Earnings Call: Q3 2020

Oct 22, 2020

Thank you very much, operator, and welcome, everybody, to Nant Group's Q3 2020 Results Conference Call. We hope you're all well and managing your way through the extraordinary times in which we are living. I'm joined here on the call today as usual by our President and CEO, Anders Jensen our CFO, Gabriel Catriona as well as Stefan Lika and Joel Gudin from our Investor Relations team. Presentation materials are available on our website as usual, and a Q and A session will follow our comments. I will now hand the call over to Anders. Thank you very much, Matthew, and good morning, everyone. I hope you're well. Q3 and the results that we have delivered today demonstrate once again just how relevant, resilient and flexible Nant is. Despite the ongoing impact of COVID-nineteen, we have turned a double digit sales decline in Q2 into 9% organic growth this quarter and a substantial impact on our Q2 profits into a return to positive underlying profit growth in Q3. Indeed, the $300,000,000 of savings from our cost optimization programs compensated fully for the previously flagged $250,000,000 of higher sports cost due to key events moving from Q2 to Q3 because of COVID-nineteen. When excluding the $117,000,000 of profits that ViaSat Consumer contributed last year, our profits were up 19%. COVID-nineteen has continued to have a massive impact on all of our lives, both professionally and personally, but I'm glad that we've been able to play our small part by entertaining people during these challenging times. We have worked very hard to keep our people safe and well and to contribute wherever possible to the communities and societies in which we live and work. This is also why we have continued to invest heavily in our content and technology in order to make sure that we can offer the very best experiences to consumers across the Nordics, whether that be with our slate of exciting and award winning original productions or the return of live sports coverage or the addition of more diverse and inclusive content that mirrors the world that we live in. The 2 primary drivers of our sustainability strategy are the promotion of Nordic storytelling and of equality, diversity and inclusion. Both of these have progressed further and faster this year, and we expect them to continue to do so as we adjust to the new normal. Our direction of travel as a business has never been clearer. More than a third of our Q3 sales come from streaming, and this is where our future lies. I ended our Q2 results call by emphasizing just how important it is that we seize the opportunity not only to grow the streaming market and our share in the Nordics, but also that it's now is the right time to expand via play internationally with So now let me turn to what we're seeing across our business and, of course, start with ViaPlay, where we have added just under 100,000 new subscribers in Q3 and over 660,000 in the last year. We ended the quarter with over 2,800,000 paying ViaPlate customers, up 31% year on year. This growth has been driven by innovative partnership deals like the one we signed with Lisa in Finland back in June as well as the popularity of our award winning original content and the long awaited return of live sports to our streams. Total streamed minutes were up 33% in Q3 and sports isolated was up 47%. This momentum enabled us to raise our full year subscriber intake target for the 3rd time this year, and we're now well on track to hit our 3,000,000 target by the end of the year. This would mean that we would have to grow the base that we will have grown the base by 32% this year and added over 728,000 new subscribers, with at least 187,000 of them coming in Q4 alone. The growth levels we have seen this year are exceptional and have probably advanced our business development by a couple of years. It is clear that the market shares of tomorrow are being handed out today, and we are determined to seize this opportunity right now. We have, therefore, forged partnerships to drive subscriber growth today that would deliver the revenue growth of tomorrow as revenue shares and price increase over time. This is why the revenue growth is slightly lower than the subscriber growth. BioPlay revenues were up 18% in Q3 compared to a 4% decline last quarter. As the overall base grew, sports prices returned to normal in July and churn levels remained at very low levels. The switching back on switching back on of live sports and a return to normal pricing was executed smoothly by our tech and customer service teams and shows just how flexible and adaptable our platform is. It is quite clear that our early and quick decision to reduce prices for our sports packages in mid March was absolutely the right thing to do. We premiered 8 new ViaPlay originals in the quarter and total viewing of ViaPlay originals was up 150%. Locally relevant originals are a key differentiator for us. The top 5 of the top 10 scripted series on Via Play in Q3 were all original productions. Our Swedish drama Partisan broke all viewing records on ViaPlay and picked up the top best series prize at the Cannes Series Awards last week, while Season 2 of Love Me now has taken back the top spot and was double prize winner at the Swedish RIA Gala last week. So moving on to other subscriptions. Sales were down 35% and this of course reflects the impact of the deconsolidation of the ViaSat consumer business from the beginning of May. The underlying performance continues to be very healthy, and the 3rd party networks that distribute our sports channels have also raised their prices again in July when live sports returned. Then looking at our advertising business, revenues were down a lot less than Q2 as we predicted. The 5.4% decline in local currency current currency terms was a significant improvement from the 27.4% decline in Q2. We estimated that we took material market shares across the line across the markets in the quarter. All ad markets were down, both for TV and radio, with betting and gambling revenues continuing to be the worst affected segments. We are now handling the postponed campaigns from earlier this year and working very closely with agencies with whom we have a very good and long term relationship. Returning demand levels do, of course, very quickly get us into sold out positions, and we are still seeing some price pressure. So based on where we stand today, what we know, what we hear and what we can expect, the advertising markets and our sales will continue to go down in Q4 and do so more or less in line with the percentage decline we have seen in the Q3. Moving on to Studios, where sales for the continuing operations were down 47% and reflecting the lower demand and delays from external clients and linear TV operators in particular. Scripted productions have been postponed due to COVID-nineteen, but not canceled, and the underlying demand for high quality scripted programming remains very healthy. And this is precisely why we are refocusing these businesses on supplying our originals pipeline moving forward and why we have put our former Head of Viaplay Sales, who has a background in content production, in charge of these operations. We have premiered we will have premiered at least 30 Viaplay originals in 2020 and plan for up to 40 next year. So there would be plenty to keep our teams busy. The process to sell the non core parts of studio businesses, the non scripted branded entertainment and events operations is ongoing, and we have already closed a small deal for 1 of the businesses, Strix, in the Netherlands, with more to follow in the coming months. The process is proceeding according to plan, and we have discussions with a large number of interested parties. The final piece to discuss is Elente, which contributed SEK 86,000,000 of associated company income this quarter. And the team is now focused on delivering at least the $650,000,000 of cost synergies and the majority of which will come next year. Of particular importance is the ongoing upselling of Via Play and or V channels to the Canal de Guitar subscriber base. We are guaranteed minimum levels of upselling and to get paid for that, but expect to see much higher penetration levels next year when Elanthe launches its rebranded and integrated offering with a new package structure. And looking forward, we announced at our Q2 results in July that we would be expanding Via Play beyond our Nordic borders. This will start with the expansion into the 3 Baltic countries in Q1 next year, and we have indicated that our target is around 15 plus markets in the next 5 plus years, with new launches to be announced on a regular basis. We will provide a lot more details about our plans at our upcoming Capital Markets Day in less than 3 weeks. ViaPlay Iceland has continued to outperform our plans. It becomes clearer by the day that the time is right for us to expand further and faster. COVID-nineteen has just accelerated the consumption trends, and we can see quite clearly that our highly competitive consumer offering, unique content mix and high quality user experience are well set to travel. The very interesting discussions that we're having with content and distribution partners outside the Nordics only serve to prove the potential here. We have for a long time stated that our focus is on ViaPlay subscriber growth and short term not on maximizing short term profitability. This applies both in the Nordics and internationally. We have added a number of new sports rights in the Nordics, which of some will already come to stream in 2021, including the skiing and the new UEFA deal. The ambition level for our originals is also rising, as I've said earlier. We do expect that prices will rise in 2025 to reflect these investments. So Nordic revenues and OpEx are both expected to step up next year. The material margin expansion potential in the Nordic market is clear, but now is the time to focus on continued growth in order to make sure we take the full advantage of the opportunity that we have. On the international side, we expect rapid market penetration and relatively short periods to breakeven with strong operating leverage and relatively high margins beyond that point. The model will vary market by market depending on the opportunities that we see. And as you know by now, we would be very disciplined when it comes to managing our cost and exposure levels. Each market we consider must provide a unique value opportunity or we will pass on it. The international expansion requires a stable, consistent regulatory licensing basis in Europe and the EU for our services. And given the imminent end of the Brexit transitional period, we will be moving our streaming registrations and TV licenses from the U. K. To Sweden at the end of this year. After a long period of due diligence, we have come to the conclusion that Sweden is our natural home and the best place for the continuing application of EU rules means that we expect to see very little impact from that change. That's it for my initial comments. So I will now hand over the call to Gabriel for his comments on our financial performance and position. Thank you, Anders, and good morning, everyone. Let me start by quickly running through the Q3 performance. Organic growth in the quarter was up 9.1%, which reflected the mix impact of our strong growth in our streaming business as well as the ongoing adverse effects of COVID-nineteen on advertising and studio sales. Currency translation played a large part this quarter, so reported sales when excluding the divestment of device and consumer business were up 6.8%. Operating profits before associated company income and IAC were up 19.1% from SEK 148,000,000 last year when we adjust for the SEK117,000,000 contribution in Q3 last year from the now deconsolidated Biocide Consumer business. On a reported basis, operating profits were down from SEK 265,000,000 to SEK176,000,000. This underlying performance is even stronger when considering the addition of SEK 250,000,000 of sports costs in Q3 due to the move of primarily the Champions League and Formula 1 costs from Q2 and that we had a $50,000,000 combined headwind from the appreciation of the U. S. Dollar and depreciation of the Norwegian krona. We offset these effects with a $300,000,000 of savings from the programs that we introduced in October last year and when the crisis hit in March this year. Savings from these programs amounted to CHF685,000,000 for the year to date, and we still expect total savings of approximately CHF 900,000,000 for the full year. Benefits from government actions such as the swallowing of staff and lower social expenses amounted to approximately CHF 26,000,000 in the quarter, of which $16,000,000 related to discontinued operations. In addition and in line with the government initiatives, we have also been able to defer CHF 520,000,000 of tax payments into 2021, of which CHF 120,000,000 are related to Q3. A few words now on the performance of Alente, which contributed SEK 86,000,000 of associated income in Q3. Alente reported revenues of CHF 1,750,000,000 for the quarter and EBITDA before IFC of CHF 294,000,000 with a margin of 17 percent. The IFC of minus SEK 45,000,000 related to the ongoing restructuring charges. Alente's subscriber base declined by 26,000 in the quarter to 1,153,000. Prices, especially on the premium package around sports, are back to normal levels, and the integration process has gone very well despite the challenges presented by COVID-nineteen. The PPA work still being finalized, so no amortization was made in the quarter by Alente. This means that the Q4 will include the PPA amortization for the 8 month period from May to December this year. This will amount to up to SEK 300,000,000 and be taken by Alente. Moving forward into 2021 and onwards, the amortization charges will total SEK 340,000,000 per year. The majority of these charges will be adjusted for tax in the reporting, so have less impact on Allentes net income. The focus now is on delivering those EUR 650,000,000 EUR 650,000,000 of cost synergies and the continued upselling of BioPlate to the Canal Digital subscriber base. The synergies will have full effect in 2022, but are already delivering synergies this year. Year to date, Alente has captured EUR 54,000,000 of synergies, of which EUR 45,000,000 came in Q3. We expect full year synergies of SEK 140,000,000 this year and approximately SEK 400,000,000 next year. The integration and restructuring costs are still expected to be approximately EUR 900,000,000, of which approximately EUR 250,000,000 will be taken this year and the rest next year. Alente secured a SEK 2,500,000,000 bank loan funding in July, which will be drawn down in order to pay out an extraordinary dividend to shareholders. We therefore expect to receive SEK 1,200,000,000 in cash in November, and Alente then plans to pay out quarterly dividends moving forward. Alente ended the quarter with a net cash position of SEK996,000,000. Now moving on to the cash flow. Cash flow from operations was down, but our net operating cash flow was up following a positive SEK 167,000,000 change in working capital, which reflected the delayed sports rights payments that will be made in Q4, lower Studios production volumes and the deferral of tax payments as part of the government COVID-nineteen support measures. For the full year, we still expect a working capital development that is broadly in line with 2019, so approximately minus SEK 800,000,000. This is driven by the investments that we're making in our future growth, including the prepayments for new and prolonged spotlights that we have secured this year, such as the Premier League and UEFA rights as well as the slate of ViaPlay originals. This is offset to some extent by the deferring of tax and other payments totaling approximately SEK 520,000,000 into next year. Looking forwards, the transactional headwinds from the U. S. Dollar are now expected to be approximately SEK 140,000,000 for the year compared to the EUR 160,000,000 that we indicated when presenting our Q2 results. We have absorbed EUR 30,000,000 of this impact in Q3 and EUR 110,000,000 for the year to date. We also expect an FX transaction headwind of approximately EUR 70,000,000 for the full year due to the depreciation of the Norwegian kroner, of which we absorbed approximately SEK 20,000,000 in Q3. Finally, a few words on our funding profile. The successful raising of SEK 800,000,000 through the issue of 3 5 year unsecured bonds in June and SEK 700,000,000 of long term funding in July enable us to substantially lengthen the average maturity of our debt. The current weighted average term is now 35 months, so close to 3 years. We now have SEK 3,300,000,000 of outstanding corporate bonds after the SEK 500,000,000 bond that has been repaid this month. We have no further bond repayments until May 2022. We also have SEK 1,500,000,000 of short term commercial paper, and we ended the quarter with SEK 1,900,000,000 of unrestricted cash, SEK 4,000,000,000 undrawn revolving credit facility maturing in August 2023 and an equivalent of SEK 280,000,000 in undrawn overdraft. Our net debt ended the quarter at SEK 3,900,000,000 which is 2.5 times our trailing 12 month EBITDA of SEK 1,500,000,000 before items affecting comparability. And the financial net debt totaled SEK 3,300,000,000. So in summary, we have seen a significant improvement in Q3 compared to Q2, and we're back to profitable growth for our continuing operations in the Nordics, excluding Alente. We have a well balanced capital structure. We are investing in the current and especially in the future growth of our streaming operations, and it is clear that the wide range of proactive and effective actions that we have taken both before and during the COVID-nineteen crisis have set us well for the future. That's it for my comments, Sander. So now back to you. Thank you very much, Gabriel. Q3 was a significant step up and a step away from the challenges that we saw in Q2. We are not out of the woods yet when it comes to advertising and production, but our 9% organic sales growth and 19% underlying profit growth are clear pointers to the future, which is all about streaming and subscriptions, which account for over 70% of our total sales. The swift and decisive actions that we took to adjust our consumer offering and cost base in the face of the crisis have clearly paid off, enabled us to absorb the significant changes in our sports revenues and costs in particular. We have continued to and will continue to invest in the core drivers of our growth, original drama and live sports content and to strike new innovative partnerships with distributors precisely so that we can capture the streaming opportunity that we see in front of us. Next up are our international travel and expansion plans for ViaPlay, which we will unpack for you at the upcoming Capital Markets Day. I stated on the Q1 and Q3 results call that we would come out of the crisis even stronger and better positioned than ever, And I am more confident of that today. 2021 will see our Nordic core operations return to profitable growth. The credit for all of this goes to the fantastic commitment, focus and flexibility of our teams during these very challenging times, as well as to you for your continued belief in and support of our strategy and story for which we are very grateful. That concludes our commentary on the results and we'll now be more than happy to take your questions. So over to you, operator. Thank you, ladies and gentlemen. We are now ready to register questions. So your first question comes from the line of Johanna Oglfis from SEB. Please ask your question. Yes. Hello. Thank you. I have two questions. The first one being related to the advertising market where you mentioned, Anders, that you expect Q4 to be of similar decline as Q3. I'm just wondering, since we've seen sort of a sequential improvement every single month up until now, has something changed? Or what is the reason behind that statement? And then the ViaPlay intake, if you can say something about the mix, is a majority of that related to the partnership with Elize and how that mix look? And then yes, if I may, a third question as well, and that relates to the fact that you will move to Sweden due to the Brexit. I'm just wondering, are you expecting any costs related to this transition? Thank you. Yes. Thank you, Johan, and very good morning. Your first question on the ad sales, we I prefer to stay a bit prudent when it comes to the outlook. The market is a bit sluggish. And even if we have seen recovery, it remains to be sluggish. But the main reason for why I want to sort of keep expectations for Q4 at a reasonable level is the fact that we get very quickly sold out when the market is coming back. And to generate more inventory on the back of a lot of viewers moving from linear TV to streaming is not that easy. So the inventory shortage is more a matter of is more the reason why we are a little bit more conservative. The market demand is there, but it goes a bit up and down. But it's more a matter of inventory shortage. On your second question, the mix in the ViaPlay intake, yes, we have a good impact from the Alisa partnership in Q3, a little bit more than 50% of the sales come from that very strong development. And we will see sort of shifts in mixes going forward, back and forth depending on how distribution agreements kick in. The underlying demand is very strong in the market, so direct to consumer continues to deliver. And on top of this, we then have the strong distribution agreements and more of those ahead of us, which is one of the reasons why we remain very whether there is any cost related to the move of our licenses, the answer is no. It is not something that has any significant cost impact. Thank you very much. Clear answers. Thank you. Thank you. Thank you. Your next question comes from the line of Ivan Abbijev from Skira Capital. Please ask your question. Hi there. Thanks for all the information and congratulations on sort of being very well in Q3. I understand it was difficult period for everyone. I just have two questions. My first one relates to the entry in the Baltics And just wanted to ask a quick question whether that's on track for the Q1 entry or whether you're even ahead of plan given that there is an opportunity to potentially capture lockdown related demand? And my second question is around the strategy for the entry in terms of whether you're going to plan to produce local content or also acquire local content? Thank you. Yes. Thank you very much for your questions, and good morning. We are on track to launch in the Baltic 3 Baltic countries in Q1. We expect to give more information and hopefully an exact launch date and some other interesting information at our upcoming Capital Markets Day. But we are on track. There is given that we're doing sports in the Baltics, it's easy to sort of pull things closer in time. We have to make sure that we time everything very precisely with the sports rights that we are taking over. So we are on track, but we will not launch sooner than anticipated. When it comes to our strategy for local content, we are in close dialogue with a number of partners, both in the announced Baltic countries and potential new markets to produce local content, not the same volumes as we do in the Nordics, but to find formats that sort of stand out in the local crowd is something that we will look into for sure. And we will acquire local nonexclusive library to make sure that we have a good balance between Nordic content, international, mostly U. S. Content and local content. But our significant library of Nordic originals will play a big part when we come into new markets. And the markets will be chosen on the basis of the relevance of this content. Great. Thanks very much. And just a quick follow-up question. In terms of the biggest competitors you potentially see in the Baltics, is that again Netflix and potentially Go Free? Or who do you see as your biggest competitor there? Yes. I like to say that we see ourselves in the Baltics as we do in the Nordics, not somebody who is in the market to replace somebody like Netflix. They play a role on the market. We will play a different role on the market. And that probably has more impact on local competition than it does on global competition with the likes of Netflix. So the answer to your question is yes, we do see local players as competitors, but also potential partners. I think the latter is very, very important in this journey we are on and the entire broadcasting industry is on. New partnerships will need to be forged and created to create unique opportunities up against the globals. So we will come in as an international player with ambitions to work with local partners. Great. Thanks very much. That's very clear. Thank you. Thank you. Your next question comes from the line of Tom Singlehurst from Citi. Please ask your question. Thank you, and good morning, Anders and Gabriel. A couple of questions actually. First one, actually on, I suppose, the sort of what we saw from Netflix earlier in the week, which is, I suppose, concerns rising around whether there was just a sort of blip driven by COVID related disruption, and we'll see growth slow. So I just wanted to get your perspective on that and why you continue to be comfortable. And I suppose linked to that, you somewhat stole your own thunder by sort of upgrading the guidance to sub numbers sort of halfway through the quarter. I'm just trying to sort of back test why was that? Why did you make choose to make that adjustment then? And is that something we should expect going forward? I mean, if the 4th quarter does continue to do well, should we anticipate a sort of midquarterly update? So those are the two questions on sort of current trends. And then maybe a bit more boringly, can you remind us when some of the new sports rights come on stream and whether that the timing of new sports rights coming on stream will then impact decisions about pricing? Because obviously, it's very encouraging you're talking about pricing being a lever you're going to pull in 2021. But is that going to be linked to the arrival of sort of new content offerings in particular on the sports side? Thank you. Yes. Good morning, Tom. Thanks for the questions. The COVID effect that Netflix is talking about, I don't necessarily subscribe to that view. I think there is one fundamental difference in the sense that Netflix comes from a deeper household penetration than we do, which means that they were seeing slowdown anyway, and then they see a little bit of a blip coming from COVID reaching a longer tail of the households. We are still in sort of further household penetration mode. And if anything, the blip that they referred to has, in my view, actually more fast forwarded our journey by a year or 2. More households find their way to streaming. And it's a very cost efficient way of consuming content. You can stack a number of services on top and get 100 and 1,000 of available hours at a cost that is significantly lower than if you were trying to find the same kind of entertainment breadth and depth from traditional TV channels. So I think if anything, COVID has fast forwarded things and made people more aware of streaming. When it comes to your question around stealing our own thunder, well, it's probably better we steal it ourselves rather than somebody else steal it for us. But I think the more important answer is that we thought the upgrade was significant enough and the outlook that we had was significant enough that we should tell the market, and it should sort of relieve some of the potential concerns around the COVID blips and the likes of those. We see continued strong demand, and we have a good pipeline of distribution agreements, hence the upgrade. And we want to be sort of forward looking and transparent with the market. The new sports rides, super exciting. The most notable ones that will have the bigger impact on pricing kicks in, in 2022. That is Premier League in Norway and Formula 1 in Finland. But we do have new rides coming in also next year. The most important one is the news alpine and skiing rights that kick in. And when I mention price increases, we look at price increases across the lines of both TV movies and series and via Play total, meaning the total package, including sports. And we will talk more about sort of how we see the evolvement of and the breadth of the service that we have at our Capital Markets Day. I think it is important that we talk about and look into price increases. It is very affordable services, and our ambition is to add more content that justifies any changes that we will make. But it is time to have a look at it, and we will do something in the not too distant future. That's very encouraging. One quick follow-up, maybe for Gabriel. I think I might have misheard, but I just wanted to double check because it's important. With Alente and the PPA, which kicks in from the Q4, did you say it was going to be tax deductible? My assumption is it wouldn't be tax deductible, but I just wanted to check that. Yes. That will be adjusted for taxes. And then it will impact less impact on the Elantis net income, yes. Okay. Perfect. We can follow-up on that separately. So Magic. Thank you. Thanks a lot, Tom. Thank you. Your next question comes from the line of Mikael Lascell from Carnegie. Please ask your question. Okay, good morning. Couple of questions. I was thinking about the content cost on the working capital situation in 2021, if you can say something about that. Will it be in line with 2020, about SEK 800,000,000 also next year? Yes. Of course, it's difficult to look at it now to forecast next year, but you can expect to see a similar level of movement next year as we will have we don't have any of the new sports renewals or extraordinary payments. But we'll continue to invest in behalf of the originals and then we will have the natural movements that we have in the year because of the prepayment of spot size that we do. So you can assume a similar development as 2020 and into 2021 for now. Okay. And when it comes to the international expansion of ViaPay, that will not have a significant impact on the working capital requirements? No, that is included in that guidance. Okay. Got it. And when it comes to content commitments on and off the balance sheet, can you say something about that in Q3? We will come back on the content commitments that we have for the future when we report our Q4 and annual reports. Okay. And just final one. It's about the growth potential in terms of market penetration of subscribers in the Nordic region for the sports side, if you can elaborate a bit on that? Yes, Mike. Happy to do so. I think we continue to see a strong interest. I think there are 2 drivers. 1 is, of course, when we move new rights over to our platform. And the other driver is the migration from consumption of sports on traditional pay TV channels over to streaming as the one source of viewing. And that gives us sort of a fairly sort of bullish outlook for sports growth, especially from the second half of twenty twenty two and onwards, when we move, as I mentioned earlier, significant sports rights in Norway and Finland. But we do have some other things kicking in also. The skiing it's a driver, but it's also something that we will use quite significantly on ad based platforms, the linear channels. The same goes for new rights in football with the Europa League, the Conference League and then the later on coming in Swedish national team qualification matches. And so that sort of gives us an outlook of good growth in sports. And I hope to be able to give you some further clarity on that at the Capital Markets Day. Okay, great. Thank you. Your next question comes from the line of Stefan Billing from Kepler Cheuvreux. Please ask your question. Yes. Hello. Stefan Billing here. I was just wondering how you see the revenue development and the bundling of Canal Digital subscribers to ViaPlay, how that is expected to develop? Are you expecting revenues and significant volumes of bundled customers in Q4? And what do you expect for 2021 and so on? Thanks. Stefan, I think the impact of the new bundling in Allente comes predominantly into next year. And that will then gradually build up over the year. And the payments of the bundling has sort of predefined flow into our revenues. So that may fluctuate a little bit between the quarters. And this is one of the reasons why you why I'm so why it's important to say that you will see some fluctuation between quarters on revenue versus subs growth. But the main impact from Alente comes in 2021, not so much in Q4. Okay. And you refer both to the subscriber base and revenues then, I guess? Yes. Yes. All right. Thank you. One moment. We'll just the next question comes from the line of Claus Danielson from Nordea. Please ask your question. Yes. Thank you for taking my questions. So just one very high level question here. So it seems like the growth in subscribers for VIA PLAY has been quite heavily driven by the kind of B2B agreements that you've had during 2020. I mean, looking out long term, could you maybe talk a bit about the how you view the kind of B2B versus B2C growth for Via Play coming through during the coming years? Yes. Good morning, Claus. Thanks for the question. You're absolutely right. We've seen a good effect from B2B agreements. And I think we will continue to see more of that going forward, also in the new markets that we travel to simply because the demand for streaming services makes it a necessity and an opportunity for distributors to move away from offering traditional TV packages to actually work with streaming services as a way of maintaining and growing their TV distribution business. What we think is super encouraging is that this is not a push thing, it's a pull effect. So you choose between a number of services and ViaPlay is one of the most chosen ones, which is why we also get good minimum guarantees from many of the distributors. Over time, this will level out between direct to consumer and B2B. We still see continued good growth in direct to consumer. We are growing ahead of the market forecast that we have seen. So this in combination with the B2B deals leads me to assume that we are grabbing meaningful market share. Then I think and this is more sort of for future and more philosophical, but I think we'll see more direct to consumer if we travel a couple of years into the future because it would be more normal for new generations to put together their packages directly with the streaming services rather than to go through a distributor. But that's more and more for how we think the future, which is why it's so important to have a platform that allows for that. That's perfect. Thank you. Your next question comes from the line of Christopher Krawszczek from Handelsbanken. Please ask your question. So hi, morning guys. Sorry if this question has been asked already. I was disconnected there for a while. But we're hearing reports that Disney plus is going really, really well in the Nordics, and I know it's early days. But could you share some color on what you're seeing in terms of the impact on your intake? Thanks. Yes. Good morning, Christoph. No, we that was a new question. And so we haven't answered that before. And the short answer is no impact. We haven't seen any churn driven by people saying that we want to churn from Via Play to get another service in general or Disney plus in particular. I've said it before, and I'm happy to repeat that, that we think that Disney is a fantastic brand. It's a great service, but it is a service that lets you add on top rather than replacing somebody else with it. I don't know the numbers that have been quoted is of course not something that Disney has said themselves. So the numbers will have to stand for the research companies that have given the numbers. But I'm not surprised, but I'm equally not surprised that it hasn't driven any churn for us. It's a great add on service. Very clear. Thank you. Thank you. You have a further question from Stefan Billing from Kepler Cheuvreux. Please ask your question. Thank you. Yes, I was thinking about the sport cost development in the coming few years. Given the recent sport rights deals that I've seen, is it fair to assume a more modest sport cost increase in 2021 than maybe you've had in the last few years and then a bigger step up in 2022? Or how would you describe that? You're right. It will be more modest when you look at like for like. But we are adding new rights in 2021 That has an impact, of course. We do have some inflation in some of the existing rights. One notable one is Champions League in Denmark, where there is inflation. So like for like, it is more modest, but there is new rights kicking in. Then, of course, we do a significant step up in 2022, both with regards to new rights in new markets and inflation and a new Premier League agreement that kicks in. So that is something that we also again, I know that I'm repeating myself talking about the Capital Markets Day, but hope to sort of unpack a bit how we see the development and the impact on our margins for our Nordic core business going forward. Perfect. Thank you very much. Thank you. There are no further questions. I will now hand the call back to your host, Matthew Hooper. Thank you, operator, and thank you all for your time and questions today. We will host digital roadshow meetings today and tomorrow, and we look forward to speaking to as many of you as possible in those. We will then host our virtual Capital Markets Day, as Anders mentioned, from 2 p. M. Stockholm time on Tuesday, 10 November. Please do register for this event if you have not already. All the details are on the website and in the press release that we sent out last week. We look forward to seeing you there, albeit virtually this time. And as ever, please do not hesitate to reach out to me, Stefan or Joel and the IR team with any questions or requests. That's it for this call today. So goodbye for now. Speak soon and stay safe.