Good morning and good afternoon, ladies and gentlemen, and thank you for holding. Welcome to the MTG First Quarter 2012 Results Conference Call. At this time, all participants are in a listen-only mode. After the presentation, participants will have an opportunity to ask questions, at which time instructions for the question and answer session will be given. If any participant has any difficulties hearing the presentation, please press the star followed by the zero for operator assistance. May I also remind you that you can find the presentation slides on the MTG's website at mtg.se. I will now hand the call over to Hans-Holger Albrecht, MTG President and CEO, who is joined on the call today by Group CFO, Mathias Simenon. Please go ahead.
Thank you, operator, good afternoon, everyone, and welcome to the call here of MTG. As you hear, Q1 were at the record level for a first quarter, earnings were not. This is because we are investing, as previously announced, in several key areas of our business. On top, remember that Q1 is obviously a seasonally small sales period, investments we do, of course, have a bigger impact on profitability than in other periods. Clear as well, the year-on-year growth in costs was at the peak level during this first quarter.
The investments are primarily focused on the free TV in Scandinavia and our TV operations there, where we are focused on driving up our viewing shares in order to be able to benefit from the anticipated advertising market growth, as well as to react on the kind of competitive level we have seen in this market through the course of last year. We're obviously investing as well in the Nordic Pay TV operations to drive future subscriber growth. Even despite those investments, we still have amongst the highest margins in our peer groups, if you talk about Pay TV. On the emerging market side, we have taken viewing and advertising market shares in almost all free TV territories, are yet to see any trend shift change in the development of the advertising market in these countries.
However, we were profitable in the first quarter and do not see any major cost increases moving forward in the emerging market side. If you look at the emerging Pay TV business, we can see that we have generated healthy sales growth and substantially increased our profits following continued subscriber growth and reduced losses for the satellite platforms as they move towards profitability. We do have some issues to fix with the Scandinavian ratings, as it was in the last conference call as well. Obviously, we are working hard on those areas and see already some improvement. Remember, it's not the first time we have those kind of issues, and we have to overcome them. It is part and embedded sometimes in our free TV business.
Overall, obviously, we are in good shape, and the bigger picture is that we are a broadly diversified group that continues to benefit from integrated operations across multiple territories. Furthermore, we have a strong balance sheet, which will allow us to invest in future organic and acquisitional net growth, as well as to increase shareholder returns. That's the kind of big picture. If we then move to the individual operations, as usual, let's look first at our free TV Scandinavian business in more detail. Talking about the markets first, there are no official numbers out yet, but we estimate that the Swedish and the Norwegian TV advertising markets were up between 5% and 8% year-on-year in the first quarter, and the Danish TV advertising market was down approximately 5%.
Our sales were down 1% at constant exchange rates, and whilst our advertising market share was stable in Denmark, we lost some share in Sweden and more obviously in Norway. The Norwegian situation straightforward reflects the situation when it comes to the ratings. There's a correlation between the lower ratings and loss of advertising market share. As I said, we are working hard to correct this, but it will take some time. The Swedish situation is a bit different. Our share of viewing is up year-on-year and quarter-on-quarter, so we see signs of improvements. We were not able to capture all of the market growth in the first quarter because the annual contracts were signed later, and we are still running off lower ratings than we had in the past.
Our Danish media house share of viewing was slightly down year-on-year but up quarter-on-quarter, and we performed in line with the market as far as we anticipated. We have locked in annual contract prices increases in each market, and spots prices are up, and obviously, the regional sales initiative in Sweden will gradually begin to positively impact over the incoming quarters our growth. Segment OpEx for the first quarter was up 13% in constant exchange rates. This followed increased programming investments in all three Scandinavian countries and the early launch of the spring schedules compared to last year. Segment operating profits were therefore substantially down for the quarter, as you have seen in the figures.
If we talk about the outlook, as I said in my introduction, the cost growth in the first quarter was at peak levels, and obviously, it will be significantly lower in the second quarter. We still expect full-year OpEx to be up mid to high single digit percentage points. This reflects the fact that we will invest less in programming in the second quarter, when the European Football Championship will impact ratings across Scandinavia, and we are no longer showing the Ice Hockey World Championship. You're going to find a correlation, obviously, in the second quarter between lower costs because of lack of world championship, but obviously as well, some pressure on the ratings. Prices are up, and we continue to expect each ad market to grow by low single digit percentage points in 2012. Much about our free TV operations.
If we then move on to the Nordic pay TV business, where you have seen revenues up 9% year-on-year at constant exchange rates, which is in line with the 9% growth in premium satellite subscriber ARPU. This is mainly based on or followed after the price increases that we did and the rising penetration of value-added services. This higher than usual level of growth also included some one-off effects, which, on a net basis, lifted revenues and positively affected the EBIT result, but only marginally. The development in the total subscriber base was also impacted by the one-off effects in Norway, as one IPTV operator was acquired and another restated its subscriber base and revenues.
When you exclude those factors, the trends remain the same, with an increase in the virtual operator base and a decline in the satellite base in what is, again, normally first quarter a seasonally low sales period anyway for pay TV. The Viaplay subscriber base has continued to grow, we have invested further by adding even more content and functions and marketing to the service. As flagged earlier, the margin was lower in Q1 as we invested in Viaplay. As I mentioned right now, the Viasat Film rebranding, which was a big part of the first quarter, and in connection with this, the launch of additional HD channels, plus obviously the prolonging sport or the sports rights cost going up. If you take it on the profitable side, profits were still up slightly year-on-year despite those investments. Overall pretty solid performance.
If we talk about the outlook for pay TV, we see no change except that the revenue growth in Q1 was exceptional, they will return to more normal levels, obviously, moving forward. Otherwise, we continue to expect the same story. Satellite premium ARPU to grow by low to mid single digit percentage points. The number of virtual operator subscribers to increase. Viaplay to increasingly contribute to subscriber growth. Segment OpEx to increase for the year due to rising sports rights cost and the addition of channels and services with a full year operating margin to return to the normal level of approximately 18%. Turning now then to the free TV operations in the emerging markets, where there is still, unfortunately, no trend shift, we have continued to take audience and market shares in almost all territories.
Those things we can control, I think we have under control right now in those places. As flagged previously as well, the closure of our loss-making Slovenian operations and the writing down of the Bulgarian assets did create a positive profitability impact, which more than offsets the investments in the Czech Republic we did to build on Prima significant audience and market share momentum. Operating costs were actually down year-on-year, the operations were profitable for the quarter. Last, we are awaiting obviously the finalization of the regulatory review of our announced acquisition of the LNT free TV business in Latvia, which we currently expect to take place during the second quarter. If we take our three largest markets in turn, which together generated 8% year-on-year sales growth, let's start with the Baltics.
Like in Scandinavia, obviously, there are no official market statistics out yet, but we estimate that the Estonian TV advertising market was down more than 10%. The Latvian TV advertising market was down approximately 5%, and the Lithuanian TV advertising market slightly up year-on-year. On this basis, we would have taken share, obviously, in each market since our total Baltic sales were up 2% at the constant exchange rates. Our target audience shares were up year-on-year in Estonia and Lithuania and slightly down in Latvia, so the pan-Baltic share increased year-on-year to 40.5%, which is a good performance there. If we talk about the outlook for the Baltics, there is really no change at this time in the outlook, and there are no official market estimates. Markets are still soft, and it's not yet clear for us that each of the market will grow again this year.
As you can see from the underlying performance, we are, of course, very well-positioned once it happens, and will then benefit directly from the growth when it comes. We do not currently anticipate any significant increase in OpEx either this year for the Baltics. We then move on to the Czech Republic, which had a very strong performance again, but starting with the market. TV advertising market is estimated to have been probably down a couple of percentage points in the first quarter. Since we had this kind of year-on-year increase in our audience share, we were able to substantially outperform the market and grow our sales by 16%, if you take constant exchange rates. Outlook for this market, like in the Baltics, there are no official estimates, and it's not currently clear that the Czech TV market will grow in 2012.
We really don't have a clear picture ourselves at this time. We do, however, expect, obviously, to continue to take market share given the higher audience shares that we have generated. Finally to the Bulgarian place, where the TV advertising market is estimated to have been down by more than 5% in the first quarter, while our sales were down 5% at constant exchange rates. If estimates are right, we have taken market share there as well. We have increased our audience share, but still suffer from advertising prices down year-on-year. At the same time, as indicated earlier as well, obviously, we have adjusted costs in the Bulgarian market due to lower competitive pressure if it comes to programming costs. Therefore, the outlook, pretty similar picture to the other two markets.
We still do not see any signs of growth in the Bulgarian TV advertising market for this year, and we still see, to a certain degree, pricing pressure from our competitor. However, we currently expect OpEx to be down year-on-year for the remainder of the year, as we do not see the need to increase our level of investments in Bulgaria beyond what we have already done. Last but not least, moving to our pay TV operations in the emerging markets, where we have another exciting quarter. Sales were up 14% year-on-year at constant exchange rates following the continued year-on-year subscriber growth. We added a year-on-year net total of 91,000 satellite subscribers to our platforms in the Baltics, Ukraine, and Russia, and almost 8 million wholesale mini-pay subscriptions for our pay channel business.
Operating costs for the segment did increase following the addition of six new channels and the investments we are making in the development of our satellite platforms and the recent launch of Viaplay in Russia. Profits were still up fourfold, and we delivered a 14% margin in the quarter. Outlook for this area, we do expect continued subscriber intake in 2012 on the satellite platforms, and we do expect continued growth in the number of mini-pay subscriptions. We also expect improved profitability levels for the business area for the remainder of this year. Much about the big operations and business we have. Maybe just a quick word on the other business segments where we have a few impacts. Firstly, the loss of the energy frequencies from the beginning of next year, and as we have additional licenses that they received at the end of 2010.
We are already seeing the impact on our sales and profits and will continue to do so for the rest of this year. That's one event. Secondly, you may have seen that we have announced the sale of Bet24, but that has not been completed yet. Thirdly, we are investing more in the development of the MTG Studios business as it is part of our forward-going strategy. All of these factors will, of course, impact our results moving forward, but to put it into context, this is a very small part of our overall group. Much about the operations, and I now hand over to Mathias, who will give you an update on the financial side.
Thank you. The first quarter was, of course, an investment quarter, as you have heard earlier today, and this is also reflected in the cash flow for the quarter. We generated SEK 334 million of cash flow from operations before changes in working capital in the quarter, and this was down compared to the year before. We reported the usual seasonal negative change in working capital due to the normal payment of key content rights as we always do during the first quarter. We managed to improve the underlying change in working capital by SEK 70 million compared to Q1 last year. In spite of this, the net cash flow from operations was down year-on-year in the quarter. We sold the remaining small number of Metro International shares and debentures to Kinnevik in line with the tender offer for the company.
This resulted in a small net gain of around SEK 9 million for the quarter. We did not make any acquisition of shares in the quarter, or even we didn't do it in last year either. Our CapEx continued to remain low, at least at less than 1% of group net sales. Our total bank debt remained stable in the quarter and ended the period with a total of SEK 1.6 billion borrowings, SEK 583 million of cash, and a total of SEK 5.6 billion available liquid funds. Our net debt position was therefore reduced to SEK 730 million, which is equivalent to around 0.3 times trailing 12-month EBITDA, which was the same as in the end of last year.
The change in value of the option element of the CDON Group convertible, which I'm sure you know that we subscribed to during the spin-off, is included in the other financial items. This non-cash gain amounted to SEK 81 million in the quarter. To remind you, this number is published on our website prior to each quarterly report as we announced previously, so you can follow it there. Back to the overall picture of the company, I think we remain in a strong financial position with continued low gearing levels and high annual cash conversion levels. We expect to continue to invest in the future growth and development of our businesses and to increase the shareholder returns in line with our newly introduced dividend policy.
The primary focus moving forward is obviously to grow, which is why we will continue to invest in new technologies, content and new territories. We also believe that the shareholders obviously should benefit directly and consistently from our cash flow generation. That is all for me, and back to you, Hans-Holger.
Thank you, Mathias. Maybe just to sum up the key highlights before we move to the Q&A session. As you have seen, we are investing, but the Q1 was the peak in terms of the year-on-year cost increase for the Scandinavian free TV and the Nordic pay-TV operations. Second, we are investing in order to drive up our ratings in Scandinavia in what continue to be growth markets. The markets are positive for us in that respect. Thirdly, we are also investing in our Nordic pay-TV operations, but still expect a margin of approximately 18% for the year, which is amongst the highest in the peer group. Those investments are covered in the underlying strengths of the operation there. We have taken viewing and net market shares in almost all of our free TV emerging market territories.
Strong operational performance there, and delivered both sales growth and a profit despite the fact that there has been no trend shift in the development of these advertising markets. We still expect to deliver higher profits for 2012 than 2011 in that region. We have continued to add subscribers in our pay-TV emerging market business and delivered 14% sales growth and margins in the first quarter, so another growth element in the company. We also expect to deliver higher full-year profits for this segment in 2012. Last but not least, obviously, we have a strong balance sheet, and we continue to review areas where we can invest in the future growth and the company, while at the same time increasing shareholder returns.
We're not giving up the traditional MTG formula that we have growth and at the same time good profit and good returns to our shareholders. No shift in that respect. Last but not least, which is our day-to-day business, of course, we have to fix issues. We have to fix the Scandinavian rating situation, and we are working hard to do so. It's not the first time we are facing one of those issues in one of our companies. Overall, obviously, the group is in good shape, and as always, we are investing now to create long-term sustainable value for the future. That concludes our comments on the results, and we will now be happy to answer your questions. Operator, can we have the first question, please?
We will now take our first question from Stefan Nelson from SEB Enskilda. Please go ahead.
Thank you. Hello, everybody. Could you just explain to me the reason why you have lost market shares in Sweden given that you have improved ratings? Are you also losing power ratio now, or have you not been sold out? Maybe you just could take us through the reasons since ratings have turned a bit.
As I explained, it's an impact, of course, that we have the yearly agreement signed later. In that phase, obviously, a lot of focus from agencies and clients and everyone is on yearly agreement. We still have a kind of hangover effect from the weak rating performance we have seen in the fourth quarter. It's more a time and delay factor rather than a structural issue, because I agree the ratings have been a bit more positive than in the other quarters.
Okay. If I understand you right, you basically sold on lower assumptions than you actually delivered, or?
Yeah, it's a combination of both. You sold on lower assumptions, and the ad hoc market is not as strong, obviously, in the first weeks, and therefore, a kind of delay in the yearly agreement slows down as well the kind of intake on the ad hoc money.
Okay, great. I know Q1 is a special quarter. If we look forward, I guess could you give us a hint how much your average price increases are in the new annual agreements?
No. They are up. They're slightly up, which is all we can say for competitive reasons. However, the fact that they are up the net price positive sign, obviously, because normally, at best, they have been flatish in previous years. That's the underlying positive momentum. The figures out in the market you hear sometimes are gross figures, and of course, I would take them with a lot of caution in that respect.
Okay. Is there any reason going into Q2, I know I'm focusing a bit on Sweden now, but is there any reason that you won't be able to capture your audience share and market share going forward?
Yeah. The second quarter, if it would be a normal quarter, there should be no reason. Unfortunately, of course, we have two effects during this second quarter. One is for the first time, we're not going to show Ice Hockey World Championship, which of course had big ratings and had big sales as well, and will have an impact on the comps. Obviously, the European Championship will have a certain impact as well in terms of ratings. The inventory, again, compared to last year, will be a bit smaller. If you take those two into consideration, obviously, it's not a normal quarter forward. There will be offset then, however, by obviously lower cost as well, because we save, for example, the investment in ice hockey.
Could you just give us some kind of indication what your assumptions are that you will lose market share versus last year due to ice hockey and football, all else equal?
No, there are too many variables in there, which is, for example, the most simple one, for example, is how far the Swedish team's coming and those kind of things. It's really hard to forecast. I would just say if it's normalized, yes, there should be no reason why we shouldn't cash in on the market share gain. This is a kind of two one-off effects in one quarter, which will have an impact, and you should be a bit cautious.
Okay, great. Just two final nitty-gritty questions. First, on the pay TV Nordic side, you said that there were some non-recurring gains in Q1. Could you quantify that, and does this have to do with refunds from the Premier League, given that the deal is not as attractive anymore?
Hi, Stefan. First of all, this has nothing at all to do with any sports rights or anything like that. The second part is that we said it was a marginal impact, and it is really marginal, but I think it's the 9% growth, for example, was not really 9%. It was slightly lower if we take out this effect. We're not going to say exactly what it was, but it was a marginal impact and not related to sports.
Okay. Will you get any kind of money back from the Premier League now that the deal has changed slightly?
No, we can't comment on that one at all. Sorry.
Just finally, on the Pay TV East, the earnings is up quite significantly. Is there any reason to say that this is some non-recurring positive effect, or is this the base level going to? It's obviously not as cyclical as free to air.
No, this is business as usual. I think it is an underlying good performance of the Pay East business. In particular, what we are happy, of course, is that we can see the positive momentum continues in Ukraine, which, of course, is a big project for us, as well as the pay channel business. No special effects, the only effect we're going to see going forward, of course, is the investment into Viaplay Russia, which again, is investment, but on a smaller scale, obviously.
Okay. We're up at a higher base level in terms of earnings now versus last year?
Yes, correct.
Okay. Thank you.
Thank you.
Ladies and gentlemen, if you would like to ask a question at this time, please press star one on your telephone keypad. Please ensure the mute function on your telephone is switched off to allow your signal to reach our equipment. If you find that your question has already been answered, you may remove yourself from the queue by pressing star two. Again, please press star one to ask a question. We'll take our next question from Adrien de Saint Hilaire from Exane. Please go ahead.
Yes. Good afternoon, everybody. Thanks for taking the question. Coming back on the free TV Scandinavian part, what is your outlook on the Swedish, Norwegian, and Danish TV ad markets going into Q2, knowing that the comm base are getting a bit easier? I know you're expecting to lose a bit of share there, but can you share with us what's your view for those TV ad markets going into Q2?
Just to recap, I think our best estimate now is for the first quarter, obviously, that we have seen growth in Sweden and growth in Norway, and decline in Denmark. However, as I said earlier as well, we are believing the market is going to grow going forward, and this should be the same picture in the second quarter. To what extent, it is really hard to forecast for us at this stage, particularly because you have the mixed picture. There will be growth. Best case maybe is low single-digit percentage figure. The positive momentum or the positive signs we are seeing are the price increases on the agreement. The negative impact, as I said, was the unclear picture when it comes to Denmark.
Based on those elements we put together, the best case we have is low single-digit percentage figure growth second quarter and for the rest of the year.
In Denmark, does the change in status of TV 2, have you seen any impact on your audience, which I think you did, and also on your advertising market share? In a word, has the change in status of TV 2, has it changed anything for your day-to-day business so far?
The Danish market has been always extremely competitive, particularly because TV 2 works under different financial criteria than we do, and obviously, the change there has an impact, or the change of the status of TV 2 has an impact on the competitive landscape. We took the decision, obviously, not to follow TV 2 like we do in other markets. Rather keep the distance to SBS. That kind of goal has worked. Even the fact that we declined a little bit year-on-year, for example, on the ratings, doesn't have a negative impact on the advertising side, where we believe we have kept our market share versus TV 2, despite their major investment. To sum it up, I think Denmark is not a problem for us at this stage.
All right. Now moving to pay TV in the Nordics. How sustainable is the 10% output growth that you mentioned? I know your guidance is for low to mid-single digit, but what's behind this strong output growth, and should we see again strong low teens output growth going into Q2?
Yeah, as we said, the output growth is one of the driving factors for growth in the Nordic pay side. We anticipate and keep the kind of view that it will grow, but rather mid-single percentage point every year based on price and based on value-added services we are selling. The price elasticity is still there. We haven't seen any major reaction or negative reaction where we increased prices like we did last time. We see better intake as well for value-added services. The mid-single-digit percentage figure, we feel safe. Just to recap again, the 9% sales growth, as Mathias said earlier as well, had a one-off effect as well, which was a bit artificial.
Okay. Can you share with us, what was the contribution of Viaplay to the growth of the pay TV Nordics business?
No. For various reasons, and mainly competitive reasons, we don't reveal any figures when it comes to Viaplay. The only thing we can say, obviously, is that if you have a look at the product, it looks very strong. The content lineup is probably one of the best you find in Europe. The technical platform works very well. At the same time, remember as well, it's an investment into the future, which right now only generates more cost than revenues. If we don't invest, in a couple of years, we will get an even bigger bill. The project is fine. It costs money. It looks strong. Besides that, for various reasons, we don't say more.
Okay. I would have two last questions. The first one is on Czech Republic. You said the market was down, isn't that due to the fact that state broadcasters have, of course, left the field? Did you see any boost coming from the ban of public advertising in Czech Republic?
No. The effect of the public broadcasters stopping their advertising was a kind of gradual move. It's not a one-off effect you see any kind of major impact during this quarter. We believe as a substance, the market has been soft in the first quarter, most likely down.
Okay.
Going forward, you don't see any kind of major impact. The strong performance only relates to the strong rating situation we have right now.
Right. The last question is on the subscribers in pay TV in emerging markets, which I think were, as you said, strong year-on-year, but kind of slightly down quarter-on-quarter. At the same time, the costs are only up 5%. Shall we expect some reinvestments there to fuel the subscriber intake engine?
If you take the picture on the principal level, obviously, if you look at the biggest investment and the most important one for us obviously is in Ukraine, and there you see positive momentum even in the first quarter in terms of subscribers. You see swings sometimes in subscriber intake on the basis of the business model in Russia, which is the low cost, low-end model, and therefore swings are there. I would not read too much on a quarter-by-quarter level always. Plus effect, again, that for us, we played obviously first quarter is a very low sales quarter and churn slightly higher. If you take Ukraine, for example, you have seen positive momentum. In terms of cost, we don't anticipate any kind of major cost increases. We just continue along the lines we have done in the past.
You want to see more investments over time in channels, in content, and technology. It's going to be the same model like we have in Scandinavia, meaning you find the kind of normal balance and grow with the flow and invest with the growth. It's not a kind of investment period in that sense.
Okay. Very clear. Thank you very much.
We will now take our next question from Rasmus Engberg from Handelsbanken. Please go ahead.
Yes. Hi. I had a couple of questions. Firstly, on your Pay TV emerging markets business, is this the one big jump or should we continue to see improvements quarter by quarter there in regards of the earnings?
No, it's a new level you reach. From that level, obviously, you're going to continue the performance like previously. It's kind of normal subscriber intake and the normal investments like we had in previous years.
Okay. Regarding Free TV in Scandinavia, as I understand it, when you talk about late signings of the annual contracts, does that mean that your March was better than January and February, firstly?
No. We can't go into this kind of detail level because that really goes down to operational issues and competitive issues as well. The only thing we are saying is the reason why we, despite the ratings going up, didn't take market share or kept the market share is due to the fact that you had the hangover from the ratings last year and the focus on the annual agreement.
Okay. The other question on free TV, considering the European Championship and the loss that you gave up, the ice hockey rights. Should we expect free TV costs to be basically flat or down in Q2 now and then be boosted in the second half of the year? Or how should we think about that when we forecast?
Yeah. You know we don't give any kind of concrete forecast and guidance, the way the model works is that, of course, obviously, first quarter was the peak level. Second quarter, on the own productions you produce, you're going to still have those kind of own productions running. They're going to be offset, of course, as well by the cost savings we have not showing the Ice Hockey World Championship, and therefore second quarter costs will be significantly lower. To be more concrete at this stage is a bit risky.
Okay. All right. Good. Thank you.
Thank you.
We will now take our next question from Stefan Lycke from Deutsche Bank. Please go ahead.
Hi, guys. Two questions. Firstly, if you look at the swing in the pay TV emerging markets business there, can you help me understand to what extent that comes from lower losses within the DTH as opposed to the better price in mini-pay?
It is a combination of volume growth on mini-pay. You see, obviously, lower losses as well in the investment we do in Ukraine and other places. You see a more stable situation, because the recession is over there in that respect in the Baltics. It's a combination of various factors. It just underlines and underpins that the Pay East is a very attractive business area for us going forward.
Okay, thanks. When it comes to Norway, you've done a lot of changes when it comes to people, and I guess it's fair to say that we should evaluate you again during the autumn when the new schedule comes out. What about the opportunity to launch a third channel in that market? What's the status? What can we expect?
Yeah, I think Norway is, of all the three countries we are in, it's the most complicated one because it's a combination of the operational issues which we are fixing, and then, of course, it's a bit of structural issue of the third channel. On the second point, if it comes to a new channel, we don't control the destiny alone fully. Obviously, the timeframe is not completely under our control. Therefore, at this stage, I can't say more than saying, yes, it is an issue, and if we have an opportunity, we're going to do something there.
All right. Thank you.
Thanks.
We will now take our next question from Bela Dar from Danske Bank. Please go ahead.
Hi. Could you just give us a sense of the competitive landscape with regards to free TV Scandinavia? What is your view on the overall programming spend today and looking beyond 2012 as to compare to the preceding years? Is the competition substantially tougher nowadays?
It's a good question. I think the peak competitive levels are phasing out. We have new management in place at TV4. We have a new owner at TV 2 in Norway, for example. I assume we're coming more back to normalized levels now in normal years. First quarter this year was the most painful quarter for us because of the catch-up effect compared to last year in terms of comps. The second quarter will be a bit different, going into the second half and next year, I think we should be absolutely back to normal days and normal levels in terms of competitive pressure and the price pressure that comes through to content.
Okay, thanks. A follow-up and a detailed question on the OpEx, so programming spend in Q1. Was that evenly spread out on the various markets, or are you pinpointing certain markets beyond Q1 so to say? What should we expect in terms of focus on ratings for the full year?
Without going into much detail, because again, it would harm the operations, it was more or less spread out evenly over all three countries.
Okay, thanks.
Thank you.
We will now take our next question from Lisa Yang from Goldman Sachs. Please go ahead.
Hi. First question is on the OpEx in the first quarter. Was there any one-off in that quarter, any cost brought forward, and can you confirm that the cost of the Champions League should be spread equally over the four quarters this year?
There was no significant or any material one-off cost were delayed or moved between quarters. If I understand the second question right, yes, we confirm that we take the new Champions League contract spread out over 12 months this year.
Okay. Just a couple of small questions. Can you comment on your audience share trends in April? Can you let us know why you sold Bet24? What was the profit and revenue last year, and are you considering disposing of other areas in the business that are not really making money?
If you look at the rating trends in Scandinavia, it's more or less a picture like in the first quarter. You see still a positive momentum in Sweden. In Norway, you still have problems in Norway and Denmark is fine. This is what we highlighted earlier as well. You will see an impact rather in the second half than the first half of this year, because we are still relying, obviously, on the kind of programming decisions made earlier or at the end of last year. That's the reason. It's not going on any further more dramatic in the main market. We talk about Bet24. We launched Bet24 many years ago with the anticipation that all the betting companies will go in and try to acquire sports rights, and therefore a new competitor would enter the market and we should be ready for that.
The world has changed, the market has changed. It's obvious that the betting companies don't have an intention to become content aggregators when it comes to sport, and therefore, we decided a while ago that Bet24 becomes non-core. If somebody comes and offers a fair price, a good price, we would sell. That happened now. We can't reveal for confidential reasons, of course, any kind of details about the profit of the company and other things, but it was a good price, and it was valuable for the shareholders, so we decided to exit.
Okay, maybe, sorry, last question, please. Just in Czech Republic, you mentioned that the prices were still down year-on-year. Your competitor, CME, also stated that they were trying to increase prices in both Bulgaria and Czech Republic. Maybe can you comment on that? Why is that different from what you're seeing?
Yeah, I can only comment on things I know myself. By the way, it was Bulgaria. I don't think it was the Czech market. In Bulgaria, we still have seen in the first quarter the tendency to sell out the inventory for even lower prices from our competitor. That, of course, puts price pressure on the market. At one point of time, they will have the same situation like in Czech, that they come to a sort of situation, then things going to get more stable. In Bulgaria, we are still probably a bit behind what happened in the Czech market. We have seen in the first quarter market price is down, and if it changes in the future, we will be the first ones to be very happy.
Okay. Thank you very much.
Thank you.
We will take our last question from Sarah Simon from Berenberg. Please go ahead.
Yeah. Hi. Just a quick one. I'm just wondering what kind of visibility you've got in terms of the ad markets and how that looks relative in terms of duration forward, how that compares with where we were, say, three months ago.
Yeah, I think it's the same. In Scandinavia, you have a bit more outlook or whatever, a bit more safety to make a projection, which we did with low single-digit % growth in the market. Eastern Europe still remains pretty unclear and vague and influenced a lot by the macroeconomic side. It's harder for us to get a clear picture really at this stage in Eastern Europe, and therefore we are a bit more conservative and safe.
Sorry, can you just explain why you have more visibility in Scandinavia? Is that because of these annual deals?
It's three things. It's the underlying economy, of course, is very solid. B, you don't see any impact yet from a Euro crisis. I haven't seen any kind of impact from the Euro crisis. Third, you see trends like in the annual agreements, for example, where prices are going up on a modest level.
Okay, great. Thanks.
Thank you.
That concludes the question and answer session. I would now like to turn the call back to Hans-Holger Albrecht for his closing remarks.
Thank you, operator, and thanks everyone for participating today and for your continued interest in MTG. We look forward to meet you or speak to you over the coming weeks and months, and we will keep you obviously updated on our progress. In the meantime, thanks and goodbye for now.
That concludes today's conference call. Thank you for your participation. You may disconnect at this time.