Earnings Call: Q3 2019

Oct 24, 2019

Good morning, ladies and gentlemen, and thank you for holding. At this time, all participants are in a listen only mode. After the presentation, participants will have the opportunity to ask questions, at which time instructions for the question and answer session will be given. I will now hand over the call over to your host, Matthew Hooper, Nedgroup Chief of Corporate Affairs Officer. Please go ahead. Thank you very much, operator, and welcome, everybody, to Nedgroup's Q3 results conference call. I'm joined here in Stockholm today by our President and CEO, Anders Jensen our CFO, Gabrielle Petrina as well as Stefan Liqueur and Emily Aum from our Investor Relations team. Anders will provide comments on the quarterly results, key strategic developments and the progress we are making as a leading streaming entertainment and content production company in the Nordics. After this, Gabriel will comment on the financial performance and position of the group, and then we will open up for Q and A session. Slides to accompany our comments are available at nendgroup.com/investors. I will now hand the call over to Anders. Thank you very much, Matthew, and good morning, everyone, and a special thanks to all of you who are dialing in for the 2nd day in a row. Q3 has been a very busy and historically important quarter for us. We have again delivered on our profitable growth commitment, while at the same time continuing to grow our ViaPlay subscriber base and invest in more and more original content. This again demonstrates the importance of our early and aggressive investments into the streaming markets. We have also changed our operating model from a traditional country setup to a functional model where we create focused centers of excellence that will work across markets, platforms, products and brands. This will enable us to take decisions faster and ensure better strategic alignment across the business and create skills hubs where talented employees can develop and grow. The new structure will also result in cost savings, which will be which will enable continued investments into our content portfolio and delivery technologies, so that consumers can get an even richer and more varied experience. We are currently in the middle of this process and we'll come back with more details on the savings and costs during the Q4. Another benefit would be that we can scale more flexibly, and we have recently announced that we will launch Viaplay in Iceland during the first half of next year. Iceland is the perfect market given the appetite for Nordic language content and its position as one of the most highly connected societies in the world. We do have ambitions for further expansion in the future. Yesterday, we announced the game changing combination of our ViaSat Consumer business with Telenor's Canal Digitral. This joint venture will enable substantial cost synergies, create a scale and competitive operator and provide the opportunity to upsell via play to the Canal Digital subscriber base. This deal will drive shareholder value and fits our strategy to focus even more on the substantial opportunity we see in the streaming markets. We covered this deal at length in yesterday's call and you can listen to a replay on it at netgroup.com. Now turning to the Q3 results. The sales were up 10% on an organic basis. Our total operating income before IACs increased to CHF 302,000,000 but did include initial CHF 13,000,000 of advisory fees for the Canal Digitale merger. So the underlying performance continues to be healthy. The most important operational performance indicator for our business is the ViaPlay subscriber growth. Put simply, scaling ViaPlay is by some margin the best way to drive sustainable shareholder value. ViaPlay added a net 37,000 paying subscribers in Q3 compared to a net loss of 11,000 in Q3 last year. So the momentum we have seen in recent quarters has continued and the ViaPlay subscriber base has now grown by over 25% in the last 12 months. We believe that to be significantly ahead of the market. Subscription sales accounted for 63% of group revenues in Q3, and ViaPlay accounted for 61% of our total subscribers. Both are growing at very healthy levels. Advertising accounted for 22% of our sales and that percentage will continue to fall given the growth in the rest of our business. Our Studios business accounted for 15% of total sales and the exceptional growth levels seen in H1 continued into Q3. Then moving to the Broadcasting and Streaming segment first. Sales were up 8% on an organic basis and EBIT was up 3%. This was our 12th consecutive quarter of profitable growth. Subscription and other sales were up 11% on a reported basis and accounted for 74% of segment sales. The ViaPlay subscriber base grew to over $1,450,000 and our total subscriber base reached $2,400,000 The continued growth of ViaPlay was driven both by high gross intake and low churn levels. Our investments in the ViaPlay platform and content offering are clearly working both in terms of customer intake and retention. Our ViaSat direct to consumer base was stable as growth in our broadband TV offering offset the gradual decline in the satellite base. Our 3rd party subscriber base decreased by 14,000 and this primarily reflected the typical seasonal patterns. Advertising sales were up 2% on a reported basis and accounted for 26% of the segment sales. Radio sales were up as double digit growth in the Swedish radio business was offset by some continued weakness in Norway. Via Free reported slightly higher sales and the number of registered users and downloaded apps continues to grow very nicely. TV ad sales were down slightly as continued price inflation and higher audience shares in all three markets were offset by the overall lower viewing levels. All three TV advertising markets are estimated to have been down in the quarter, but our audience shares were up in all three markets and that bodes well as we enter the annual upfront advertising contract negotiations with the agencies. Demand for TV advertising remains high, so we do expect prices to rise again. Betting and gambling advertising sales represented approximately 21% of our advertising revenues during the quarter compared to 24% in Q3 last year and 22% in the second quarter. Despite this segment fall, our total ad revenues were stable. Profits for the segment were up 3% and included a U. S. Transactional headwind of approximately SEK 20,000,000. Now moving on to the Q3 content highlights. We premiered 3 bioplay originals during the quarter, including Heder, which is our most successful original to date and also topped the charts series with the most unique viewers during Q3. Another very successful premiere was the interactive kids production, which we have which will have a virtual lead character to guide kids around Viaply and encourage them to take an interest in both technology and physical exercise. We now have a total of 33 originals premiered and 28 more announced. This high quality local and relevant content as well as our unrivaled live sports offering are the key differentiators for us. We have also signed a number of new sports agreements recently, including the exclusive Nordic rights to the Ice Hockey World Championships from 2024 to 'twenty eight. We already showed the tournament in Sweden until 'twenty three. We'll now expand the coverage to the entire Nordic region. And we have added exclusive coverage of the ISU speed and figure skating events for the next 4 seasons. These rights are ideal, complements to our winter sports offering and are hugely popular rights for Sweden, Finland and Norway, respectively. We have also added the rights to the Premier League Women's Football in the U. K, Germany and France, as well as selected home nation international matches. Following the success of this summer's World Cup, this is absolutely the right time to be investing in the development of women's sport overall. If we then move on to men's studios, the strong momentum seen in the first half of the year continued into Q3 with 32% organic sales growth. The pipeline of signed development deals continue to look very promising, but the year on year comps start to get more difficult in the Q4. Operating profits was up slightly, included some additional costs for establishing our Brain Academy production company in the U. S. The ambition is to gradually increase the number of productions being done in house for our own channels and services. Internal sales already accounted for 10% of total sales in Q3, double the 5% in Q3 last year. With that, I will now hand over the call to Gabriel for his comments on our financial performance and position. Gabriel? Thank you, Anders, and good morning, everyone. I would like to start by giving some financial comments on the proposed merger between Biofert Consumer and Canal Digital that we announced on Tuesday, which will bring significant value to our shareholders. We estimate that the combination will yield annual cost synergies of at least SEK 650,000,000 with full effect from 2022. The largest savings are expected to come from a reduction of transponders, IT and SG and A related costs. There will also be material revenue synergies from the combination of the businesses as churn will be reduced and the JV will be able to upsell bioplay to the Canal Digitale base. We expect that the integration costs related to achieving these synergies will be approximately $900,000,000 and be incurred during 2020 2021. This primarily reflects the cost of moving ViaSat customers over to the Telenor satellite service. The JV will be owned fifty-fifty by us and Telenor, which means that we will not consolidate the JV in our numbers, but report it as an associated company after closing. The intention is that the JV will pay out 100 percent of its distributable earnings to its owners in the form of cash dividends. The deal is subject to European Commission of Regulatory approval, and we expect to close the transaction during the first half of 2020. This combination will generate significant synergies, prolong the life of both businesses and accelerate the development of our streaming business in the Nordics, which fits perfectly with our strategy to become the leading Nordic streaming provider and content producer with a global appeal. And it's important to add that we have made a separate agreement to provide the JV with content, tech support and of course, our ViaPlay streaming service. Moving back to the Q3 performance and the P and L. Sales were up 11% on a reported basis and were driven by 10% organic growth as well as 1% FX contribution. The combined operating profit for our business segment, that is before central operations in IAC, was up 3% and included US20 $1,000,000 FX headwind. The negative EV contribution from central operations was up from $56,000,000 to $65,000,000 And our total EBIT before ISE was up, not only included the FX headwind, but also the $13,000,000 of initial costs related to the announced merger with Canal Digital. The effective tax rate in the quarter was approximately 21%. Moving on to the cash flow. Our cash flow from operations was slightly up compared to last year. Net operating cash flow was down due to an increase in working capital, which reflected the timing differences and the payments for new and prolonged spotlights as well as working capital buildup in the NAND Studios off the back of the exceptional growth seen in Q2 and in Q3. It is important to understand that a large part of the working capital buildup arises from investments in content for the future, such as sports rights and bioplay originals, which are of strategic importance and will secure the continued growth of our business. Also important to remind you that the timing of sports payment shifts between the quarters years as we have indicated earlier. The impact on the working capital is reflected in the net debt as well, which is roughly in line with what we expected for Q3. Our net debt ended the quarter at $4,800,000,000 which is 2.5 times our trailing 12 month EBITDA before items affecting comparability, well within our target. The financial net debt was 4,200,000,000 dollars Finally, let's look at the business outlook. We do expect to continue to generate positive organic growth, primarily due to the growth of ViaPlay. We remain committed to delivering higher profits for our business segments in 2019. Do remember that we will have higher sensor costs versus last year. We maintain our guidance that the negative EBIT contribution from center operations will be approximately $250,000,000 for the full year, and that is excluding costs related to the transaction with Canal de Itau. We will have ongoing costs for the merger process in Q4 and especially in Q1. We expect the full year transactional headwind of approximately SEK75 1,000,000 from the appreciation of the U. S. Dollar this year, which is lower than our previous guidance for approximately SEK100 1,000,000. We will face though an incremental transactional headwind of approximately SEK180 1,000,000 in 2020, but we remain confident in our profitable growth commitments. We continue to expect that our normalized tax rate will be approximately 20%, but 2019 will be slightly higher than this. We do expect a material working capital release during the Q4, and we now expect that the full year change in working capital will be approximately $600,000,000 to $700,000,000 compared to our previous guidance for approximately $400,000,000 This increase is primarily a function of incremental content commitments, including a step up in the number of originals we have launched and have under production and payments for new sports rights and including the ice skating, alpine and cross country skiing and the ice hockey awards championship. We will continue to tie our working capital, but expect the annual buildup to return to the normalized historic levels in 2020. We are maintaining our full year CapEx guidance at 1% to 1.5% of sales. And that's it for my comments. Anders, back to you. Thank you very much, Gabriel. Q3 was indeed a groundbreaking quarter for us at NEMT. We delivered on our profitable growth commitment, and VIA PLAY's growth momentum has clearly continued, which demonstrates that the investments that we're making in content and technology are yielding results. We have announced a new operating model, which has been implemented from the start of Q4. This will not only lead to faster decision making, but it will allow us to also scale more flexibly, which is very, very important as we launch via Play in Iceland next year, but also to reduce cost significantly. The game changing joint venture with Telenor will bring substantial cost synergies and the opportunity to upsell ViaPlay to the Canal Digital subscriber base. Our content offerings are stronger than ever before and we do have appetite for more. And the addition of more originals to the skiing, skating and now the Aisocchi demonstrates our focus on scaling via play, which is the most effective way to drive substantial and sustainable shareholder value. That concludes our commentary on the results. Over to you now then operator to start the Q and A session please. Thank you. Our first question is from the line of Johanna Alquist. Thank you. Please ask your question. Yes. Hello. Thank you. My first question relates to working capital actually. And you mentioned, Gabriel, that you expect the high levels this year to come back to sort of normalized level over time. But I mean, what is your visibility here, Ilu? Because I guess in next year, we'll have 2 major sports rights up for renegotiation again. And I'm just wondering what's the sort of level of confidence in that you will get back to the $400,000,000 level in 2020? And then my second question relates to the Via Play, very strong intake also this quarter. And I'm just wondering, given the fact that you have increasingly focused on the B2B deals here, I'm just wondering how the revenue split looks like between you and the operators, for instance, you see in Denmark when you have such offers? Thank you. Thank you very much. Good morning, Jan. I will start with your last question first, and then we'll let Gabriel take the working capital question. On ViaPlay, you're absolutely right. We continue to see a very strong momentum. There are no significant B2B deals in the 3rd quarter numbers. They are driven by direct to consumer sales. Typically, when we do B2B deals, they are on a share basis where you can think about an eighty-twenty or seventy-thirty split. That is the normal way of doing it. It may vary for a little bit from case to case, but that's typically where we land to have sort of a coherent approach to the markets. And that is something that we will continue to do. And we do see a lot more B2B opportunities on the horizon going forward, but what is very encouraging to see that the direct to consumer pool continues to be very, very strong in the market. And on the working capital, Gabriel will comment, you're all right that there are rights up for renewal next year, specifically 1, which is the Champions League, as we have said before. With that aside, we have very good visibility exactly on what we expect to invest in and what is available in the market. So I think Eberl can be quite affirmative on his outlook. Yes. So looking at next year, we have pretty good visibility on everything, as Anders mentioned, when it comes to the investments that we're making and some on the content investments that we plan to make. Obviously, there's some news on how and when that especially that right renewal will come. But we have to aside from that, we have a pretty good sight on where we will land next year, which is in line with what we saw last year and the guidance that we had at the beginning of the year. Okay. Thank you very much. Thank you. The next question comes from Martin Arnell. Thank you. Please ask your question. Hi. This is Martin Arnell with DNB. My first question is on the advertising outlook. I think you said you expect prices to rise again for next year. And I think that the Swedish incumbent is out with the price lists. Where are you now thinking about pricing for next year in advertising contracts? Yes. Thank you, and good morning, Martin. You are absolutely right. We have seen price slips out from the leading commercial player in Sweden, suggesting high single to low double digit price increases across the various price schemes. And that is the kind of levels that we are targeting for next year and are expecting. That is in line with the balance between available inventory and the continued high demand in the market. We have seen this now in the Q3 that despite the decline in gambling and advertising, the demand continues to be high and complements for the decline in that particular segment. We expect Q4 to be flattish, which will assuming it's completely flat, will lead us to a 0.9% increase on advertising sales for the full year of 2019, and you should expect that kind of outlook going forward as well. Radio continues to be very strong, but there we have surplus inventory, given we're taking significant market share, so less room for price increases. And the more registered customers we get on Via Free, the better price premium we can get out of it. So net net, you should look at a high single digit number for the price increases next year. And that means you're overall for the total advertising, you're actually looking at a slight increase here or is that what you're saying? I will be I mean, we have to be ready for everything. And one tweet from somebody can change things very, very quickly these days. So the way we're looking at advertising sales is basically that what we've said before, we're cautiously optimistic, but we look to flattish to very moderate positive development for next year. That's great. Thank you. Very clear, Anders. And then on the on via given your sort of ramp up of originals, competitors changes and new entrants, strength of your sports rights package. When do you expect sort of changes to ViaPlay pricing? Well, on Viaplay pricing, if you take sports first, there is only one significant write up in the coming couple of years. So we're quite firm on the sports side of things. We have increased prices in Denmark, and we did increase quite significantly in Sweden not so long ago. We have all the winter sports sort of coming in with full force from 2021 with the skiing. So you should expect us to have a look at our sports offering around that time frame, probably not before. It comes to TV series and movies packages, we remain sort of of the opinion that it's best to see what Netflix is doing before we increase any prices. We saw this week that HBO increased their prices in all markets in the Nordics, but Denmark with on average SEK 20. And I think that is a signal of the need to start to actually use the pricing power in this significant demand that we're seeing in the markets. We will increase prices. The question is whether we just wait for Netflix or we arrive at a conclusion actually where we think we have a significant premium to Netflix, and then we will increase prices on the back of that. So within the coming 6 to 12 months, we will know more about pricing. But the underlying pricing power in SVOD is significant and is something that will drive value the coming years that I'm pretty sure. Okay. And my final question is on the new organization that you announced a couple of I think it was a month ago or something. And you expect savings from that, right? And can you just talk a little bit about the rationale for the new organization and perhaps indicate some numbers on what you expect in terms of savings? Yes. I mean the rationale is that we are a different kind of business today than we were in 2015 when we did the big transformation in MTG at the time and went to this country based organization. That has made a lot of sense to decentralize and to get the country sort of in line with ambitions. Now we are also on the back of the proposed merger between ViaSat Consumer and Canal Digital. Now we are more and more a fast growing streaming company with a number of supporting areas around that. And that just calls for a basically demands a different way of working, where we are working with brands across markets in different of which market it is, with functions supporting multi markets instead of building up functions per market. And that will yield savings, and they will be fairly significant. I can't say much more than that given the sensitivity of it. But if you remember what we did in 2015, we had savings on a yearly run rate of approximately SEK 600,000,000 to SEK 700,000,000. It will not be on that level, but it will be significant. That's as much as I can say today. We will announce the savings and the cost to achieve the savings during this Q4. Okay. Thanks a lot. Thank you. The next question comes from Rasmus Enberg. Thank you. Please ask your question. Yes. Hi, good morning. I had just to coming back to what do you mean when you say you're returning to normalized net working capital levels? Is that SEK 400,000,000 negative per year or somewhere around that? Or is there something else? No, that's the level that we had in '18 and that we guided at the beginning of the year before we started to increase our ambitions when it came to originals and some of the new small sites that we decided to invest in. Okay, good. And you talked a little bit about further costs for the proposed merger of ViaSat and Canal Digital. Can you give us some sort of level where we should be in Q4? And then you said probably that it would be higher in the Q1, right? And this is excluding the €900,000,000 obviously for that are taken in that company, I assume. Yes. I mean, these costs are small, and I would say low double digits, very similar, maybe higher to what we saw in this quarter, but it's mainly related to external advisers as we're doing a carve out of the business. And then obviously, you have legal fees and financial advisers, not material. But you said in Q1, they might be bigger? Or was that something you said? Or did I misunderstand that? No. It was more the timing when the cost will hit us. Okay. So the total will be in that level, but most of it will be in Q1. Is that what we should be? When we will have to pay most of them. Okay. Great. Excellent. And right, was there anything else I wanted to ask you? I mean, overall, the Studios business, how do you look at that? I mean, it does it shows tremendous growth, but no operating leverage at all. Is that is how it should be going forward as well? Or what's the scale and scope of having that business internally? Well, it is something that we are reviewing and how we want to position it, Rasmus going forward. It is a significant force in our ramp up in Vinyl Play Originals, and we are benefiting quite significantly from access to that, both on the creative side of things and the production strength that, that has. I agree with you that as a reporting segment, So you will probably see us reviewing how we want to deal with it going forward. That doesn't mean that we don't think it's a valuable strategic asset. We do think it is, but we may place it a bit differently in how we are structured going forward. And you talk about yourself as the streaming company. Now you have made a deal for 1 of your sort of declining legacy businesses, the satellite distribution operation. There is another kind of over time probably declining business on when it comes to advertising TV. Is that something that you might also consider to look at the partnership or something like that? Well, partnerships sort of yielding benefits, we're always open for discussion. But there are differences between the 2 legacy businesses and the way they are impacted by decline. What we're doing now is that we're combining 2 subscription businesses into 1 scale subscription business, and that gives us benefits and is not sort of hit by cyclical impacts over time. If you scale up on advertising sales, you could definitely gain some scale benefits from it, but you also get more exposed to a part of the market that is less sort of less controllable. So that sort of speaks against that. And then if it means we would spend money on sort of buying or investing in something that is not our future, we'll probably think very hard before we think before we decide to do that kind of work. But partnerships and opportunities to work together to sort of find benefits without structural deals, absolutely. Okay. Thank you. Thank you, Russell. The next question comes from Henrik Mawby. Thank you. Please ask your question. Hi, good morning. Can you hear me? We hear you fine. Good morning. Good morning. So looking at your costs in Broadcasting and Streaming, they turned 9% higher year on year, euros 240,000,000 up. You mentioned euros 20,000,000 I think relates to currency in that number. Can you just give us some more flavor on what else is in that cost increase? And are there any items of a temporary nature? Yes. Sorry, can you repeat the last part of the question? I lost it first. Yes. So what are the other items in the cost increase year on year? And are there any items in there that are of a temporary nature? No, I think well, you have the investments that we have made in content that are hitting the cost base. And also, you have the currency, as you mentioned, but also some of the effects of the cost that we have in other currencies as well hitting. But nothing of an extraordinary nature in Okay. Great. And also, thinking about the merger with Telenor now on the distribution side, It strikes me that you've not been able to agree on where to locate the head office. And the 2 success would probably want to drive garage fees and via play conversion. It looks very like a very good deal on paper, but running this business and agreeing on how to run it efficiently, I could see complications. How do you intend to mitigate and handle that potential issue in governing the company? Well, we don't do deals that only look good on paper. We make sure we have sort of the everything in place to make sure that the governance is controlled. We make sure that the incentives for the respective owners are balanced and that there is sort of a long term view on how we're going to run this. 1st and foremost, the headquarter question is not an open question. This company is primarily headquartered in Stockholm with dual functions or separate functions sitting in Oslo. That is, as you can imagine, clearly taken care of in our shareholder agreement. We have also written a very long term sort of outlook for the satellite contract that takes care of all incentives for that part, for our partner. Equally, we have carried out long term contracts on everything that is related to carriage fees and everything related to our core business on the content side of things. So that is taken care of. And the shareholder agreements also clearly, clearly stipulates what the incentive for us doing this merger together is. And it is about yielding significant synergies and paying out every surplus single krona in cash through dividends to the shareholders. So and it's right. If you want to play a little bit of the devil's advocate that you can look for different incentives. And going into this, we knew this very, very well. And of course, there is a reason why this deal hasn't happened in the past. We've taken care of that. Then it's up to us and the management that we put in place to execute on this. But knowing both parties quite well, of course, Nant and having worked with Telenor in my previous life, I am very confident that this will be a fruitful partnership benefiting both parties. Sounds good. And just a follow-up. On the satellite contract, I mean, I'm not an expert on satellite distribution contracts. But to my understanding, it is a large component of a fixed cost in there. Is it the same dynamic in this contract? I understand you can't talk too much about the details in that specific contract. But is that the type of fixed cost dynamic we should expect from such an agreement? Yes. Well, satellite is a pretty sort of established business, so there would be no big sort of surprises in how this is operated. There is a significant synergy similar to mobile operators sharing networks moving from 2 satellites to 1 satellite. And then the corresponding sort of transporter capacity being optimized over time. So it is actually very, very straightforward. But given that there is a 3rd party involved here, our current satellite service provider, I cannot comment anymore on the specifics this one. Understand. And looking at your D2C business subscriber trend in the quarter, it looks continues to be very strong. I guess there is the mix effect underlying there with satellite dropping and broadband growing. Can you give us the mix on net adds in that segment, please? Well, the mix is we have given you a number on the broadband subscribers. They are roughly 130,000, which is then the part that is joining this joint venture. So that with the growth, as you correctly point out, in the broadband TV business is compensating for the structural decline in satellite. But we also have pretty good churn numbers and churn development on satellite exclusive of broadband, very much driven obviously by the content offering that we are having. And the fact that satellite is, from a technical point of view, a very stable technology, which is why we and our partner to be in the joint venture believes that the long tail in satellite is actually quite long. Okay, very good. Thank you. Thank you. Our next question comes from Tom Hill, Singlehurst. Thank you. Please ask your question. Yes, good morning. Tom Singlehurst from Citi. I missed the very beginning of the call, so I apologize if you did cover this. But I think previously, you have talked about 250,000 sort of net adds as a sort of target or aspiration for ViaPlay for 2019. I'm just wondering whether you specified whether this should go up on the back of the stronger performance over the sort of middle half of the year, if that's the right way of putting it. That was the first question. And then secondly, briefly on advertising. I know you have talked a little bit about sort of how you treat sort of gambling related inventory separately. But I was just wondering whether there's any scope amid concerns about gambling to sort of self regulate. I know in the U. K, we've seen some of the channel businesses choose to sort of limit the actively limit the level of inventory, the amount of gambling advertising, amount of live sports, etcetera. Just whether there's anything that you can do yourself to defang that as a risk because it's still a relatively big overhang for investors? Thank you. Thank you very much and good morning, Tom. Yes, on your ViaPlay outlook question, we have added a little bit more than 200,000 subscribers now in the 1st 3 quarters of this year compared to 170,000 for the full year 2018. So I think it's fair to say that our outlook expectation of a minimum 250,000 net adds is something that is well in scope to be beaten. We're not giving a new sort of upgrade number because we have to be mindful about the fact that we're growing ahead of the market. And at some point, you could argue that we are sort of preempting some of the growth that we have ahead of us for the full year. So we stick to the 250%, but I feel fairly confident that we will beat that number for the full year. We have grown a little bit more than 25% over the past 12 months, which is puts us ahead of as much as we know about the total market growth, that puts us ahead of it, which then suggests that we are gaining meaningful market share. And that will be the case at the end of the year that I feel fairly confident on. On your second question on ad sales, we are not self regulating in the sense that you suggest. We are not a regulator, and we think it will be very difficult to be sort of a good input giver into whatever regulation may come if we start to act in one way and some other players may act in a different way. When it comes to the live sports, as you mentioned specifically, we are regulating in the sense that we're mindful about giving a good viewer experience. So we don't want to sort of if you will, we don't want to poison our very sort of strong sports position by being sort of greedy on how we deal with gambling and betting during the sports shows. So that is a pure customer position that we're taking. When it comes to the actual decline and the outlook, the gambling and advertising investments in the quarter or the sales reduced by some 14%, while advertising sales as a whole was up close to 2%. So the price increases and the fact that we don't have a demand problem for advertising sales. We have an inventory problem, meaning that the decline in TV viewing yields a smaller inventory, but there is still significant demand from also non gambling and betting advertisers to go on TV. And when our outlook suggests that, that would be the case also for next year. So we are regulating in, if you will, from a customer viewing experience point of view, but that's it. That's very clear. One follow-up actually, if it's okay, on fire play pricing. I think obviously, you mentioned HBO Nordic has moved prices up. And we obviously love to think about pricing in terms of the sticker price, the sort of headline pricing. But I know that very often pricing can also at least ARPU can be driven by sort of changes of approach to things like discounting. Are you seeing any significant sort of nonsticker price type changes to pricing amongst the competitor base? Are we seeing sort of Netflix or others being more aggressive on the level of discounting or policing, password sharing or any of those other sort of under the covers type sort of yield management? Yes. No, that's a very good remark and a good question. Thankfully, people are fairly industrial in how they view SVOD and not giving away pricing power in a growing market, which you often see in adjacent industries. And we have seen some activities like that in the past. But there is very limited below the counter offering right now on the direct to consumer side. We do have reason to believe that there are some competitors out there that are giving away quite a lot in B2B deals. But obviously, that is only something that we believe and don't know. But we remain very firm on the value of our content. It has to speak for itself. You cannot price yourself into the SVOD market if you don't have a content proposition that is strong enough because there is such a massive sort of pipeline of fantastic content coming from all parts of the scale. So we remain firm on not trying to price ourselves to a stronger market position. We haven't seen, thankfully, that kind of behavior from anybody currently. Our last question is from Peter Testa. I had a couple of more questions on the deal from yesterday, please. If you look at your partner, he's only put in his satellite business and he has some agreement with C More, which you're obviously very used to competing against. I was wondering and which is comparing to yourselves, both IP and satellite into the business, which makes it also cleaner proposition and how you handle customers. Can you just talk a bit about how the joint company can address this situation of split IP satellite and maybe the also therefore the relationship with Seymour, which would be different between IP and satellite potentially? Well, thank you. Good morning. Well, we are actually working with Seymour on our sort of distribution side as well, and that is a difference from how it was some years ago, and we've done that quite successfully. So it's not that different today as it was not that long ago. So we have moved that into a rather value creating way of driving these businesses for all partners. And we don't envisage any change in that. We think that this new distribution company that we will go on with Telenor should be open for distribution of content from all sorts of partners if it's something that our customers want. You are right that we are bringing a few elements to the table, including the IPTV base in Sweden, roughly 130,000 customers. And that is also reflected in the fact that if you look at an absolute customer base size number, we are bringing a smaller base to the table. And nonetheless, we are achieving a fifty-fifty split in the deal, which suggests the value of the assets that we're bringing to the table. So I think it's a fair balance between the two parties and what we are bringing to the table, the way we have reached a fifty-fifty agreement on this company. And going forward, it's about looking at the joint assets and how we can optimize those to yield as much sort of customer benefits as possible, including working with both Viaplay and Seymour and others. Okay. And with regards to having to work split IP TV versus satellite Norway versus an integrated structure in Sweden, do you think we see any differences? No, because our IPTV business is an asset light one. It's based on wholesale fiber rather than us owning infrastructure. So there is no overlapping conflicting interest between, for example, the business that Telenor has in Sweden in their RemainCo, so to speak. So what will happen with that and how that's going to be developed in the future together with our wholesale partner or in any other way, That is for the JV management to work on and suggest to the Board and the 2 owners. Okay. And then just on the carve out P and L, I was wondering if you could give some sort of sense as to what income from Viasat or Viasat plays inside the venture and what is retained within NAND itself related to these customers? Well, obviously, there's internal intergroup agreement when it comes to distribution of content between the ViaSat consumer and NAND, right? So that is included in that P and L. And then we have a distribution? Yes, exactly. Yes, exactly. So and then when the deal gets concluded, we will have a distribution contract with the JV as we have with any other distributor that will hit the you can call the NAND remain COPYMN. Right. Okay. And the last question, please, is just on the content opportunity. Now that you have depth of content and some repeat seasons and so on. To what extent is there a point at which you think your 3rd party commercial ability to sell that content outside if your use is changing or increasing? Can you talk a bit about the pipeline developing that? Well, if you talk about critical mass and how much more we can actually sort of develop, we're not there yet. There is still sort of ample opportunity to develop and to do more on that. If that is your question, if I'm not misunderstanding you? It's more third party opportunity, the extent to which if you have multiple seasons and more stable critical claim, whether the extent to which you can sell content third party and gain income that way is different than you're able to do now. Yes, you're right. And we are still sort of building up on that. And so second windowing with a third party partner for some of our key content is something that we're absolutely doing. Here in Sweden, we're doing it with SVT. We have a very, very successful series up now called Love Me, which has a second window on SVT, yieldings or benefits for our production costs, and that will then sort of before the 2nd season hits Fireplace. So that's a good way of capitalizing. Then, of course, outside our footprint in the Nordics, we have sold more than 50% of our ViaPlay Originals abroad, which is a good indication on the demand for both sort of the Nordic content that we're doing and also what we could potentially do ourselves outside the Nordic when we have critical mass on the content. So that's a way of, as you rightfully point out, a way of derisking our investments while keeping up very high pace on adding new content to the platform. That concludes the question and answer session. I will now hand back the call to your host, Matthew Hooper. You very much, operator, and thank you all for your time and questions today. We will now do road showing in Stockholm and London today and tomorrow, so we look forward to meeting as many of you as possible face to face. And please, as ever, do not hesitate to contact Stefan or Emily in the IR team if you have any questions or would like a meeting. As you've heard on both of our calls this week, we have a unique story to tell, and we hope that you found it interesting. That concludes today's conference call. Thank you for your participation. So that does conclude the conference for today. Thank you all for participating. You may all disconnect.