Good morning and good afternoon, ladies and gentlemen, and thank you for holding. You can find the presentation slides on MTG's website at mtg.se. Before we start, may I remind you of the forward looking information, 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 the 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 new technologies and competitors. These risks and uncertainties are described in more detail in the 2011 Annual Report, which is available 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 President and CEO, who is joined on the call today by Group CFO, Matthias Hermansen.
Thank you, operator, and good morning and good afternoon, everyone, to my first conference call as CEO of MGG. Today is more about the future than the past. It's about the investments that we are making in key areas of content, technology and geographical expansion to drive future growth of MTG. I will start with a short overview before we dive into our performance and plans in each of the operations. Q3 is the smallest sales quarter of the year, but sales were actually up 2 percent year on year at constant exchange rates if you exclude the operations that we discontinued or sold earlier in the year.
All of our broadcasting divisions, except pre TV Scandinavia, reported continued sales growth at a constant exchange rate, while slightly higher cost resulted in lower profit levels in the quarter. Our ratings have continued to improve in Sweden, stabilize in Norway and are fine in Denmark. We expect continued TV ad market growth in Sweden and Norway in Q4, but at lower levels and a continued decline in Denmark. We have taken further market shares in Denmark, expect to gradually recover shares in Sweden, with Norway taking longer. We also now establish as the most watched online commercial media house in Sweden and in Denmark.
Almost all of our emerging markets free TV operations have taken further viewing and add market shares and improve their profitability levels, but we have not seen a sustained return to market growth. When it comes to the Pay TV side, competition is continuing to heat up and that is clear to everyone. However, we have invested in premium movies, TV and sports content to ensure that we have the most attractive multiplatform offerings in the market and that we are well placed to take subscriber market shares in the future. Our Nordic efforts are focused on our premium channel offering and our market leading and fast growing via play OTT service. In the emerging markets, we have launched HD movie channels in Russia and the CIS and added a prepaid satellite service in Ukraine.
Taking all this into account, we currently expect that total Nordic premium pay subscriber base, excluding ViaPay, to continue to decline with stable total Nordic pay TV sales in Q4 2013. The combination of this with investments that we are making and therefore also currently expected to result in lower margins for our Nordic Pay TV business in Q4 2013, but will position us to grow our subscriber base revenues and profit in the medium and longer term. At the same time, the investments that we are making in the emerging markets Pay TV business are currently expected to boost our revenue growth, but result in operating losses for the segment in Q4 2013. Our financial position is now even stronger as our healthy cash flows and the CTC media dividend stream have enabled us to reduce our borrowings to low levels. We have reduced our net debt by DKK1.2 billion over the past year and it now represents less than 30% of trading 12 months EBITDA.
In addition to the operating investments I've described, we're also looking at a number of organic and M and A led expansion opportunities. We have already acquired the Swedish communications operator, Sidious, and signed an agreement to buy out the other half of Q2 Sport in Denmark. You should expect to us to continue to pursue M and A opportunities in our target markets with a focus on content and technology business and broadcasting assets in Central, Eastern Europe and Africa. Now let's go through our core business in more detail. As usual, we'll begin with our free TV business in Scandinavia.
And the official advertising market data for the quarter isn't out yet, but IIM reduces its forecast growth for the Swedish and Norwegian markets to 5% and 4%, respectively. We suspect that the Swedish market in particular may actually have grown less than this in the quarter. No forecast available from DRRB for the Danish market, but it's clear from the July August report figures, which indicated a 17% year on year decline that the market worsened significantly in the quarter, and we estimate that it may have been down as much as 15% year on year. Our sales were down 7% at constant exchange rates in the quarter with lower year on year sales in all three countries following high soda outages and the Olympics being shown on state owned or rivaled commercial TV channels during the summer. We estimate that we lost TV advertising market share in Sweden and Norway, but increased our share in Denmark.
Our Swedish ratings were up significantly quarter on quarter as all of our 4 channels reported increased audience shares. The 4 schedules, which were launched earlier this year, have performed well to date, but there is, as always, a time lag between recovered audience share and recovered market share. TV3 and Pulse both increased their target audience share year on year in Q3, but our combined Danish media house audience share was down as major Q3 plus in particular was impacted by the broadcasting of the Olympics on state owned TV channels. The fall schedule were also launched early in Denmark and have shown good momentum to date. Our combined Norwegian Media House audience share was up quarter on quarter again in Q3 as we continue to take back during shares.
We are still not back to the level of a year ago in a highly competitive market, which is why our market share was down. When it comes to the online viewing of catch up free TV services, the MGG Media House has now established itself as a leading commercial player with the most watched commercial channels online in both Sweden and in Denmark. OpEx was slightly up year on year at a constant exchange rate as lower programming costs in Norway were offset by higher programming costs in Denmark and in Sweden. Segment operating income was therefore down year on year. In terms of outlook, IIM has reduced its forward forecast for the Swedish and the Norwegian TV ad market growth, while there are no forecasts for Denmark, but it is clear that the market would be down for the rest of the year.
We do expect to maintain or increase our Danish ad market share and gradually increase our Swedish ad market share now the ratings are improving. As before, the Norwegian turnaround will take longer, but comps are getting easier and ratings have established. This is not about investing more, but about improving execution. So we are actually now expecting full year OpEx to only be up low rather than mid single digit percentage points this year and to return to the usual mid single digit percentage point increases next year as we look to build on the positive momentum and benefit from the new suit duties we have signed this year. If we now turn to the Nordic Pay TV business, revenues were up 3% at constant exchange rates and premium satellite subscriber ARPU was also up 3% following the previously introduced price increases and continued growth in the penetration of HD service in particular.
The overall premium subscriber base did not grow in the quarter, mainly due to the continuing decline in the satellite subscriber base, which continued to be affected by high level of competition in the Danish market in particular and a shift in the subscriber mix to the basic tier in Norway, but also due to lower growth in 3rd party network subscriber base. This was due to lower subscriber volumes for 3rd party cable networks in Sweden and the impact of the price increase that we have put through in the Norwegian IPTV networks. We've continued to focus on the development of our bioplay online pay TV service and added further key movie, TV and sport content to the SVOD platform, made the service available on Philips Smart TV set, added a download to grow feature and now making the service available on PlayStation 3 games consoles. The office growth in the quarter reflected the investment that we have made in premium movies and sports content for our platform and channels, the expansion of ViaPlay as well as the ViaSat film rebranding, HD and catch up channels launched earlier in the year. Segment profits were therefore down, but our operating margin was in line with the full expectation of approximately 17%.
In terms of our outlook, the sales development in Q4 and moving forward will be impacted by the increased competition and the fact that our satellite volumes have been falling for the past year. This will be offset to some extent by the positive ARPU impact of ongoing DTH price increases and higher HD penetration. We do expect continued growth in the via play and third party network subscriber basis. This is why we have invested to strengthen our all movie series and sports content offering to ensure that we have the most attractive on and offline content offering in the market, so that we can take subscriber market shares in these increasingly competitive markets. Following the addition of 4 new HD channels and 5 catch up channels earlier in the year and the ViaSat film rebranding, we are now adding further 11 ViaSat HD channels and 4 catch up channels to our offering in Q4 and there can be no doubt now about our market leading position in HD services.
Finally, we're increasing our investment in VIABLADE to ensure that we consolidate our first move advantage and market leadership at a time when a number of rival services are now being launched. As a result of the above, segment sales are currently expected to be stable quarter on quarter in Q4, and we still expect to deliver full year operating margin of approximately 17% and a Q4 margin of approximately 15%. Moving to next year, sales are currently expected to be stable year on year due to the continuing fall in premium TTH volumes not being fully offset by rising bioplay and third party networks volumes. The investments that I have described are currently expected to result in a full year 2013 operating margin of between 10% 12%. Now moving on to the free TV Emerging Markets business.
Our sales were up 3% year on year at constant exchange rates and reflected growth in sales during ad market shares in almost all of our markets, but also the year on year impact of the discontinuation of the Slovenian operations. The largest market, the Baltics, the Czech and Bulgaria reported a combined 6% sales growth at constant exchange rates and together represents more than 90% of the segment sales. However, we still we have still not seen any significant trend shift in the overall market development at this stage. The LAPLAN LNG operation contributed their 1st full quarter of sales and cost, while the year on year comps were also impacted by the discontinuation of the loss making Slovenian operations and of the depreciation of the Czech and Bulgarian licenses. The quarter results did include reorganization costs and losses for the LMT Lending operations, which amounted to low single digit 1,000,000 of euros.
Operating costs for the segment were down year on year, but far less at constant exchange rates than the reported numbers would suggest. The reduction also reflected lower programming costs in Bulgaria and Hungary, offset by continued investment in the Czech operation. As predicted, the year on year reduction in cost in the second half of the year is proving to be lower than in the first half. Overall then, the segment operating loss in this seasonally smallest sales period of the year was reduced to DKK48 1,000,000 and the loss for our combined large operation was stable year on year at DKK50 1,000,000. Looking at the 3 largest markets in turn, let's start with the Baltics where our sales were up 10% year on year at constant exchange rates and include the newly consolidated LMT operations in Latvia as well as year on year sales growth for the Estonian operations.
The Estonian TV ad market is estimated to have grown slightly year on year, while the Latvian market is estimated to have been stable and the Lithuanian market to have declined. On this basis, we estimate that we have taken market shares Estonia and Latvia, excluding the 2011 election effects and lost some share in Lithuania, which also reflects our audience share development during the period. Our Pan 4 gs target audience or viewing share increased significantly year on year to 47% from under 41% due to the LMT impact and higher ratings in Estonia more than offset the decline in Lithuania. Secondly then, if you go to Czech Republic, where our sales were up 4% year on year across the exchange rates in a TV advertising market that we estimate to have been stable. We therefore believe that we took further advertising market share in the period.
This again reflects the significant increase in our target audience share with the Czech Media House recording its first ever quarterly share of 40% following the addition of further news, sports and other locally produced programming. And finally to Bulgaria, where our sales were up 6% year on year in what we estimate to have been a stable market. So again, we have so again, we believe that we took further advertising market share on higher ratings despite the fact that programming costs were actually down year on year. Overall then, as before, we're yet to see any trend shift in competitive behavior or return to sustained growth in advertising spending or pricing. However, costs are down and we do not see the need to increase our level of investment by on what we already done ahead of our return to sustain market growth.
If we then
move on to PayTE operations in the emerging markets, where the segment sales were up 13% at constant exchange rates following continued subscriber growth for our satellite platform in the Baltics in Russia and Ukraine and main page subscription growth in particular Russia. Our satellite platform added a net total of 83,000 new subscribers year on year and 9,000 subscribers in the quarter. We have also added more than 14,000,000 wholesale mini page subscriptions over the past year and more than 2,600,000 subscriptions in Q3 alone. We now have reached the milestone of 75,000,000 subscriptions for the first time. Our rating costs for the segment were down year on year and segment profit therefore more than tripled year on year to just under DKK 15 1,000,000.
In terms of outlook, we do expect continued subscriber intake on the satellite platform and growth in the number of mini pay subscriptions. We have now a big opportunity in Russia and Ukraine, in particular, to push the penetration of our services, which is why we announced in September that we would launch 3 new premium HD movie channels in Russia this month, and we have signed multiyear license agreement with 4 Hollywood Studios to provide high quality content for these channels. It is also why we launched a new prepaid satellite service in Ukraine at the end of September, which will sit alongside our existing premium satellite service. These investments and our ongoing subscriber acquisition activities are expected to boost sales moving forward, but also to result in Q4 operating losses of less than DKK 20 1,000,000 and a full year 2013 operating loss of less than DKK 15 1,000,000 before a return to healthy profitability levels in 2014. And finally, just a quick word on the other business segment.
Finally, firstly, we sold 24 operations at the beginning of May. So that reduces sales and cost for the segment when compared to last year. Sales for our combined radio and NTT studios business were down 18% year on year at a constant exchange rate, but actually up year on year when excluding the PEG24 contribution last year. Higher sales for the Norwegian radio and MGD Studios operations more than offset the decline in the Swedish radio operations due to the ending of the energy distribution agreement in Sweden. Result for the previously acquired and profitable Pafikalar Tingo content production business would be consolidated from the beginning of this month.
Products for the segment were slightly down year on year due to the increased losses for the Swedish rail operations. And in terms of outlook for these other businesses, we expect the sales decline in Q4 to be in line with Q3 and profits to be down in Q4 due to the fact that we cannot adjust Swedish radio cost base fully until the distribution agreement comes to an end with energy. Now over to you, Matthias.
Thank you, Jurgen. Currency exchange rate movements were a major factor as you've seen in this quarter with a large year on year movement in the Swedish krona exchange rates against the Danish and the euro in particular. Our sales performance was therefore 4.5 percentage points better at constant exchange rates than at reported rates and that included as much as 10 percentage points negative impact in the emerging markets operations itself. Group sales were up 2% year on year in the quarter at constant exchange rates when excluding the businesses that we sold and closed down, and those ones were VET24 and Slovenia primarily. Group operating expenses was up less than 1% year on year at constant exchange rates as we balanced our cost savings with investments throughout the quarter.
Group operating income, excluding CTC contribution, was down year on year due to the lower profits from the high operating leverage we have in the free TV Scandinavian business in particular. And for those of you who have time to look at the year on year comparisons, actually the loss or the reduction of EBIT in FreeTV Scandinavia is more than 100% than the reduction for the overall group. We continue to have high cash conversion of 74% of EBITDA into operating cash flow when you take out the effects of CGC Media. We reported a positive change in working capital in the quarter compared to rather large negative change last year, and this is all mainly driven by timing effects of payments for key content, including sports rights. So this included sorry, this resulted in more than DKK400 1,000,000 positive year on year swing in the net operating cash flow and included a DKK51 1,000,000 dividend payment CTC this year.
But as you remember, no dividend in the Q3 last year as both 3rd quarter and 4th quarter dividends was recorded in the 4th quarter for FTG. As opposed to previous quarters, our pretax profit was only marginally impacted by the revaluation of the option element of the CDN Group convertible bond that we hold. However, given the sharp strengthening of the Swedish krona against the euro, we have also revaluation loss of euro forward contracts of DKK 24,000,000 in the quarter recorded in the financial net. Our effective tax rate was lower in the quarter than the expected rate of 25% to 30% that we have. This was mainly due to one off adjustments for prior periods before 2012, which leads us now to expect that the full year tax rate will be below 25% for the year.
When we look into next year, some of you may know that there's a new Swedish tax legislation proposed. We are right now trying to assess the impact for us of that. But we currently expect the tax rate overall next year to be in the same range as we have for expected for this year, that's the 25% to 30% and somewhere in the middle of that range. Moving back to the cash flow. We invested DKK 174 1,000,000 overall in shares and participation in the quarter, which almost entirely comprised of the acquisition of PAPRA Galizino and the CTO's open access communications operator in Sweden.
The DKK24 million of other cash flow from investing activities comprised mainly of the end payment from the sale of BED24 that Jurgen just mentioned. The cash flow used in investing activities, therefore, totaled DKK179 million net in the quarter. We reduced our borrowings by DKK 363 1,000,000 in this seasonally weakest quarter of the year, and we have therefore had lowered total borrowings of DKK 1,300,000,000 at the end of the period. And we have now reduced our net debt by 66 percent or more than DKK 1,200,000,000 year on year to DKK 630 1,000,000 in the quarter. And this is equivalent to 0.3x trailing net debt to EBITDA.
We have almost DKK 5,800,000,000 still of available liquid funds at the end of the period when we include our unutilized credit facilities, and we have a stock market value of our shareholding in CTC that was almost DKK3.6 million the close of trading, let's say, of the quarter. So all in all, we are therefore now in a much stronger financial position than we did before. And we'll continue, of course, to invest in the long term future growth of our businesses as well as the long term enhancement of shareholder returns.
And then back to you, Thierry. Thank you very much, Matthias. And a quick summary before we move to the Q and A. We are making the investments that we are making now in order to drive future growth. The Pay2B markets are increasingly competitive but we have invested to secure the most attractive content for years to come, so that we can take subscriber market shares and consolidate our market leadership.
Our Nordic efforts are focused on our premium HD channel offering and buyer play, while in the emerging markets we have launched new HD movie channels in Russia and the CIS and added a prepaid satellite service in Ukraine. So all in all, this will reduce profitability levels in 2013, but increase our subscriber revenue and profit growth potential in the medium and longer term. Railings are improving or stable for our Scandinavian future wheel operations and we have reduced our full year OpEx expectations. Our focus is now on taking back market shares. We have taken audience and ad market shares in almost all of our emerging free TV territories, while at the same time achieving cost savings and improving overall profitability levels.
So we are better positioned to benefit from the return to sustain growth when it comes. Financially, we are stronger than ever with low borrowing levels and substantially available liquid funds. We have done some key deals and there are more to come as we continue our organic and M and A investment in content, technology and geographical expansion. That concludes our comments on the results 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 Exane.
Please go ahead. Yes. Good afternoon, everyone, and welcome, Jorgen. Good luck for in your new position. I'd like to clarify a few things in Pay TV.
First of all, if you're still guiding for ARPU growth next year, that means that you're expecting, I think, a significant decline in premium subscribers. So can you sort of guide us on what kind of premium subscribers you expect for next year? That's the first question. And the second question is about Via Play. Can you tell us if the trends in subscriber growth well, the latest trends in subscriber growth over the last couple of days weeks, especially in the wake of the arrival of Netflix and HBO.
So have you seen a, well, a significant slowdown or a significant increase? Or if you can quantify this, please?
Thank you very much. Yes, if you look at the growth, of course, what we are seeing right now is that we see fight when it comes to our DTH platform, particularly in Denmark. We see also that the revenue mix that we have right now due to the fight in DTH in Denmark and a revenue mix shift. When it comes to bioplane, a revenue mix shift. When it comes to ViaPlay, we have seen over the period a clear increase in terms of subscribers.
And we are the content leader when it comes to these services. And therefore, of course, we expect our increase to continue.
Okay. But for example, in terms of the number of subscribers you expect at the end of next year, can you have some sort of number here?
No. What we have so far what we are not doing is that we aren't giving out the subscriber numbers. It may come at a later stage. But right now, we what we can say is that the subscribers are increasing and that is of course in the back of all the content that we have, which is quite a superior offer in the market.
Sure, sure. I was actually referring to the premium subscribers, so DTH and 3rd party network. So what do you expect for, well, 31st December to
sign 13? Yes. We expect it as it is right now. And again, we expect it to be lower. But we, of course, expect that the combined DTH, IPTV and VIA Play subscriber base to grow.
Okay. And if I can ask just one follow-up about margins in Free TV Scandinavia. From what you can see in terms of current ad trends and investments needed, would you expect margins to grow in 2013 in Free TV Scandinavia?
What we're looking at is that, of course, it will depend on the market and how the market will evolve. We have the market forecast for EIM. We're forecasted for Norway a growth of 5% next year and Sweden a growth of 3%. Unfortunately, we don't have the DRB figures yet. But if the market should grow accordingly to what the forecast and the market in Denmark should come into better shape, we see around the 20% margin for the free to relations in 2013.
Okay. Thank you very much.
We will now move to our next question from Stefan Nilsson with SEB Enscgilda. Please go ahead.
Thank you. Hi, Jorgen and Matthias. I'd like to kind of understand a bit more about your PayTV guidance. Obviously, it's a huge difference in margins, which implies that costs will be up more than it did in the past year. Could you kind of explain a bit more where the cost increases come from?
Because if I understand it right, a lot of your Pesic costs are after all variable and depending on the subs you add. So maybe you could split it up a bit more.
Yes. If you look at the investment that we are making right now, it is, of course, in content. As you're saying, it is in sports content. That is fixed content. It is in the movie content that we're investing in.
It is in buyer play as well. It is in marketing. And then of course, if you take the last thing in that mix when you look at the margin guidance for 2012 and so 2013 is of course that we have it is increased competition and we've seen in Danish BTH bar for sure. We have a tough fight there. But it is it may consist of increase in content and simply a better offering to our consumers going forward.
Because now what we have been doing with the movie acquisition is that we have signed them up until 2016 2017. The sports is signed up, Danish League 15, Tennis League 15, Premier League 16. We even managed to get the Premier League for Denmark as well for our TTH platform. So it is long term now that we have managed to secure very good content for our platform, which means that our products should be very strong in the markets.
Sure. What I don't understand is just that a lot of these things you've already taken in the cost base this year and you're launching new channels. There's a marketing work going on in Stockholm as we speak. But I mean, still you're guiding for 15% margins in Q4, but then they should collapse in the next year. Just kind of what's the new cost drivers in terms content that aren't already in the numbers?
I think what Stefan is Matthias. I think the way we should look at it is, as Jurgen said, is a couple of different things. 1, the content cost increases, the content investments we're doing in HD, in the Olympic Games, we're going to start cost for next year, for example. And the sports costs in the sports costs, you both have new content, but you also have a lot of inflation in the existing content as well. And a lot of that starts kicking from the beginning of next year, even if some of it has been announced that we get renewed, for example, the Champions League, etcetera, going to have an increased cost for next year for that price.
So that's one thing that we are doing. And the HD push, a lot of it is going to be launched towards the end of this year. So that's going to see an impact on next year. That combined, I think, with the fact that over the course of the last quarter now we've seen that, as Jurgen said, that the acceleration of the decline of the DTH basis has been a little bit faster than we've seen anticipated before. The earnings potential from the DTH business has been slower or slightly lower, which means that the payoff for these investments, which is fixed cost investments, are not so variable as we discussed, are not as high as we anticipated before.
And at the same time, of course, we're pushing more into these content areas and strengthening the products order to make sure we win this in the long term because it is a long term game. And the final element of this, of course, is the Viaplay investment that we're doing. And we're not only investing for the Nordic areas. Of course, longer term, we believe that Viaplay is a very strong product for other markets as well. We're taking additional investments in Viaplay at the same time.
So if you factor them in, if you try to simplify the delta between the profits from this area next year and compared to this year, it's pretty much if you want to simplify very much, it's 1 third from lower earnings from the old pay business, 1 third from the strengthening of the content and building a much stronger product and around onethree from the investments we do in ViaPlay.
Okay, great. And then my second and final question is shorter. But then when you say you're going to grow earnings from here, so this is a new normal. It's from basically 10% to 12% margins that we should look forward in 2014, 2015. There's nothing non recurring.
This is basically the new normal in PTV.
Yes. But of course, we expect all these investments that we are doing to have an impact and to push for future growth and future margin expansion.
Right. But revenues for that VTH will continue to fall in for 10 years or so. So I mean, it will be the same kind of flat revenue growth probably for
a few years in that perspective.
Our expectation is that we will with the investments we're doing that we will return to healthy growth in the business. But that's exactly when and how it, of course, depends on the competitive situation and other things. But we believe it will return to growth.
The whole idea is, of course, when we invest in these content and looking at our content offering going forward, it is quite strong. And of course, it is something that we will market heavily in order to make sure that people understand that going forward, if you want best movies, if you want the sport and so forth, best TV series on produced content, we have a very strong offering compared also to some of the competition, which we have not lost any content, which some of our competitors have done. So we have actually a very strong and enhanced content offering going forward.
Okay. Thanks so much.
Our next question comes from Rasmus Enberg with Handelsbanken. Please go ahead.
Yes, hi. Can you hear me? Yes. Yes. Hi.
I had a question on your comments regarding your free TV business. As I see it, you lost ratings share in all Scandinavian markets, yet you say you are growing. Can you surely, we are not looking at ratings sequentially or am I missing something?
If we're looking at share viewing for the Q3, we have grown the Swedish free TV operation in terms of TV3, TV8 and TV10. So of course, what is positive for us is when you look at TB3 that the programming department at TB3 actually has managed to find good shows, which have had the appeal to the consumer and which then means that we are doing a bit better than we did last year. TV6 went down in the quarter. And that, of course, is due to the Olympics that we have a lot of main audience, people going to SVT and towards the Olympics. Looking at TB3 in Denver.
In Q3, TB3 managed to grow from last year, to be precise, 10.49 to 10.70 and the same deposits from 2.93 to 3.44. So they actually managed to grow these 2 stations. Again, the same thing happened with the Olympics for Q3 plus where we lost the shares versus same quarter last year.
But the Olympics in Sweden was on public TV?
Yes. But still what you are doing is of course is if you take unfortunately a lot of the main jury away which of course is something which is healthy for helping our TV6, our main SKU TV6 and TV3 plus in Denmark was affected the fact that TV2 also as a commercial broadcaster had the Olympics. Norway, we lost shares on TV3, but we managed to gain shares on ViaSat-four. And of course, if you see Norway, if you take the markets, we will say, I think that we have done a good job and the program here has done a good job in TV3 in Sweden. And we also see for the house the 1st 2 weeks in Q4 that we're actually gaining as it looks right now as NTT as such.
In Norway, we are it is top market. We are number 3. We have some good shows, which of course we can take with us to next season. But that is also why we are saying for us, it is not so much about the money. This is more about the execution because we do have money in almost all of the slots.
So it is simply up to our programming people, our editors and our scouchers and our content people to go out and get the best stories and produce the best content for our viewers just because that you double the investment in the slot does not necessarily give you double ratings as we of course know. So this is the way we look at it. We are stabilizing. We are improving when it comes to our commercial view. And of course, we are glad that we produce content that more viewers would like to watch now.
This is, of course, where everything begins.
I mean my question then is given that over these three markets and the three quarters you have lost ratings in all markets in all quarters, except in Q1 in Sweden. I'm just wondering what is your pricing what's your pricing power going into negotiations about price next year? Don't you think you need to promise for next year to increase spending in free TV significantly?
Yes. There's many reasons for price increases. Of course, we believe that with improved rating performance in Sweden, of course, we believe that we have a more attractive product going forward next year as well for the advertisers. As you know, you are being rewarded on your historical merits when it comes to rating. And we are stabilizing and we are increasing a bit.
And the programs we have are also in terms of demographic very interesting. And we see that also when we look at the online viewing that we're having where we are by far the largest in Sweden. We saw since week 33 according to MMS. We have 51% share of the online viewing in Sweden amongst the TV channels. So that of course implies that we have young talent groups.
We have very good talent groups and I even read somewhere that Anna Vergages as a TV series, our fantastic female audience share. So this is one component. Of course, there is still a demand for TV ratings in Sweden. And that of course is another thing which could drive prices next year.
Just finally on this subject. I mean, last year it was basically seen as a disaster in Sweden in Q4 where you had 30 4% ratings share. Now presumably, you would not be happy with 34% in this Q4. Is that correct?
It's a tough thing. You can never be satisfied, to be honest. We want all the shares in the world. And that is what we are trying to that's of course what we are trying to get. Most important for us is of course that we produce content that our viewers they like and that, of course, is reflected in that we should grow our shares and that is, of course, always the aim.
And, of course we grow the shares in the right target groups. And of course that is the aim for us and the program department. So we would like to gain shares also in Q4.
Yes. All right. I'll just take one very quick question. I'm not going to take all of this conference call. These two acquisitions, Citeos and TV2 Sport, are those in PayTV Nordic?
Is that where they will be reported? And are they included in the sales and EBIT guidance, if so?
CTSS will be reported under other broadcasting solutions, not under pay TV.
Okay.
So it's not included. And TV2 Sport, Denmark will be included in pay TV Nordic, but it's not included in the guidance right now.
All right. Thanks.
Our next question comes from Lisa Yang with Goldman Sachs. Please go ahead.
Hi, good afternoon. My first question would be on PayTV Nordic again. I just wanted to clarify, you're expecting flat sales next year. I mean, given your market leading content, why top line will not be growing? And are you basically assuming you'll be losing share to other players and to other platforms?
And is there any particular reason why satellite customers have declined more than you expected? Is that an overall decline in the market? Or again, is that basically MTG losing more share? And second question on Pay TV Emerging Markets. Can you also explain the €50,000,000 loss you expect next year?
Just give us a sense of the breakdown of where you're going to invest. And you also expect stronger revenue growth. So why isn't the cost offset by stronger revenue growth as well? And where do you see the long term margins in this business? Thank you.
Yes. If we start with the sales forecast, of course, what we are seeing right now is this revenue mix where we see that we are losing somewhat deterioration in the Danish market particularly because of the increased competition we are losing a bit as well when it comes to the IPTV which is higher ARPU customers, of course, than the bioplait customers that is right now. So the revenue mix is different in 2013. What we of course hope or what we expect going forward is of course that we will start to increase again in IPTV sales because our content offering is superior. And also as we just said, we are launching new HD channels, which of course will help ARPU increase as well on DTH going forward when we have high uptake on HD subscribers on our DTH platform.
When it comes to Russia and to pay TV Emerging Markets, We're investing in content. We're investing in new movie channels. And of course, we foresee that over the coming year, we will we expect of course that we will get much more customers. The thing is, of course, that we again, with the movie deals, it's something that you're paying now per month going forward. And of course, the customers won over the period.
So of course, we do believe long term that we will increase our sales and also of course that we will go back to profitability as well in due time.
And just to go back, I mean, you mentioned several times you're seeing increased competition. I mean, can you give us a couple of names? I mean, and what are your competitors doing?
Yes. We see, for instance, in Denmark, you have seen on the DTH market that you have seen that TV2 became suddenly a pay TV channel, which gave a big boost to competing platform Boxer, a DTT platform, selling big content package very cheap right now. So there we are in a tricky situation. That's why of course we're happy that we managed to secure the Premier League because always that of course will make sure that we over time will have a more stable TTH base in Denmark. In Sweden, we are simply seeing for instance in cable this quarter that we are that the IPTV network, some of our customers are still not growing.
But of course, going forward, the competition will continue. And that's why that in the end, it will of course be the company having the best content who's going to win this. It goes without saying that the consumer will go there. It takes time. They have to find the whole brain they have to change probably as well platform.
But over time, of course, we will hopefully expect it, of course, to be very strong. We have good offering. We have good content. We have security long term. So that I think that is quite evident going forward that we are superior in the content offering and therefore should grow as well going forward.
And sorry, can you also repeat again what are your expectations of longer term margins in both Nordic and Emerging Markets?
Hi, Liz, it's Matthias here. I think if you look at the Nordics first, I think what we're trying to say right now is that next year we know largely where the levels will end up. After that, I think we have expectations that it will grow. But if they grow to the same level as historically, that's still to be seen I think. But that they will come up of course is one of the reasons why we're doing what we're doing that we expect them to come back.
In terms of emerging markets, of course, as Jurgen said, I think the push on the premium side in Russia is a fantastic opportunity if we get it right, of course. And that could be a very, very substantial business for us moving forward if things plays out in the right way and we do it well. And if that's the case, then margins will definitely come back very strongly. How fast it's going to take, that's still to be seen, I think. But we expect the year the following year to be in a breakeven situation at least.
Great. Thank you very
much. We will now take our next question from Nicholas Duberg with JPMorgan.
Hello. Just to confirm on the recent acquisitions that LMT and TV Sports are included. And if so, could you please break out the impact? Thank you.
Sorry, can you repeat? I didn't clearly hear what you said.
Hello. Just to confirm that the recent acquisitions, including LNT and TV Sports, are included in the guidance. And if so, could you please break them out? Thank
you. They are included in Q3 L&T, but in emerging I'm not I'm not sure I understand, but it's in emerging markets free TV. And we haven't really broken out the impact financial impact, but it's not material very material.
CV2 Sport is not included in the guidance currently. Thank you.
Our next question comes from Baldar with MTG. Please go ahead.
Hi. So I'm calling from Danske. Could you give us some sort of breakdown on the DTH scrubber base? How large is it in Denmark? Just to get a sense for how long this churn might continue?
Hi. It's difficult. We what I can say is that we are seeing decline in Denmark and we are seeing increased competition. Of course, what we are doing and what we are trying to do right now, for instance, with the HD channels with the Premier League and so forth is to make sure that that's the TTH based in Denmark somewhat will stabilize. Then of course also depending on the competition of a long time that we will see this aggressive competition from the competitors in Denmark.
So I think it's difficult to split them up.
Okay. And is it so do you anticipate the subscriber loss while maintaining your prices unchanged? Or is it a mix that you're lowering your prices and still expect subscribers to churn?
I think it's a little bit difficult for us to talk about our pricing strategy moving forward, but I think the volume impact is the biggest one.
Okay. Thanks.
Our next question comes from Laurent Zaglione with Statik. Please go ahead.
Yes, thank you to take my question. I have two questions. The first is I'm still a bit confused about this pay TV resetting of the investment you need to do. Ultimately, your share price is losing 10 times what you're going to invest next year's roughly, which seems to indicate to me that it's structural, not just to answer to a competitive or competitor offensive. I just want to understand, you mentioned Denmark, you mentioned the fact that ultimately you need to get some good contents.
The new competitors, I. E, the new platform which can have come through with Internet or other sort of platform, they are in your mind they are existing or it's really the traditional pet TV operators which are bothering you and you want to make sure you invest in order to get to leapfrog against them? That's my first question.
Yes. It's of course, we if again if we look at the DTH situation we have described, the biggest market, as far as if you look at Sweden, we it is not looking the same as it does in Denmark where we have fierce competition. So it is not that people will go away from THH. We have on the contrary. What we have done is, of course, that we have strengthened the offering.
Combined TTH and IPTV and ViaPlay, we will grow going forward. And again, the offering as well on Viaplay as it looks right now and the DJ is also different offerings. We are capturing new markets with Viaplay. It is in the old days, as you know, we had only DJ then we went to virtual operators and now we have taken the next step and we go online with Viaplay and OTT and can reach basically all population more or less in the Nordic market. So combined going forward, whenever the customer they want to find us, we have an offer.
We have our product. They can find and if they can't get it with a distributor, they can find it online. So of course, we do believe going forward that we will take market share and we will increase our combined subscriber base.
Okay. That's what I wanted to know. So it's not structural. You're investing in getting somewhere on another more clients. I understood.
Sorry, can I just add one? So we maybe forgot a little bit in this whole thing. If you as Jurgen said, in the Swedish market, as an illustration is we have cable operators only digitalized probably almost onethree
of their subscriber base.
And of course, for us that's why our expectation of growth for us on the virtual operator side of slowdown is because they have started to actually decline at the digital base. But it's more than 1,000,000 households that are still analog, which means that, of course, these people want to watch Premier League, they want to watch Champions League, etcetera. And now all of a sudden, we have an opportunity to get them in other ways. That's one of the things. The other one, I don't know how familiar some of you are to the Swedish market, but there is a big trend now that networks are going from being closed networks, like in the case of Telia Networks and Com Hem Networks, to now go more for open networks.
And that's what part of the strategically why we acquired Sitio, so it's an operator that actually sits on top of these open networks and can actually distribute our content together with other people's content as well. So I think that makes us give a long term very positive view of the Swedish market for example, whereas the Danish market is a little bit more complicated in a way. But the Swedish market is obviously being the biggest one.
Okay. I mean obviously it comes as a surprise, but I understand why strategically you're doing it. The on the second question I have, I'm surprised with you nobody mentioned so far the ProSibon disposal of the free TV operation in Scandinavia and what MTG could or could not do and obviously you have been invited to the data room. Is it possible you expand on this subject?
Thank you. What we have decided on this, obviously, is to say that we have no comment. And that we have said all along, I see speculations all over newspapers. And I think we have been used in issues or whatever. So therefore, I think that the most safe and secure thing to say is to say no comment.
So we would cannot comment on that one.
Okay. But if I am not specific on price or blah, blah, blah, I saw somewhere on and I don't know your countries as well as you obviously that they were probably regulatory hurdle if that was going to happen and you may have to carve out some of the channel on SBS. Is that correct? Or in your assumption, do you think there will be indeed some recurring you will have to do it as a team or not?
I think what we are saying is that we do have no comment to this topic. And as a general comment, I can say that to predict the competition authorities what they would like and would not like to see and so forth, I think that is very hard. I think if you want to make the assumptions that we're discussing right now, you need to talk to each of the competition authorities and have a process or whatever. So I think what we are saying right now is that we have no comment on the SPS thing.
That concludes the question and answer session. I will now hand the call back to Juergen Madsen for his concluding
remarks. Thank you, operator, and thank you all for your time today and for your continued interest in Oneontime's Group. Of course, we look forward to talking with you over the coming weeks and months to keep you updated on our progress. So thank you and goodbye for now.