comes to the distribution agreement, I think what you can say about this, for instance, when you get higher penetration like we have gotten now with, for instance, the TV10 inclusion in the Canon 80 Guitar cable universe, it is to a large extent up to us as well to make sure that we capitalize on it by getting more and more viewers in. Today, as you know, 75% of the revenue coming into FreeTVNord is advertising and 25% is MiniPay. But the deals I have and it gives us opportunity to, of course, to reach more customers, which, of course, is very important for us going forward. And therefore also if we do right, we should be able to help our advertising sale and the distribution as such. Okay.
Susie, can you hear me? Yes.
Sorry, just a follow-up question. Actually my question was more on the distribution agreement for the free to air in the Nordics in the Nordics? So all the distribution agreements you just renegotiated and what impact on the carriage fleet will have?
Yes. As I said, it is the distribution agreement, they for the Nordics, they consist of different components. And some of them are, of course, you increase the penetration of your channels in some packages. And by that, you are getting, of course, more carriage fees as such. So that's, of course, a good thing.
I think the other thing is also that where we get the opportunity to come out to a broader audience, which is very important with the penetration increases we're having. And there, the example and that example is up to us, of course, to make sure that we can capitalize on the increased penetration, for instance, like we're doing in Denmark, where we get a higher penetration in the boxer, for instance, that means we get a higher cable piece in network, at the same time as we increased our commercial share of urine, which also means that, of course, we can get higher advertising sales. And the split between the free to air, sorry, the advertising is and carriage fees is 75% of the revenue comes from advertising and carriage is 25%, and we don't expect that split to change.
Okay, great. Thank you.
We'll now take our next question from Baader from Danske Bank. Please go ahead.
Hi. I've got two questions. Firstly on PayTV Nordics. Could you just tell us how much the acquisition of TV 2 Sport added to growth year on year and this quarter? That's the first question.
Give me a second, I believe. I will come back in a short while. I have to figure it out.
I can ask the other question meanwhile. Looking at the FreeTV Denmark and the deals that you have in place with Boxer and Canaligital, You're adding new channels to the Boxer platform 1st July. Could you just give us a comment on how the dynamics work in terms of the MiniPay revenue flows? Will you start to collect revenues from October 1 July? Or is it a postponement of 3 to 6 months on those kind of revenues?
Yes. It's as you correctly say, we have all rated TV3 included in Boxer, and we also will now have T3 Pulse included as well. And we that is not we never comment on the actual deal and how the deals are set up. What we are saying is that we will have increased MiniPay revenue from the Boxer deals and we will have increased penetration. So therefore, it should be so that we hopefully as well will increase our advertising market share.
That is of course the whole idea that you gain that you get more viewers in. And as I mentioned as well, the split will not change. It is still 75 percent of the revenue in Nordic, it will come from advertising and 25% will come from these carriage fees.
All right. Thanks. And regarding TV to sports?
Yes. It's around half of the I think we had around 7% at constant exchange rate growth for PayNordic this quarter and around half of that comes from QB2.
All right. Thanks.
We'll now take our next question from Mikael Lasine from Carnegie. Please go ahead.
Hi. Just a quick question on the financial items, if you could comment and explain how the negative numbers are there in the quarter and what we could expect ahead any one offs in the quarter?
It's Matthias here again. I think there is one off in the financial net in the interest cost. This is a provision that we actually did this quarter. It was a provision interest on tax payments. But we have one of our countries right now, we have a discussion with the tax authorities.
And we've been very prudent that we've put a provision in there, which you shouldn't expect to come back as a one off right now and it's not cash and it's not even decided that we have it. We've been fairly cautious. It accounts for the whole negative in the financial net.
Okay. But roughly how much would that be?
I was I think the financial net was -28 in the quarter, and I think it was very close to that.
All right. Okay. And just also maybe a comment on the other business. Sales were higher than expected there. And is this a new level?
And if you could maybe talk about the drivers for that segment? Thanks.
Yes. That segment is fairly volatile, to be honest, meaning that it depends on the intake of orders that we have for our production unit and also as we said when it comes to DRG and November film and so forth. So but of course, it is quite good that they that we are increasing, meaning that we are getting good orders in. And of course, we the more renewal of these orders, you can say, the more renewals of the show, of course, we will hope forward as well to make sure that we grow that area. And that is, of course, the whole idea with going out and becoming broad with our product.
That's why we have acquired DRG and also November 5. But it is very difficult to predict the growth there because it simply depends on the seasonality as well on from the TV station what kind of business what kind of products do they order, what kind of shows do they order.
Yes. What's the visibility for the second half?
Sorry, just to give you some flavor, in the second quarter, it was the our core STRIX business, so actually was the main growth driver. Just coming back to what Jorgen said, it was.
Okay. And the outlook for the second half, what's the visibility here?
Yes. We might know to a large probably know to a large extent what kind of TV shows would be ordered. Still, hopefully, there will come more in or so therefore, it is difficult to say. I would rather not comment on that to be honest right now.
The only technical thing you should remember as well of course we have acquired a couple of companies that we didn't have for example last year. So DRG for example will come in as well.
Yes, exactly. Okay. Thank you.
We'll now take our next question from Rasmus Enberg from Handelsbanken. Please go ahead. Your line is open.
Yes. Hi. I had two questions. Firstly, on the pay TV side, can you sort of help me understand what drove the acceleration in growth there? You went from 3% growth in Q1 to 7% in Q2 in constant exchange rates.
Was that an impact of your price increases? Or was it purely relating to ViaPlay?
Hi. It's not one single thing there. It's a combination of a lot of things. We have Via Play doing extremely well. We had general price increases that's filtering through.
We had higher we had boxing event, the per view event as well, which was a little bit of a one off effect, but it was not that was a fairly small impact on the overall growth. So I think it's across the board.
But your price increases, have they already taken I mean, presumably, aren't most of your clients on sort of 12 month contracts?
Yes, yes, previous price increases, yes.
Okay. So these are price increases from 2012 sometime or
Yes. No, I'm talking more about the price increase within the beginning of the year for Via Blade, for example, which was a fairly decent price increase for the sports package.
Last year, your pay TV revenues declined a bit in the 3rd quarter compared to the second. Is that a seasonal pattern or is it not?
Yes. We had a very low sales quarter, I think, last year in the Q3. That was all this normally, we take start fees upfront when we sell the packages, and that had an impact that quarter.
Right. And on your new Norwegian channel, have you communicated anything when that will go live? And can you also say if those potential viewers are bundled at the same price as your existing Norwegian viewers?
Yes. What we are saying about the channel when it goes live, it's it will go live in the second half of 2013. When it comes to the bundling, yes, we are bundling our sales. We are delivering same target groups, the same use for all our channels. So it is a bundling to provide to the markets.
Okay.
All right. I don't have any further questions at this point. Thank you.
We'll now take our last question today from Anders Swinburne from Brummer. Please go ahead.
Hello, Antoine Brummer from Brummer. Congratulations to a good quarter, in particular, on the free TV emerging markets. I just have one question left, a detailed question. The minority interest was higher than normally. Is that connected with Czech Republic doing well I.
E. Is it an effect of should we see that in connection with the strong fit in the emerging markets business?
Yes, it's Matthias. Yes, it's entirely the Czech performance, which was extremely good.
So we should basically model higher given that the strong performance in emerging markets continues, we should model higher minorities going forward?
Yes. If you assume the first and you should assume second. Okay. Thanks.
That concludes the question and answer session. I will now hand the call back to Juergen Madsen Lindeman for his closing concluding remarks.
Thank you, operator, and thank you all for your time today. We will announce our Q3 results on October 22, and I very much hope to meet with as many of you as possible before then. Thank you for your continued interest in our work to shape the future of entertainment by delivering relevant local and digital products and services to our more than €100,000,000 in 37 countries across 4 continents. I wish you a good summer and say goodbye for now.
That concludes today's conference call. Thank you for your participation.