Earnings Call: Q1 2020

Apr 23, 2020

Now hand the call over to your host, Matthew Hooper, Nordic Entertainment Group's Chief Corporate Affairs Officer. Thank you very much, operator. Good morning, and welcome, everybody, to our Q1 2020 results conference call. You for taking the time to join us on this call in these extraordinary circumstances, especially as most of you will be dialing in from home. We very much hope that you and your loved ones are keeping well. I'm joined here on the call today by our President and CEO, Anders Jensen our CFO, Gabriel Catriona as well as Stefan Licker and Emilie Alme from our Investor Relations team. Presentation materials are available as usual on our website and a Q and A session will follow Anders' and Gabriel's comments. I will now hand the call over to Anders. Thank you. Thank you very much, Matthew. Good morning, everyone. I hope you're all doing well. As Matthew said, today's call will follow a different structure than usual, of course, given the extraordinary times that we're all living through. I will start with some general thoughts and reflections and move on to what we are seeing across the business and then run through the actions that we are taking. I will then hand over the call to Gabriel to run through our Q1 performance, what we're doing to protect profits and cash flows and how we are set up from a funding perspective. The effects of the corona crisis on our personnel and personal and professional lives are in many ways unprecedented. Some of these effects are temporary, but not everything will go back to the way it was. It has always been clear to us that the change in consumer behavior that we have seen in our markets for a decade now would eventually cause irreparable damage to traditional broadcast business models. This is exactly why we invested so early and so aggressively into streaming already 13 years ago and have significantly stepped up our ambitions in the past 4 years. Our streaming strategy is even more relevant today than it has been ever before. Furthermore, the actions we took last year to change our operating model, reduce our cost base and merge our satellite business with Canal de Catal has put us in a strong position to deal with the current challenges and more importantly, to take advantage of the opportunities that we're now seeing to come out of this crisis even better positioned than before. Being able to make fast and accurate decisions in times like this is absolutely vital. It is clear to me that the new organization and operating model that we put in place have enabled us to do exactly that and that these decisions have protected our people and helped us to look after our subscribers and partners. These decisive actions included making sure our people were working effectively from home at an early stage, being the first to reduce prices for our sports subscribers and partners and taking quick measures to reduce our costs and improve our cash flows without any reductions to our permanent workforce. I'm proud and very inspired by the response of our team to this crisis. We have found new ways of working together, of looking after each other and of motivating each other, and not just internally, but also with our customers, our partners and society in general. Our people are not just focused on how we will get through this, but also how we will accelerate our transformation by coming up with new innovative ideas and solutions to limit the negative impact of the crisis and accelerate the development of our streaming operations. This gives me great confidence that we will come out of this even more focused than before because change and transformation are what we do best and times of crisis also bring opportunity. At a time when many companies are paralyzed, there is a clear window of opportunity to structure new deals and collaborations with partners. Both companies and governments are now receptive to things that they would have not have considered before. Now let me turn to what we're seeing across our business and start with our subscription sales, which increased by 5% and accounted for 67% of our revenues in Q1. We're already seeing continued growth in viewing levels, subscribers and revenues for ViaPlay before the crisis. And this accelerated dramatically in March once people started to stay home. ViaPlay added 102,000 paying subscribers in Q1, which included our highest ever TV and movies subscriber intake. When adding customers that have access to ViaPlay through their ViaSat subscriptions, our total ViaPlay base was over 2,000,000 by the end of the quarter and has continued to grow at a fast pace since, which is why we feel confident in raising our full year subscriber intake from the original 250,000 to 400,000. This would represent a 25% increase in the ViaPlay subscriber base in 2020. The ViaPlay subscriber intake in the quarter was a result of a very high gross intake and low churn rates for our TV and movie packages. Our sport base was only down 11,000 in the quarter, but was up compared to last year, which demonstrates that our early decision to reduce the sports package pricing on the to the TV and movies price point on March 13 was the right one, even if it will, of course, have a significant short term effect on our revenue growth. New sports sales have been predictably low since the postponement or cancellation of almost all sporting events, but churn has also been very low as viewing of non sports content by sports subscribers has increased dramatically in recent weeks. It is clear that there is a huge built up demand for live sports when the leagues and events resume. The total number of start in streams on ViaPlay was up 34% in Q1 compared to last year, and the growth was an amazing 46% in March when excluding sports viewing. It is also clear that this period of everyone being at home has led to significant rise in the purchasing and renting of new movies with record sales for both our TVOD and EST stores in March. We set a new record last week on Monday, April 13, when we had more than 1,280,000 unique users on ViaPlay. The increase in viewing is happening across all categories: series, movies, kids content and, of course, originals. We premiered 8 new ViaPlay originals during the quarter, including Box 21 and the 2nd season of Couple Trouble, which were our 2 top 2 most viewed originals during Q1. Our kids series, Mia's Magic Playground, was the 3rd most viewed kids series in Q1, only trailed by the hugely popular international formats, PAW Patrol and Peppa Pig. The release of the new Bond movie was postponed, but our release of all the Bond movies on Via Play has been very popular. And we have struck deals with several Hollywood studios to release new movies direct to our stores given that the movie theaters are currently closed. The deals that we have signed in the last few weeks with Com Hem in Sweden and Altibox in Norway will make Via Play available in even more subscriber packages. And the launch of ViaPlay in Iceland on April 1 has landed very, very well, with more than 5% of the households having subscribed to ViaPlay just 2 weeks since the launch. On the content side, the vast majority of the 30 originals we had planned for 2020 will premiere as planned. Our Hollywood slate is stronger than ever after recent deals with SF, Sony and Disney. And when things return to normal, we will have the broadcast sports offering. We have the broadest sports offering we have ever had. And we have gone even further by signing long term deals with the Premier League, Bundesliga, Formula 1 and most recently UEFA, where we have extended our rights to the Champions League in Denmark until 2024 and added rights to the Europa League and new Europa Conference League in Sweden, Norway and Finland from 2021. We have stayed true to our commitment to make a positive return on all sports rights, so we will let go of the Champions League rights in Sweden and Norway after next season as the prior price inflation moved well beyond what we could justify. We're, of course, sad to let go of these rights after so many years, but our proactive management of our sports portfolio made this possible and also makes me very confident that with more football and more sports for many years to come, there will be no negative impact on our sports subscriber base. Our ViaSat direct to consumer subscriber base was only down 3,000 as growth in our broadband TV offering in Sweden almost fully offset the ongoing decline in the satellite base, slightly less than 50% of our ViaSat direct to consumer base subscribe to sports, and we have seen very low churn levels as a result of the postponement of a sports event. The merger of our ViaSat consumer business with Telenor's Canal Digitale is proceeding according to plan. We made the EU filing in March and expect to hear by the end of this month if a Phase I approval will be made. If this happens, we expect to close the deal in May. The current crisis has only served to further highlight that this deal is absolutely the right thing to do and could well become the model for similar much needed mergers in other parts of the business and industry. Now moving on to our advertising business, which accounted for 33% of our revenues in Q1. We are considerably less exposed to the advertising markets than most other broadcasters. Our viewing shares increased in Sweden and Norway, slightly down in Denmark, while our share of listening was up in Norway, where we have news programs slightly down in Sweden. The advertising markets had already shown some signs of weakness at the start of the year, but were still broadly in line with our expectations. The onset of the coronavirus crisis in March has seen demand levels fall sharply in the spot markets with advertisers delaying or canceling campaigns. Our Q1 advertising revenues were down 13%, March advertising revenues were down 17%, and our April revenues are expected to be down around 25%. Radio has fared somewhat better than TV in Sweden, but not in Norway where buying cycles are very, very short. Started streams on Via Free were up 26%, but revenues were down in Q1 due to the lower advertising demand levels from March in particular. Our advertising business has seen postponements and cancellations across all markets and sectors. If we look at our April and May bookings, the most affected market segments right now are travel, entertainment, retail and especially betting due to the postponed sports event. These categories together represent roughly onethree of our ad revenues. The most resilient segments are Pharma and Healthcare, FMCG and telcos, which together represent around a quarter of our ad revs. Approximately 80% of our estimated annual ad inventory has been committed in the upfront agreements at a slightly higher net price than last year, and TV remains the most popular ad medium as it delivers the proven attractive returns on investments. Naturally, forward visibility is very low right now and would be unwise to speculate. We are seeing clients being very tactical about the planning of campaigns to coincide with the anticipated return to some sort of normality in the weeks or months to come. It is not that they are leaving the market altogether. We do obviously expect that advertising revenues will be down significantly in the second quarter, with May likely to be down more than April. And just to be very clear again, it is important to remember that our exposure to advertising is limited to approximately 25% of our revenues. So every 1% decline reduced our group revenues and profit by approximately $40,000,000 That is before any of the mitigation effects that we have taken. Now finally moving on to our Studio business, which accounted for 10% of group sales. Q1 sales were down 17%. It is clear that the restrictions on people's movements and abilities together for anything other than absolutely critical activities are seriously limiting our ability to produce new content. 5 large scale scripted shows that were due to start production in this spring has been postponed to this autumn or next spring. The good news is that no scripted shows has been canceled, so the underlying demand remains very, very healthy. We have 16 non scripted shows that has been postponed and another 12 that has been canceled as it is simply not possible to continue or even reschedule the productions. It is too early to quantify the Q2 and full year impact, but we do sales to be slightly to be down significantly for Studios. But please remember, though, that the Studios cost base is variable by nature, so the profit impact at a group level is very limited. If we look beyond the crisis, there is no doubt that the demand for high quality content is only going to increase, and our development slate looks very promising. We have paused the process we started in January to sell the non scripted events and branded entertainment parts of the business, but there is no change in our decision to do this. It's just a matter of timing, and we have been encouraged by the continued interest in these attractive businesses. The scripted production parts of the business remain of great strategic value, maybe even more so now, and will be key to ensure the continued quality of our original production pipeline into 2021 beyond. So what have we done and what are we doing? Well, our first priority since the start of the crisis has, as mentioned, been the safety and well-being of our people and doing what we can to impact to limit the impact of the coronavirus on our communities. This is why we took the early decision on March 9 to ban travel from initially affected areas and then altogether. And then on the 11th March, to ask almost all of our people in all countries to work from home using our VPN, cloud computing and video conferencing tools. We have restricted access to our office locations so that we can protect those of our colleagues who do come in to keep our services running. We have made sure that we have followed or even exceeded the guidance of local governments and international health organizations in the measures that we have taken to slow the spread of the virus. We also put great emphasis on continuous communication and interaction with our people in order to provide guidance and support of both mental and physical well-being. To date, we have 2 confirmed cases of the virus in Nantgroup and both are recovering well at home. We have seen many creative examples from our colleagues across Nant of how to help fight the COVID-nineteen virus. We are working with health authorities in each of our markets to help inform the public about what they can do to keep themselves safe and slow the spread of the virus. A great example that I'd like to mention is the launch of Lusner Jelten in our Swedish radio stations where we encourage and celebrate people helping out during the corona crisis. Local music artists have held live performances in our studio to raise money for NGOs helping with the crisis, and we're offering 20,000 free months of Wireplay subscriptions to relevant institutions that are supporting people, particularly affected by the crisis as well as the many superheroes who are working so hard to look after them. In addition to helping out here and now with fighting the virus, it is very clear to me that the combination of investing in streaming and taking decisive actions to reduce costs and manage cash flows is the best way for us to protect our people, customers and partners. This will ensure that we come out of this in a stronger position than when we have been to the crisis and that we can continue to create significant shareholder value. We have therefore implemented actions to reduce our cost by at least $700,000,000 this year without reducing our permanent workforce or reducing our ambitions for wire play. The $700,000,000 of savings is made up of 3 buckets, dollars 200,000,000 come from the reduction in the number of freelancers and consultants and the cancellation of all variable remuneration for this year. Another $300,000,000 comes mainly from lower ad hoc content investments in our ad funded TV business. And the final $200,000,000 is the SG and A saving from travel, entertaining and conference bands as well as lower marketing spend in some categories as we use our own unsold inventory to further promote our products. This comes on top of the $250,000,000 of savings from last year's transformation program. The preservation of cash flow and liquidity is critical here, which is why the Board has decided not to propose the payment of a dividend for 2019 or any share based executive incentive plans for 2020. Gabriel will elaborate on our funding profile and cash flow protection measures in just a few minutes. Taking care of our customers and partners has been a big priority for us since the start of this. This is why we very quickly implemented the temporary reductions in our sports package prices for our ViaPlay consumers and together with our distribution partners from 13th March. As I mentioned before, we were the 1st media companies to do this and most have now followed suit. Virtually all sports leagues and events have now been postponed indefinitely or in some cases canceled. We understand, respect and fully support the decisions made by the sports event organizers around the world who are rightly focused on safeguarding the health and well-being of athletes and fans. We're in close contact with the organizers to discuss how things will be handled moving forward. We have, in the meantime, stopped amortizing sports rights, and we're not making any new payment for postponed sports rights until they resume. We do expect to receive compensation for any sports events that are canceled and indeed have already received back 100% of the cost for this year's Ice Hockey World Championship that was due to be held in Switzerland. We will also not make any payments for the 2021 season until everything is clear with the current seasons. Our risk with regard to sports rights is basically limited to 3 months, which is the worst case scenario being limited revenues, full costs and no compensation. However, this is not a realistic scenario, especially as we have already started to be compensated for canceled events. And the unlikely event that the lockdown continues throughout the year, then we won't be making any further sports payments and will not be expensing any sports rights. Taking care of our customers will boost our NPS and the general depreciation of our service and will, of course, raise prices back to their previous levels as soon as the events are back on. Moving back to the bigger picture, it is clear that the coronavirus has accelerated the ongoing shift from linear viewing to streaming. The structural issues with the ad funded media model are bigger and clearer to me than ever before. And yes, the ad markets will bounce back at some point, but I do not believe that the ad markets and things in general will go fully back to the way they were. The short term effect of people being confined to their homes is that streaming services are seeing a huge surge in popularity and usage levels. But even more importantly, many more people are now experiencing these services for the first time. This will further impact linear viewing levels and accelerate the cord shaving and cutting trends that we have already been that were already evident before the crisis. Our strategy to focus on streaming is, therefore, more relevant than ever before, and we remain laser focused on making sure that we fully capture this opportunity by investing even more into ViaPlay. The launch in Iceland has demonstrated the popularity and rating of our content as well as the agility and scalability of our tech platform. So further international expansion may be on pause for now, but only temporarily. Expansion plans makes perfect sense and may be even more cost efficient and quicker in the changed market conditions after the crisis. Our purpose to tell stories, touch lives and expand worlds has never felt more relevant or correct than right now as we seek to help each other throughout these very difficult times. With this, I will now hand over the call to Gabriel for his comments on our financial performance and position. Over to you, Gabriel. Thank you, Anders, and good morning, everyone. I would like to start by quickly running through the Q1 performance. The organic growth in the quarter was down 2% and comprised a 13% decline in advertising revenues, a 5% growth in subscription revenues and a 17% decline in studio revenues. Advertising accounted for 23%, subscription for 67% and Studios for 10% of our total sales in the quarter. Operating profits before items affecting comparability were down 20% or $55,000,000 and that included a $60,000,000 FX headwind relating to the U. S. Dollar in the quarter. We had some cost benefits from the postponed or canceled sports events, but also a headwind from the depreciation of the Norwegian kroner on top of the impact from advertising. Our cash flow from operations was up slightly compared to last year at 247,000,000 dollars Changes in working capital had a negative impact of $794,000,000 which reflected normal seasonal patterns, including our investments in Vipay Originals, prepayments on the new Premier League rights agreements that we signed during the quarter as well as the payment related to the now canceled Ice Hockey World Championships, which has been refunded now in April. As a result, our net operating cash flow for the year was down. As we enter the Q2, it is clear that the impact of COVID-nineteen on the business will increase, but it is difficult at this stage to fully predict and quantify the depth or the duration of the impact. As a result, we have decided to withdraw our 2020 outlook for profitable growth. It is too early to provide an updated outlook as that depends on different factors, including the extent and duration of the crisis, the measures implemented by governments across the world and in general and in the Nordics in particular and also on which sports leagues and events will resume later in the year and when and which will be canceled and also the further actions that we can take to mitigate these additional impacts. Furthermore, the closing of the ViaSat Consumer and Canal Digital merger will also change our financial profile. As Anders mentioned, we expect this transaction to close sometime in May. Having said that, our ambition is to be as transparent as possible. So I want to try and help you with some of the line items where we have We expect the majority of the savings of approximately 2.50 We expect the majority of the savings of approximately $250,000,000 from this in 2020, of which we deliver approximately $50,000,000 in Q1. We expect to generate an incremental $700,000,000 of savings in 2020 from the program that Anders talked about earlier. The effect from this was approximately €35,000,000 in Q1. This number will be closer to €200,000,000 in Q2 and will then gradually increase throughout the year. The cancellation of the Ice Hockey World Championships, a number of European golf tournaments including The Open and several Formula 1 races as well as the postponement of the Euro 2020, we already expect to reduce our sport cost compared to our plans by approximately DKK 200,000,000 this year. We expect our transactional headwinds from the U. S. Dollar of approximately DKK 200,000,000 for this year, which is slightly higher than our previous guidance of DKK 180,000,000. And we also expect some translation headwinds from the depreciation of the Norwegian kroner. It is also too early to provide any guidance on working capital, but you can see from the Q1 performance that we have made prepayments from the new Premier League contracts, and working capital was affected by investments also from Vipay Originals. We will also make prepayments in Q3 on the new deal that we just signed with UEFA. At the same time, as a result of the crisis, the lower sales in studios will have a positive impact on working capital impact for the year. There are, in addition, likely to be material benefits from government actions to support companies, which we are proactively utilizing, but we will come back later on this when the precise measures and the impact of those can be specified more clearly. Moving on now to our funding profile and the measures we have taken to safeguard our cash flow generation. I would like to stress that NAND is structurally a resilient company with a business built on subscription model and our access to liquidity is good with a solid bankrupt and different sources of funding facilities. We ended the quarter with $1,300,000,000 of unrestricted cash, a $4,000,000,000 revolving credit facility maturing in August 2023, of which $1,000,000,000 is currently drawn and an equivalent of $280,000,000 of undrawn overdraft facility. At the end of the quarter, we have corporate bonds totaling $2,300,000,000 of which $500,000,000 expires in October 2020, with no further bond repayments until 2022. We have short term commercial paper totaling $2,100,000,000 and we have managed to renew $100,000,000 of this in recent weeks. Our net debt ended the quarter at $4,800,000,000 which is 2.6 times our trailing 12 months EBITDA before items affecting comparability. The financial net debt was €4,200,000,000 and we found ourselves at very competitive rates and have close and long standing relationships with all of our credit providers. The positive cash flow impact from not paying any dividend together with the cash impact of our OpEx savings, will ensure that more than $1,000,000,000 of cash will be retained within the business. We are also looking into utilizing actions to manage our liquidity during 2020. For instance, some of the deferral tax payments that will also help to manage our cash flow during the year. On working capital, we have a standard weekly management process to review cash outflows and receipts. We are continuing to work closely with our customers to ensure timely payments in line with contractual commitments and with sports right holders in terms of future payments and compensation for payments already made in the event of cancellations. I would also like to stress that we're constantly reviewing different scenarios of the COVID-nineteen outbreak and the potential impact on our future revenues, profitability and cash flow. And we are adopting the business and measures to mitigate the impact accordingly. These assessments and judgments are important when valuing certain assets and liabilities, such as goodwill and intangibles, account receivables and inventory. And at the time of this report, there is no indication of necessary adjustments, impairments or similar. So in summary, we have taken and are taking decisive actions to mitigate the impact of the coronavirus on our business, and we remain in a healthy position with plenty of liquidity. Thank you. And now back to you, Anders. Thank you very much, Gabriel. The year started out well, but the spread of the coronavirus is having an adverse impact on parts of our business. We have acted fast to implement a range of measures to protect the business, and I am convinced that Men Group has the focus, the agility and the bravery to deliver in challenging circumstances and to emerge even more focused and even better positioned to capture the opportunities that lies ahead. The success of ViaPlay in these times proves the validity of our strategy. Scaling ViaPlay is simply the best way to create sustainable long term shareholder value. We're now looking forward to the closing of the ViaSat Consumer Canal Digitall deal, which will generate significant cost savings on top of the $50,000,000 mentioned earlier on this call and further accelerate the growth potential of ViaPlay, including further geographic expansion. So now that concludes our commentary on the results. And over to you, operator, to please start the Q and A. Thank you. Ladies and gentlemen, we are now ready to register questions. So we have the first question from Johanna Alquist. Please go ahead. Yes. Thank you. A few questions, if I may. The first question to you, Gabriel, if you have any breaches on covenants that you expect to sort of hit during the year? 2nd question relates to the fact that you expect to get money back from the hockey rights. I'm just wondering, do you expect in terms of cancellation of, for instance, Premier League or Champions League, do you have sort of the same bargaining situation that you expect to get 100% back of the sort of non played games, if you understand what I mean? And then third question, I guess a big part of your savings for the year, the €700,000,000 relates to free TV and the content. And I was just curious how flexible you are in terms of that content. I was sort of expecting that you signed most of it already going into the year, but it seems like you have a pretty good flexibility there. And then 4th and last question, sorry for all of the questions, is if you see an accelerated satellite churn or if you expect that to happen as a consequence of this downturn? Thank you. Yes. Thank you very much, Johan. I will start with your first three questions and then hand over to Gabriel for the last question on the covenants. If we start with your question on sports, yes, we are contractually entitled to on a pro rate basis get back any non sort of concluded sports events, whether that is the Premier League or the Champions League or anything else. We will, of course, not get some money back for the matches already played, but we will get money back if something is canceled. What we see right now is the AISOC, the money has been sort of paid back to us. We do expect some Formula 1 races not to be concluded, and we will get money back for those, while some will be concluded. Premier League, Champions League and general football in general, we do expect that the leagues will do everything they can to get back to some sort of completion of the season during the summer. But yes, we are entitled to 100% prorate compensation for canceled events. On your third question on the content for linear TV, we are every year working with a bucket of ad hoc content acquisitions very much based on how we see the demand in the market and how much inventory we need to build. So we always keep this open so we have flexibility and are not totally locked in if the market like it has now goes down. So that flexibility around between $250,000,000 $350,000,000 we have also going forward. And it may, of course, be so that a slow return from the ad markets means that we will continue to not invest as we would normally do in linear TV content. We haven't seen much churn to your 4th question. We haven't seen much churn on the direct to consumer DTH basis when it comes to sports. We are adding we're working with them. There are many different price packages in that part of our business. And the team is working proactively with the customer base to give compensation without reducing the prices because it's very difficult in that part of the business unlike streaming. So the churn has been, I would say, very, very limited and manageable. Gabriel, the question on the covenants, please? Yes. I mean, to answer your question, I think the way we see the business right now, we have a very healthy financial position. And at the same time, we have very strong relationships with our banks and access to funding. But obviously, it will depend how the corona crisis evolves. But right now, we have a very healthy position and don't see any risk. Thank you very much. Thank you. And we have another question coming from Tom Singelhurst. Please go ahead. Good morning. It's Tom here from Citi. Thank you for taking the question and thanks for doing the call. Just a couple of questions actually, one on advertising. I know you sort of vaguely mentioned this, but minus 25% in April doesn't actually sound that bad in the big scheme of things. You've got, ProSieben talking about minus 40 over the same period. I know you mentioned May is slightly more challenging. Just give a bit more color on why that is? Is it because some of the sort of the guarantees are kicking in and artificially keeping the numbers up? Is a big differential, let's say, between sort of traditional linear advertising and advertising on the sort of AVOD sort of via play free service? That would be interesting. So that's the first question. And the second one, the sort of subscription and other revenue performance is really very, very creditable given the pressure you've got from proactively casting prices. On the transactional VOD side, where you've been obviously selling a lot more content, is that causing a significant sort of impact? Is that artificially in place in growth? That's the question. Thank you very much, Tom. I hope you're doing well. On your first question on advertising, why is it only 25% given that we hear different from others? Well, I think it's very difficult to compare market by market and broadcast by broadcast because the way deals are structured is most likely very different. We have 80% locked in, in the yearly agreements. So that is, to some extent, holding the numbers up. And you could also argue that, in theory, the decline should then be kept at 20%. But we're not working like that. We're trying to help our customers as much as we possibly can. There is no ad hoc market right now, and that's basically gone. So we're moving campaigns to support clients also into 2021. And then we have the mix effect, like you mentioned, AVOD and radio is hit less than the linear TV. So that helps our total sort of decline in a sort of like a positive mix effect. So we are in a slightly different position than many others. The first is, of course, that advertising revenues is much smaller as part of our total revenues than for most other broadcasters. And the second is that we have a different deal structure and a mix effect that impacts the ad revenues. So while 25% is a terribly sort of number, a terrible number to talk about, it's not that bad. Consider everything that we're seeing. And we will see how that evolves, of course, going forward. But that's what we see right now. T VOD is increasing significantly. The rental of movies is up on very, very high levels. And it's no, it provides decent margins, but it's a very, very small part of the total subscription revenues. So it doesn't materially move sort of the streaming business short term because of the crisis. It's just positive to see that we have good traction, especially given that some of the movie is coming from a directly from the cinematic window onto T Bone. So we can sort of offer, unlike many other streaming services, the same service as iTunes, for example. So it's good, but small. That's great. And one final question. I mean, we've seen lots of data that suggests that your overall sort of usage of the size is up significantly. You've obviously reported great sort of net additions for VIA PLAY. Can you give us any sense of the sort of competitive landscape? I mean, are you do you get a sense that you're outperforming within the context of this sort of overall bump for the industry? Yes, that's a good question. I can speculate to some extent. If you look at the numbers that are out from Netflix, and we've seen some indications that their growth in the Nordics is very limited. So we are growing sort of ahead of that particular competitor. Others, obviously, we don't know that much, but the numbers that we have suggest that we continue to take market share and a more than fair share of the organic growth in terms of deeper penetration of streaming in the households. I think it's fair to say that in a Pan Nordic perspective, the 2 services that are in most households across the Nordics with Netflix and ViaPlay. And that is, of course, very encouraging to be top of mind in that sense. The number 60 percent of our subscribers also having Netflix is gradually going up. And I think Netflix would say the same if they were ready to give that kind of detail that the combination of Netflix and Via Play is the most sought after in the Nordics. So I do believe we are grabbing market share, yes. That's very clear. Thank you very much. And stay safe. Stay well. Thank you. Our next question comes from Mikael Larsen. Please go ahead. Yes, hi. Thanks. Got a few questions also. First of all, can you elaborate a bit on the price reduction impact on ViaPlay and ViaSat, how that affected your revenues late in the quarter and how we should think about the Q2? Yes. Good morning, Michael. Hope you're well. The price reduction only relates to ViaSat. We haven't made any ViaSat price reductions other than on third parties, if that's what you referred to. ViaSat direct to consumer, we have kept and worked proactively with. And we it's very difficult to give you sort of a straight sort of numeric answer on the impact going forward. It very much depends on when things start to go back to normal. We have almost a full month of impact in the Q1, but I think that has been, to some extent, been compensated by a lower than normal churn also in sports. And when we combine that going forward into the Q2, we will get a little bit of a down the double whammy effect in Q2 with a full quarter of negative advertising and the pricing impact on the subscription revenues, of course, for sports. Exactly how much that is, it's too early to say and really don't want to go into that. We continue to see very good growth and good conversion rates, and that's the best way to quickly bounce back from this and to stay sort of profitable in every single quarter throughout the year. That is also a key component for us. But above and beyond that, I can't give you sort of a number, unfortunately. Okay. But if you can say something about the VIA plus side then that you control and know in detail. So the number of subscribers, we know that and the price effect. Can you say anything? Is it 30% or in that range? Yes. We have reduced the prices from the various sports prices that we have across the footprint down to the TV series and movies package. And you know from history that around 25%, 30% of our customer base is sports. And then it's very easy to do the maths on what kind of impact that has on revenues in general. That should then be sort of measured up against the continued very strong growth in terms of gross adds and the very good growth in terms of net adds with lower churn. And those if you put those things together, then you get sort of an indication of what a full quarter could potentially cost us in terms of lost revenues for sports. Yes. I'll do on the math also, but just to check, of course. And just to follow-up on the 3rd party side, what's your view on how the operator customers have sort of absorbed this and handled this price adjustment? Well, I think it's up to each and every distributor to manage their own prices. We can only provide sort of support and recommendations. And we went out very early and offered to take our part of any price reductions that they want to make, which, of course, is the best way to deal with this. It's a shared pain that we have to take. I think most of them has acted and reacted very positively. We have seen that some competitors have decided not to reduce prices for 3rd party distributors, and that is, of course, very negative. So I think what I'm seeing is that the industry is not abusing this situation, but rather trying to work together to keep customers happy, which is obviously a positive. If and when something happens on the sports side and we get money back, only then can we start to talk about sort of further compensation, but not before. Okay. And I would like to follow-up on the content cost discussion earlier and what type of flexibility you have. You have already highlighted that the SEK 700,000,000 part of that is content cost related. But other things that you could do in the advertising side, free TV side and in the subscription side? Can you say something about how you can manage the costs? Absolutely. If you look at sort of the like you say, the $700,000,000 bucket of savings this year, the vast majority comes from cancellation, not moving, but actually canceling some of the ad hoc purchases of content for predominantly linear TV that we're doing. So that is not money that we move into the future in any way, shape or form. We basically just cut it. And we always have that level of flexibility every single year. So there is a way of working with our inventory in an efficient way. Then next step would, of course, be to reduce longer term investments and reduce the number of own produced content for our TV channels. We can reduce some of the way we amortize the acquired content over a longer period and pull it into the future play out differently. So we do have a fair degree of flexibility to work with our content costs for those areas that are under decline. The most important element for us is to make sure that we don't have to touch in a negative way the investments in streaming content, which we're not doing and we're actually increasing to some extent to give more content to our subscribers. But we do have a fair degree of north of 3 50,000,000 in a given year. Okay. And just a couple of questions on the advertising side. Can you talk about Norway, Sweden and Denmark, how the markets develop there? And what you expect in those 25% in May that you commented on? Yes. We have seen Sweden also started the year fairly soft and that has continued. So the decline as it has been spread for now in the outlook is Sweden, Denmark, Norway in that order in terms of decline. Of course, Sweden is the bigger market here, so that hurts a bit more. But then, of course, that market is bigger. So whenever there is an opportunity to bounce back, that probably comes a bit quicker. I think the long term effects in especially Norway will prevail for longer. So that mix effect gives us the decline that you've seen in the first quarter and also in the expectations for April of around 25%, slightly more in Sweden, a little bit less so in Denmark and a little bit less so in Norway. Okay. I'll take a stop there. Thanks. Thanks. Thank you. Your next question comes from Peter Tester. A couple of questions, please. One is just when trying to figure out how to match up any potential restarting of sports with your view on when you can reprice your sports package. As you go into the summer, I mean, obviously, you get to the end of a lot of sports seasons. Can you just give some sense as to if they do, for example, start up the football extensively for an extended league season to make up what they've missed? Is that a trigger? Or what is the real trigger for you to consider putting your sports pricing back up? Yes. Hi, Peter. I hope you're all well. Yes, the trigger is exactly that. The one defining league is, of course, the Premier League. So if we assume that the Premier League goes back to the latest reports point to an ambition to start up in June. Of course, it remains to be confirmed. But if they do and if they, as we have heard, do it in a slightly different pay more matches per day in a cup sort of way to complete the season, that will generate a lot of And if that is then cited by some other things coming back at the same time, then I think we have good grounds to increase prices back to normal immediately when that is happening. If it's so that the Premier League is continuously delayed and we have smaller leagues, important but not as defining as Premier League, we will do gradual price increases. But the ambition is to be back to full prices a little bit with some country variations. We don't have the Premier League yet in Norway. So prices will go back probably a little bit later in Norway. But during the summer so end of June, August, we hope to be back with the prices. Right. Okay. And then just looking at the number of ViaPlay, you're looking you're saying $400,000 for the year, which I guess there's a lot of different moving parts in that given the situation. I mean, obviously, you've got lower churn, which helps. You've got this lack of sports in the short term, which hurts. And then you've got your comments on satellite. So when you try to get some visibility as to how those moving parts are driving your view on how you get to $400,000 for a year, you've got some also some net distribution agreements that have recently been signed, some quite interesting ones. I'm just can you just give us some understanding as to how you got to that number? Yes. Happy to. You're right. We have signed and announced 2 new agreements, 1 with Com Hem in Sweden, out of box in Norway that has sort of significant and very attractive B2B components for ViaPlay in them, where we'll see ViaPlay in the top tiers in more households. That's one element. We do expect the lower churn to prevail. And then the kickback when we get the sports, my belief and expectation is that we will get sort of the customers back, the few that has left us. But the way the sports have developed, I think there is such a demand for sports short to midterms, so we will see additional growth in sports when it all bounces back. And then we have continuously a very strong fall when it comes to new content. And in addition, albeit a small market, Iceland is doing very well. So I feel very comfortable with everything put together in that mix to upgrade our expectations to $400,000 Okay. And then the last thing is just on the ambition or I thought about the wrong word, but just what you're expecting to try to achieve on the government side in terms of cost support? I mean, obviously, you have different situations in Scandinavia than we have in a lot of Continental Europe vis a vis state of shutdown, etcetera. And as your businesses outside of maybe the programming part largely functioning. So can you just give some idea of the scope of support that you're examining with governments at this time so we have some concept for what you're looking for, please? Yes. The most notable support that we're getting currently is to allow people to go on short term leave, so to speak. And then we get the salary partly or almost fully paid by the respective governments in the countries. That is applied in all of our markets. And so that's very hands on. It's kicking in as part of our savings. In addition to that, we're, of course, in discussions with all relevant regulatory bodies when it comes to tax breaks and supports when it comes to get productions back into full swing when that's possible. That's where I think the support from the respective governments is a bit more vague in that area. So more work needs to be done to get something really tangible out of it. For now, the support is deferral of payments of social securities and support with salaries. That's very hands on. But we are seeking more, but nothing has been fully confirmed yet. Okay. And the extra would be mostly in the production part or would it be in other parts? No, I think it would be natural to find ways of getting support when it comes to production. Short term, that makes sense to get people back into work as quickly as possible. You could be tempted to try to sort of not go back to full swing immediately and to save a little bit extra. But with government support, that should not be the case. And I think it's in everybody's interest to get people back to work as quickly as possible. And the last question in the queue comes from Martin Arnell. Please go ahead. Hi, guys. Hey, good morning. How are you? I'm fine. And you? Yes. We're hanging in there. Great, great. So my question is, firstly, would it be possible for you to quantify roughly the increase in via play streaming since mid March like a year over year effect relating to this current crisis. Is that anything you could share? You talked about streaming in terms of usage, right? Daily average streaming time, for example. Yes. The number we have given a number of 34% increase on started streams year on year for the Q1. And that number is, of course, very much influenced by March, demonstrating even higher numbers. And a record number of subscribers being in using the service on a single day is up to 1,300,000, which is an all time high. So of course, there is a very positive effect. I think it's important to say that, so you could argue, yes, that's, of course, a onetime effect of the crisis. But yes, it is. But the flip side is there is a lot of opportunities and choices for any given consumer out there to consume content. And the fact that we're doing so well under those circumstances is telling us that ViaPlay is more and more top of mind and ViaPlay is more and more the first or second choice when you decide to watch something during the day and evening. And so and that bring that with us into the future. So Marsh has been very strong. We're looking around sort of between 30% 50 percent increases on usage, without the sports, of course. Perfect. That's very helpful, Anders. Thank you. And that continues into April, I assume, the March trend? Yes. It continues to be very strong, both we see continued very strong sales, low churn. We continue to see usage doing very, very well. I have to mention Iceland being a small market, so that we've been there only a few weeks now, and we're in more than 5 of the Icelandic households. And the conversion rate on people going from free trials into paying is absolutely record high. We're talking about plus 80% conversion, which is extremely high. So yes, it's looking good. Great. And on your fireplace subscriber base guidance for the full year, the 25% growth, How should we look upon the split B2B and B2C in that number? You will see some significant effects coming from 2 new distributor agreements, Com Hem and Altibox. Continued sort of good beat underlying performance in direct to consumer. So it's we're probably looking at 30% of this year coming from B2B. That can, of course, accelerate further if and when we make new deals and new ways of working together with others. But that's the kind of split that you should think about right now. That's great. And on if you look at the sports rights market, we're seeing local telcos in Sweden moving in on the large some of the largest rights. How do you think that To be confirmed, I believe. Yes, to be confirmed, sure. But how do you think that will impact you in the longer term when it comes to use some future partnerships with these telcos? Well, we are very open to discuss ways of working together. I think there is proof of concept of the smartness of doing that. If you look at the U. K. As one example, instead of having battled it out for a number of years and then finding a way to work together, I think BT and Sky could have avoided a lot of value destruction. So we are very open for those discussions, but it takes 2 to tango and it takes a common view on things, whether it's a telco moving into content or some other of our more traditional competitors taking over a ride. That is part of the that's the name of the game, and we've done it for quite some time. And even if we let go of Champions League in Sweden after the next season and in Norway, our portfolio is stronger than anybody else's. So whatever discussion we're going to have in terms of working together, we will be discussing it from a position of strength, and that is as it should be. Okay. And And on your cost savings, the SEK 700,000,000 and the SEK 250,000,000, what's the timing for realizing that in the coming quarters like Q2 and the second half? We will see it gradually kicking in already now in Q2. And it spreads sort of a little bit back loaded, of course, given that it takes some time to realize it. But it's, of course, all in 20 20. But the split over the quarters is back loading a little bit. So you'll see gradually more and more in Q3 and Q4, of course already some in Q2. Okay. Great. And on just two more questions, if I may. On Via international expansion case, your next market there, can you say anything on the expansion case for ViaPlay? Is it a nearby market you're looking at? Or any flavor on that? Yes. There's a lot to be said about our expansion plans, and we probably don't have the time for it now, and it's a little bit premature. And what markets we're looking at, I will have to leave as a cliffhanger for a number of reasons. What I can say is the way we look at expansion is that expansion is only interesting if we can fully utilize, as with Iceland, our scalability on tech. I think that goes for most markets. We can capitalize on our strong content position above and beyond our own controlled originals, utilize our relationships with content owners. And by doing all of this, getting to profitability in any given market in much faster pace than you normally expect, That's the only reason why we would go into any market. We will not venture into a sort of walk in the desert, profitability. That would be very, very specific plans for each and every market if we decide and when we decide to do it. But we hope to be able to get back to you in the not too distant future and share much more about these plans. Okay. Thanks, Anders. And just finally, on the ad market, how do you think this crisis will impact the TV advertising market in the longer term? Do you think I mean, will it be like for the print market after the financial crisis? Do you think that it will be able to recover? I think it will recover to some extent. This is, of course, only speculation and belief, and it may recover fully. But I would not be surprised if it doesn't recover to the same levels. And I'm basing that on seeing sort of the move on consumption from linear TV to streaming and new ways of reaching your end customers as an advertiser. Linear TV remains the preferred choice when it comes to reach and quality. But of course, as consumers change, and they do change a lot during this crisis, you will potentially see an acceleration and thus a reduction of the value of linear TV going forward. We are ready for it unlike many others, and that is very, very important for us. Okay. Thank you. Thanks. Thank you. That does conclude the question and answer session. I will now hand the call back to your host, Matthew Hooper. Okay. Thank you, everyone, for your time and your questions today. We will be hosting video conference roadshows over the coming days, both today and tomorrow, and look forward to speaking to as many of you as possible. As ever, please don't hesitate to reach out to me, Stefan or Emily in the IR team with any questions or requests. We will hold our AGM next month. And for obvious reasons, we'll be doing that in a way that requires as little physical presence as possible. Please do let us know if you have any questions about how to register or vote at the meeting. It is now just over a year since our shares were listed on NASDAQ Stockholm. It's been an eventful year, and we have a unique story to tell. So thank you for your time and your continued interest. That's it for this call today. So goodbye for now. Speak soon and stay safe.