Earnings Call: Q4 2020

Feb 9, 2021

Thank you very much, operator, and welcome everybody to our Q4 and full year 2020 results conference call. We hope you're all well and managing your way through these challenging times in which we are living. I'm joined here on the call today by our President and CEO, Anders Jensen our CFO, Gabriel Katrina 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. Thanks for dialing in today. We finished what was a very challenging 2020 strongly with 6% organic growth and a 22% underlying increase in profits, 33 percent via Play subscriber growth to hit our year end target, and we've also set a very clear path for our expansion and development over the next 5 years. Despite the impact of the coronavirus pandemic on our live sports coverage, studio production schedules and advertising sales, Our full year organic sales were slightly up and our underlying full year profits when excluding the contribution from the now deconsolidated ViaSat consumer business We're down less than 13% following the cost saving programs that we put in place quickly when the crisis hit early 2020. This shows just how relevant, resilient and flexible our business is and how important our strategic focus on the fast growing ViaPlay businesses. The pandemic has impacted our business in people and people in many ways in 2020. And we have always maintained a very clear focus on protecting the health and well-being of our people, while also using our services to inform and entertain our customers and building a company that is better prepared than ever for the future. The pandemic remains a constant in all of our lives for now, and we are working to ensure that the positive elements of our new ways of working will improve our lives, society and hopefully the environment for the long term. This is why we have signed up to the science based targets initiative and are carefully considering what the new normal It will look like for NAND now that we've proven the effectiveness of our remote working solutions. I'm also personally very proud of the progress that we have made to become an even more equal, diverse, inclusive and values based organization. This approach and culture enables us to make better decisions, be more creative, engage more widely and provides our people with an even greater Our direction of travel as a business has never been clearer. More than 30% of our sales in Q4 and for the full year came from subscription based streaming, and this is where our future lies. I talked at our last results about 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 to expand via play internationally and seek new horizons. We presented our plans at our Capital Markets Day, and we have met with over 70 shareholders or potential investors before the end of the year to discuss those plans. The EGM approval 2 weeks ago will now enable us to raise the money to finance the expansion and maintain an attractive leverage profiled. Now let me turn to what we're seeing across our operations, and I will start with ViaPlay, where We've added 207,000 new subscribers in Q4 and just under 750,000 in the year to end December just above our target of $3,000,000 up 33% year on year. The growth in the quarter was primarily driven by the B2B sales channels and the TM package and our deal with Alente in particular. Allent and other B2B providers ran very successful pre Christmas campaigns that boosted our subscriber base towards the end of the quarter. Churn remained at an all time low and industry competitive levels. Stream minutes on ViaPlay were up slightly above 30% overall, with viewing of our award winning originals up an amazing 90%. We also maintained a very high level of service accessibility with an uptime on the platform of 99.97% and 56,000,000,000 minutes streamed on ViaPlay in 2020. The subscriber growth levels that we have seen in 2020 were exceptional and have probably advanced our business development by a couple of years. And as I've said before, the market shares of tomorrow are being handed out today, which is why we have been so determined to seize this opportunity. The partnerships that we have forged with the likes of Alente and are driving today's subscriber growth and will deliver the revenue growth of tomorrow as subscribers move beyond the initial campaign periods. As before, our ViaPlay revenue growth is lower than our subscriber growth, which reflects the higher B2B and TEM mix and the fact that a significant proportion of the subscribers were brought in late in the quarter with Christmas campaigns, lower via play store sales due to the substantially lower number of new movie releases as a consequence of the pandemic and the 3 percentage Point of currency translation effect due to the weakness of the Danish and Norwegian kronas. The organic revenue growth was 14% in the quarter and 11% for the year. We premiered 12 new BioPlay originals in the quarter. We have more than 70 full series originals on the platforms and the total viewing of our VIA PLAYER originals was, as I mentioned, up A very strong 90%. 4 of the top 10 scripted series on ViaPlay in Q4 were ViaPlay Originals. Locally relevant originals are a key differentiator for us. We have seen clearly now how the success of 2nd seasons Like the op shows like Love Me can create renewed interest in the 1st seasons. Leukoviken by Camilla Lechberg was one of the most successful Successful launches in Q4, and we have already launched a second season in January. While Josephine Borneburg's social distancing movie, Orkatz, Shows how quickly we can get relevant content on screen even during a pandemic. We premiered a total of 30 originals in 2020 and expect a further 40, including documentaries, in 2021. We have announced a large number of upcoming originals, including the 3rd season of Lars von Trier's hugely popular drama, The Kingdom. On the sports side, We have added and extended a number of attractive new rights for both our existing and new markets, including a 5 year extension of the NHL and the addition of the 2023 Women's Football World Cup for the Nordics, the Bundesliga for Poland, the Champions League for Iceland and the Baltics And in a groundbreaking new agreement, the rights to the men's national football team UEFA tournament qualifiers in Iceland. This is a first of its kind deal for UEFA with a pure play OTT service. Looking forward into this year, we to expect to add a further 400,000 paying subscribers in the Nordics and 250,000 new subscribers in our new international markets. Iceland has continued to perform very well, and we will now launch in the Baltics next month on March 9 as planned in Poland in August and in the U. S. At the end of the year. Given how well our content and platform are performing in the Nordics, The volume of exciting new functions and content we're adding, including the FIS skiing, UFR rights, 40 new originals and full integration of STARZPLAY, We will raise prices for the TM package initially with sports to follow in due course. Timing is not confirmed yet, but bear in mind that we have not raised our TM package prices since 2017, and they are currently lower than some of our competitors who offer far less content and features. More broadly and given the substantial steps that we have taken, we see no reason why we should not be the price leader rather than a follower. This is all part of the existing plan and target that we have laid out at our Capital Markets Day in November and part of the reason why we expect our ViaPlay sales to grow faster in 2021 than our ViaPlay subscriber base. We will separately disclose subs, sales and EBIT for the international ViaPlay operations in the future. Turning now to our other subscriptions business. Organic sales were up 12% in the quarter and 7% for the year when excluding the $724,000,000 of sales contributed in Q4 2019 by the ViaSat Consumer business, which was deconsolidated from the beginning of May. Alenzo was the main contributor to growth in Q4. Moving forward into 2021, we expect healthy double digit growth to be driven by relevant and needed price increases. All of our channels will be basic or premium pay channels in the future with the expectation that no channels We'll be free to air. This means a change for TV 6 in Sweden, which is all part of our strategy and reflects the quality of the content that we invest in. Moving on to our advertising business, where the level of revenue decline due to the pandemic continued to improve and organic sales were only down 1.3% in Q4. Reported sales were down 5.4% due to the strengthening of the Swedish krona. We estimate that we took market share in the quarter in each market and especially in Sweden and Norway. The Swedish TV and radio ad markets are estimated to have been down with the Danish TV ad market also down, while the Norwegian TV and radio markets are both estimated to have grown. Betting and gambling and travel ad spending continued to decline in Q4 with consumer goods, healthcare and telecoms increasing as a percentage of our total ad revenues. Sold out ratios were high as we handled the postponed campaigns from earlier in the year, and we saw higher year on year prices in the Swedish radio market and the Danish TV market. Moving into 20 21, we are working very closely with the agencies with whom we have a very good and long term relationship on the annual agreements. Rate card prices are out with low single digit price increases expected in Sweden, mid single digit in Norway and mid to high single digit increases in Denmark. Commercial PUT levels are expected to continue to fall. So overall and as it stands right now, a more positive outlook for 2021, especially in terms of the comparison for Q2. The pandemic has particularly affected our Studios business, where sales Our continuing operations were down 21% on an organic basis and reflected the lower demand from external clients and linear TV operators. The postponement of productions, events and distribution deals due to the pandemic was the reason why we took the decision to impair the value with the non scripted branded entertainment, distribution and event businesses that we are selling. The sales process Was slightly delayed by the pandemic, but is now on track and expected to be completed by the end of June. We are refocusing our remaining scripted content studios on the production of high quality originals for via Play and therefore expect these studios to generate limited external sales moving forward, especially as we will increasingly keep the international rights to our formats for our own expansion. The Studio's operations are now part of our content operations and the Studio's CEO He's reporting to our Group Chief Content Officer in order to ensure that we get the very best of our in house production capacities, which will primarily comprise Africa in Budapest and Warsaw. We continue to work closely with Filmation UK and L. A.-based Picture Start in which we own Equity stake. Both of these companies have been heavily impacted by the pandemic and resulting delays in production. Moving forward, we are considering no longer reporting studios as a separate revenue line, but rather integrating them into our other reporting. The final piece to discuss is our 50% participation in the Alente joint venture. After successfully raising $2,500,000,000 in debt financing, Allenta paid out a $2,400,000,000 extraordinary dividend in Q4, of which we received $1,200,000,000 Our fifty percent share of Allentor's net loss of $67,000,000 in Q4 is reported as associated company income. The loss reflected the previously flagged inclusion of a $299,000,000 PPA amortization charge and $125,000,000 of restructuring costs that Gabriel will walk you through later. The business continues to perform well and the team is on track to deliver the annual cost synergies of approximately at $650,000,000 as well as substantial sales synergies from the upselling of Via Play and RV channels to the Canal D'Getol subscriber base. Given the ongoing restructuring and non cash PPA amortization charges, we do not expect Alente to contribute much associated company income in 2021, but and more importantly, Alente does plan to pay out quarterly dividends. Looking forward, we have announced and laid out our expansion plans, consulted with our major shareholders, and we secured 97% EGM approval for our proposed equity raise. Due to our investment plans and the equity raise, the Board has decided to propose the not to propose the payment of a dividend for 2020. We are now finalizing the Baltics launch and we're preparing for Poland and the U. S. We will announce the other 5 international markets to be launched in 2022 and 2023 in due course and have indicated that our overall target is 15 plus markets in the next 5 plus years with new launches to be announced on a regular basis. It is clear by the day that the time is right for us to expand further and faster. The pandemic has just accelerated the consumer behavior trends that we have seen, Our highly competitive customer offering, unique content mix and high quality user experience are well set to travel. And we have more and more inbound interest from current and potential suppliers and partners. We have provided 5 year targets and continue to expect our 2021 Nordic organic revenue growth to be within the projected CAGR range within Bioplay Nordic's revenue growth, including price increase and outstripping the 400,000 net subscriber growth. Morely costs will also rise given the constant investments we're making, but we do expect the underlying margin, excluding the ViaSat consumer contribution in 2020 to go up in 2021. On the international front, we expect 250,000 new subscribers, which does not include any substantial distribution deals and losses of approximately $400,000,000 for the International segment in 2021. We expect rapid market penetration and a 3 to 4 year period to breakeven for our international operations, with strong operating leverage and high long term margins higher long term margins than in the Nordics. The models will vary market to market depending on the opportunities that we see and we will continue to be very disciplined when it comes to managing our costs and exposure levels. Finally, we have moved our broadcast and streaming licenses from the U. K. To Sweden in order to provide a stable and consistent EU regulatory environment for our services, and we have seen little change as a result. That's it for my initial comments. So I will now hand the call over to Gabriel for his comments on our financial performance and position. Thank you, Anders, and good morning, everyone. We reported 6.1 percent organic growth in Q4. The growth in ViaPlay and Our other subscription revenues more than offset the decline in our advertising and studio revenues. We ended the year strongly and our sales were actually slightly up for the whole year on an organic basis. Currency translation effects again played a large part this quarter with our reported sales up 2.6% when excluding the contribution in Q4 2019 from the now deconsolidated ViaSat Consumer business. Our operating profits before associated company income and items affecting comparability were up 22.1 percent to DKK 426,000,000 from the equivalent DKK349,000,000 last year when excluding the DKK111,000,000 contribution from the now deconsolidated ViaSat Consumer business. Our profits for the full year were only down 13% on the same basis. The EUR 250,000,000 of cost savings from the programs that we introduced in October 2019 and when the crisis hit in March last year Have offset the ongoing content investments that we have made in 2020. Our operating income, including We previously announced non cash impairment charges of $275,000,000 which relate to the studios operations that are now in the process of being sold. The total noncash impairment charges in the quarter amounted to $895,000,000 and included with the CHF 620,000,000 related to the discontinued studio operations. The total savings from the 20 2019 and 2020 programs amounted to CHF 900,000,000 as anticipated. The benefits from the government actions Such as the full allowing of staff and lower social expenses amounted to SEK 7,000,000 in the quarter and SEK 49,000,000 for the full year, Of which SEK 4,000,000 SEK 25,000,000, respectively, were related to discontinued operations. A few words now on Alente, which has continued to perform very well. Alente reported revenues of €1.72 €1,000,000,000 in Q4 with the subscriber base down 20,000 compared to Q3, ending at 1,133,000 subscribers. Allentes EBITDA before items affecting comparability amounted to SEK 348,000,000 with a margin of 20%. Allentes' operating income of minus CHF 86,000,000 including CHF 125,000,000 of integration costs That were reported as items affecting comparability as well as the EUR 289,000,000 amortization of the now finalized Purchase price allocation for the period from May to December. Moving forward, the full year amortization charge It's expected to be approximately SEK 330,000,000 each year until 2027. The majority of these charges are adjusted for deferred tax in the reporting, so have less impact on the Allentes net income, which amounted to minus €76,000,000 in Q4. Our 50% share of minus €38,000,000 is reported as associate company income. Alente is on track to deliver the $650,000,000 of cost synergies and the continued upselling of BioPlay to the Canal Digitel The migration of satellite customers has started and is being scaled up after being delayed by the coronavirus crisis. The company is now entering the 2nd phase of integration and is also preparing to launch a new packaging structure with BioPlay as a key component. The cost synergies, which will have a full effect in 2022, amounted to CHF 96,000,000 in Q4 CHF 150,000,000 for the year, which was slightly higher than previously anticipated. We continue to expect approximately CHF 400,000,000 of cost synergies this year. The integration and restructuring costs are still expected to total approximately EUR 900,000,000 in 2020 and 2021 combined. That these were less than expected at $202,000,000 in 2020 due to the delays in the satellite migration, and they totaled SEK 125,000,000 in Q4. That leaves approximately SEK 700,000,000 of ISE costs for this year. And with the cost and the PPA amortization, we do not expect a substantial amount of associated income in 2021. But the cash flow and the ability to pay dividends is the key factor for us. After securing EUR 2,500,000,000 bank funded in July, Alente paid out an extraordinary dividend of DKK 2,400,000,000 in Q4, of which we received DKK 1,200,000,000 Enelente plans to pay out a quarterly dividend moving forward of at least EUR 200,000,000 of which we will get 50% and have net debt of SEK 1,300,000,000 at the end of the year. Following this dividend, our cash flow from operations amounted to €1,63,000,000 in Q4, and our net operating cash flow was also up to €910,000,000 even with the negative CHF 720,000,000 change in working capital in the quarter. The negative change in working capital for the year was CHF674,000,000 and therefore lower than the CHF 800,000,000 we guided for earlier. The reason for this It is that various sports prepayments have been scheduled to be paid this year, and we also took the opportunity to pay All of the $530,000,000 of tax and social fees deferred during 2020 as part of the government support measures due to the impact of the coronavirus pandemic. This shift slightly changes our net negative working capital expectation for 2021 from approximately SEK 800,000,000 going up to approximately SEK 850,000,000 and reflects the investments that we're making in our future growth, including prepayments for new unprolonged sport rights as well as the slate of ViaPlay or reasonable. We have absorbed approximately EUR 185,000,000 of FX transaction headwinds in 2020, which is less than we Our transactional currency exposure is hedged on an average 16 month forward basis. And the strengthening of the Swedish kroner against the U. S. Dollar will over time benefit us as we have approximately $350,000,000 on content purchased annually in U. S. Dollars. Based on the current market situation and currency levels and our exposure levels, We expect limited transactional currency effects in 2021. Our underlying Effective tax rate in 2020 was 21.5%, and we expect the effective tax rate to be approximately 21% this year. We ended the year with net debt, including discontinued operations, of DKK3.03 billion, Comprising financial net debt of CHF 2,520,000,000 including cash and cash equivalents of CHF 2,040,000,000 Net lease liabilities and sublease receivables of EUR 505,000,000 Our net debt to Trailing 12 months adjusted EBITDA ratio was 2.2 times at the end of the year. We now have a new and even more balanced funded structure in place after a number of changes in 2020. We have SEK 3,300,000,000 of outstanding corporate bonds with the first due date in May 2022. We also had SEK 1,260,000,000 Short term commercial paper at the end of the year and a newly arranged SEK 4,000,000,000 revolving credit facility that expires in December 2025, which complements our existing SEK 4,000,000,000 BAKER facility that expires in August 2023. Both were undrawn at the end of the year, and we also had the equivalent of EUR 280,000,000 of undrawn overdraft facilities. The new equity raise will enable us to reduce our leverage while we ramp up our investments in the expansion of the group and launch Avaya Play in new international markets. In this context, it is natural that we have suspended our annual dividend policy and payments for the time being. This in order to focus our resources where we see the greatest potential value creation and returns on investment of shareholders' money. In summary, we have continued to see sequential improvements in the market environment and our operating performance. We have a clear strategy and significant value creation opportunities in the Nordics and internationally, and we have continued to streamline our operations with a disciplined capital allocation approach. Our proactive group transformation and Cost savings programs have positioned us well to manage the impacts of the corona crisis as well as to continue to invest in the future growth of our streaming operations. That is it for my comments. So now back to you, Anders. Thank you very much, Gabriel. 2020 was indeed an extraordinary year for us all, and we are certainly not out of the woods yet. But we have seen a clear sequential improvement, and we ended the year strongly by meeting our subscriber target and delivering 6% organic sales growth and a 22% increase in underlying profit. We expect Further healthy growth in 2021 and have raised the bar further by providing new 2021 subscriber targets and setting a series of 5 year The swift and decisive actions that we took early in 2020 to adjust our consumer offerings and cost base in the face of the crisis and definitely paid off and enabled us to absorb the significant market impact. As a result, Organic sales were up in 2020 and operating profits excluding the now deconsolidated ViaSat consumer business down less than 13%. And as I said before, this shows just how relevant, resilient and flexible our business is and the importance of our strategic focus on the fast growing VIA business becoming the European streaming champion. We will maintain our clear focus on and more sustainable than ever. We will continue to invest in the core drivers of our growth, our people, our platforms and our content and to strike innovative new partnerships so that we can capture the streaming opportunity that we see in front of us. Next up is the international expansion of IOPLIP, and I look forward to keeping you updated with that. The credit for all that goes to our teams who have worked very effectively despite the challenging circumstances and to you all for your continued belief in and support of our strategy and story. For that, thank you very, very much. That concludes our commentary on results, and we will now be more than happy to take your questions. So over to you, operator. Thank you. Ladies and gentlemen, we are ready to register for questions. We will now take our first question. Please go ahead, announcing your name and company. Omar Sheikh, please ask your question. Hi, everyone. Yes, didn't realize it's me. Good morning, everyone. I've got a couple of questions, if I could, please. First of all, Anders, on the ViaPlay Guidance for 2021, could you perhaps explain a couple of things? What are your assumptions for B2B sales, including Alente during 2021. And how much are you assuming for, I guess, direct to consumer within the numbers that you've announced? And then taking a step back on looking at the 2021 guidance for Viaplay versus the 2025 guidance, I think the average run rate for Nordics would be for the $3,000,000 you want to add for the whole 5 years. The annual run rate is roughly 600,000 per year. So I wonder whether you can maybe on the Nordics explain why you expect Your full year your 'twenty five guidance rather to be back end loaded effectively, given what you said about 'twenty one? That's the first question on Viaplay. And then secondly, I want to just touch on the launches later on in the year. So if you look Poland and the U. S, I mean, we've got quite a bit of color on what the product will look like in the Baltics, which is obviously just coming up. But on Poland, It would be useful at this stage perhaps to get a little bit more color on what additional content side of sports you're anticipating going into that market with? And then on the U. S, are there is there any update on potential Wholesale agreements you might sign to get into that market. Thanks very much. Thanks, Omar. Good morning. So we'll start with the first question Regarding Via Play Nordics and the B2B share for this year. B2B will play an important part, especially since we get and increased effect of the Alente agreements. So the majority of the growth will come from B2B. If we look at direct to consumer, we expect that to be in line with or slightly better than the organic direct consumer market growth in the Nordics. And linking that to your question on the $600,000 run rate in the 5 year plan, You are correct to assume that there is a little bit of a delay effect in the sense that we get more incremental growth in 2020 too given new sports rights, especially in Norway and Finland. So there is a ramp up in that. And we're also taking a reasonably prudent approach for 2021 given that we are planning to do some price adjustments. So it follows exactly the plan that we have. And as always, we are mindful about not over promising and we are also mindful about the fact that there could be upside to this. Coming on to the international markets and your question regarding Poland and the content offering. What you will see in Baltics in exactly a month's time is a very sort of good indicator on what you will see also in Poland. So there is more to be said on sports before we launch in August. There is more to be said on the breadth of the content offering on entertainment. And we will very likely also announce some original content for Poland to come already this year and increase from next year and onwards. So the Baltic proposition, which will Soon, going live and start to be marketed is a very good indicator on what Poland can expect. U. S. Is early days. We are in some very interesting dialogues with distributors and other streaming companies. So but it's a bit early to say. U. S. Would be around Christmas time this year. So impact on this year would be quite Insignificant, but a lot of interest. I hope that answers your questions. Yes, it does. And just one very quick follow-up, if I may, on Viaplay, The guidance for this year on the revenue side, could you give us a sense of what sort of price increases you're thinking about for Viaplay, both Nordics Well, just in the Nordics, that'd be great. Thanks. Yes. Well, we would like to respectfully, but we would like to inform our customers first what the price increases are. And of course, we don't want to talk about it too early. So it will happen in the first half Of the year most likely, but we are yet to decide exact timing and exact amounts. We're not talking about the drastic price increases for TV series and movies this year, but I think it is important that We start to adjust gradually, so we create a sustainable future for this for the growth opportunities as we see. But I'll have to come back to you on the price and timing. Thank you. We will now take our next question and it comes from the line of Martin Arnell of DNB Markets. Martin Arnell, please ask your question. Yes, sorry. Here I am. Good morning. My first question is on the ViaPlay sub intake in the quarter, if you could say or share some light on the split standalone versus bundled B2B. Yes. Good morning, Martin. It was very much driven by as I also alluded to when it comes to this year, it's driven by the Alente agreement ramping up and further campaign, not just Lendly, but further campaign driven with our distributors. There is a meaningful share of Direct to consumer also in the 207,000, but the majority came through distribution agreement as anticipated. Is that going to be the same in the start of 2021, you think? Or anything is changing there? No. We see good momentum on direct to consumer also starting the New Year. So there is a steady beat, if you will, in the sign up direct to consumer, but there is a bigger ramp up again coming in from the agreements. And part of the beauty of the joint venture Allenti was, of course, all the synergies that we can share with Telenor, but also the significant upside in upselling Via Play and RV channels to Alentia, and that is playing a big part for the full year and already early in the year. Okay. Thank you. And on the $400,000 new Nordic paying subs that you target for 2021, did you mention your expectations on Split there between stand alone and distributions, is that mostly stand alone or? No, it's majority is distribution partners. And that is the next phase that we're seeing in the now that there will be a slowdown in direct to consumer as a consequence of many households, many individuals have made sort of their first call into streaming services Then the distributors are picking up on streaming us as the new way of creating opportunities where traditional TV channels are less in demand. That will even out over time. So basically, we started our journey with being almost only direct to consumer driven. Now we are harvesting the to existing distribution through partners and then that will even out over time. So 2021 will be The majority, the Nordic growth will be driven by distributors. Okay. Perfect. Thank you. And then on the pricing, you're guiding for price hike. And I guess it makes sense. It was quite a while since you did it. And I understand you don't want to comment on what kind of price, but is it should we see it as a normal level compared to historic races. Is that fair or? No. I think, Martin, the way You have seen it historically is that there has been sporadic from us and others sporadic price increases when you sort of help to do a price increase. And that is quite common in growth industries trying to sort of find their feet in what the right price is. What we would want to do now is to Not stare ourselves blind and what the others in the markets are doing, but actually carve out a price position that we think is the relevant one For ViaPay, given the investments we're making, given the proposition that we have in the market. And then gradually, we'll work with price increases on moderate levels going forward and not wait 5 years every time. So you could argue that we're now sort of resetting our approach to price increases by doing a moderate one this year, And then they will follow annually or biannually in the future. And that's a stable way of managing sort of inflation in investments. Perfect. Thank you for that color. And finally, on the skiing rights here that you're adding later in the year, But you're exiting the Champions League contract. How should we look at that mix for Sweden? And is it possible for you to actually have a separate package, Where you include the skiing rights? Or is it only going to be included in the TMS? That's a good question. And we are contemplating various ways of packaging our content. And I think there will be a proliferation of packages over time. But I am a bit mindful about not sort of complicating the customer proposition Too much too soon. Two price points in the market is basically where we want to be for the time being. And then that may change over time. But we are you are right to assume that we are adding a slightly different kind of portfolio also going forward. You have the ski this year. We have the Swedish men's national team football team next year. We have the handball already. We have the ice hockey already. They are different in character compared So that may lead to some packaging changes in the future, but a little bit too early to say. Okay. Thank you very much. Thank you. Thank you. And our next question comes from the line of Jamie Bass of Berenberg. I've got three questions, if I may. The first one on the ARPU in the quarter. So you sort of alluded to the impact of B2B distribution, but also I was wondering if you could sort of quantify the impact of Disney plus coming out and the loss of that content in terms of the transactional side. Second question is just whether you could give some color on any expectations for further sports content rights in Poland. And finally, on the U. S, so you mentioned that you sort of see markets as being 3 to 4 years before breakeven. Can we expect that number to be in the same range or slightly shorter for the U. S. Given the sort of different entry strategy you have there. Thank you. Yes. Good morning, David. Thanks for the questions. Just the first one on ARPU on ViaPlate. The impact on in the store of Disney gradually, not fully yet, but gradually pulling over their Constant to business. That has been not significant enough to really move the needle on the overall ARPU. The main drivers for the ARPU that we're seeing in Q4 is the share of B2B, the number of campaigns that we are running and the fairly back loaded nature of the quarter. And then on top of that, some currency headwind from the strengthening of the Swedish krona. So that is more impacting the ARPU mix that you see in the quarter rather than the Specific example of sort of the loss of Disney content in the fireplace store. The store is down more so because of the lack of new content Because Hollywood is on more or less on standstill. So that would, of course, bounce back gradually in the future. But the RPO is where we expect it to be slightly better actually when it comes to the impact of Campaigns. And as I alluded to earlier, that will then now gradually change in 2021. So both the nature of the campaigns, The price increases that we are planning and the growth in general in the market, we will see revenues grow ahead of subs this year. That's the ambition for 2021. We do when it comes to your question on Poland and sports rights, it's a bit early to announce anything. But if I put it like this, we're not done yet with carving out It's a proposition for Poland. And as I also alluded to earlier to Omar's question, when you see Baltics Coming in March and the breadth of the service that we've developed there, the ambition for Poland is Similar. So that would be a good indicator for what's coming in Poland, but too early to shed any light on exactly We will do more original production in Poland that we will most likely at least in the early days in the Baltics and hopefully be able to announce Something significant fairly soon on that. On the U. S, yes, you are fair to assume that the potential in harvesting sort of margins could be slightly shorter in terms of a journey in the U. S. Than the other markets. And that's not just the U. S. That is Probably when you look at the specialized markets where we don't go broad with the sports offering, we are more in control of exactly what kind of cost base we have from the get go. So we can then tailor what kind of margins we want at timed, but we don't want to leave the growth opportunity too soon. So we will continue to add content in the markets like the U. S. Represents, but The journey to breakeven and healthy margins could be slightly shorter, yes. That's great. Thank you very much. Thank you. And our next question comes from the line of Tom Singlehurst of Citi. Please go ahead and ask your question. Yes. Good morning. It's Tom here from Citi. Thanks for taking the question. So first thing, I mean, obviously, the disappointment today for the share I suppose it turns out that we had just taken the 2025 sort of uplift in sub numbers, divided it by 5 and just that you were going to deliver sort of steady linear growth, which, well, It's clearly wrong. The question, I suppose, is the same for 2021. Can you just talk a little bit about the phasing of growth through the quarter, through the year. Presumably, it's all going to be very back end loaded. So I just wanted to 100% confirm that. And then specifically on the DTC side, I mean you mentioned that B2B is doing a lot of the heavy lifting at least in the short term. But is there anything that's specifically happening across the first half that will drive maybe a sort of And acceleration of that cadence of DTC adds because that's obviously a critical part of the story. So that was the first question, just Phasing and just understanding what changes and when will drive that acceleration in DTC. And then the second question, I think you said 40 originals. I just wanted to confirm that number. I suppose it's linked to the first question in the sense that is this The main difference this year that will drive an acceleration in DTC. Yes. Good morning. Thanks for the questions. Now on the phasing, let me start by saying that it's not it is not as you alluded to, It's not a linear development in the subspace from now up to 2025. We are adding especially on the sports side, we are adding new rights next year, as I also said earlier, and that has an impact on the way you should see sort of the growth on subs over time. And we also we're coming out hopefully from a pandemic year. And all of us will spend a little bit more time outside again, Hopefully. So I think it's wise to not overshoot too much around this year. It is a good reflection on the balance of how we see the market, what we know about distribution and what we know about the direct to consumer market. I think the slowdown compared to 2020. If any, the growth will continue, but it may slow down a bit in direct to consumer compared to 2020, given the pandemic boost that we saw in especially Q2 and Q3. When it comes to the phasing of the quarters, We are less sort of if you had to come back a couple of years, we would say the growth quarters are Q1 and Q4. And in between, we have some seasonal effects and That is sort of evening out those quarters. We see less and less of that. So the kind of trajectory that you have seen over the quarters in 2020 going into this year. We'll continue to be more of a steady state. Q1 expected to be strong, Q4 expected to be strong. But Q3 Q2 and Q3 is stronger than we have seen before, maybe not compared to last year, which was a bit and extraordinary. But other than that, it's more steady state over the year, which reflects a more mature Product than it did a couple of years ago. Yes, you're right, 40 Originals for the Nordics, I should say, this year, and they are driving a lot of interest in the TM package in the platform. We're viewing up 90% in the past year and past quarter. They drive a lot of attention. And that is, of course, a differentiator. And there is no silver bullet other than to continue to produce content that people are engaged with and care about and want to see. And we have established a number of formats that will come to 2nd, 3rd and 4th seasons of the coming year. So it's becoming more and more of a franchise, and that is very strong. Any original production that we will do outside the Nordics is not included in the 40 originals this year. So that will come on top. Perfect. And then actually, one follow-up, if I can. I mean, on the capital raise. I think you've the sort of back end, sort of The date for it is May by the latest. Can you I mean, is there any particular sort of puts and takes on the timing? Now we've got full information on the full year 2020, are you just going to proceed as fast as possible? No. We have a mandate now from the EGM that takes us To the ATM, which is in May. And then it's a consultation between management and Board and the market. And we cannot say more than that around the timing, unfortunately. Very clear. Thank you. Thanks, Tom. Thank you. Your next question comes from the line of Ivan Abhijev of SIGRA Capital. Please go ahead and ask your question. Hi there. It's Ivan here. Thank you very much for taking my question. I just have 2 actually. One is on the year of 2021. As you mentioned, Anders, what people are getting back in normal, I guess. Do you expect any sort of increased churn? And how would that sort of be counterbalanced by the increase in sport coming back? And my second question related to the originals targets. Are you seeing any increased conversion from the nature in terms of Netflix and Amazon in terms of demand for in line producers and storytellers and it's true in the region to create our own traditional content. Thanks. Thanks, Ivan. I'm sorry, maybe on my side, but the line was breaking up a little bit. So let's come back to your second question because I didn't get all of it. But your first question, Whether we expect increased churn as a consequence of all of us coming out of the pandemic, we don't think that's going to be the case. We are of the opinion that we have now established sort of a new way of consuming content and The choices made what kind of platforms to subscribe to are more obvious for people now than they were just a couple of years ago, and I think Pandemic has changed that. A lot of people would probably look at their total expenditure on content and whether you should not maybe Instead, reduce the number of TV channels in your package and add another streaming service rather than start to churn from streaming services. And we haven't seen Any changes in churn other than positive in the last couple of quarters. So we continue to work with it. And the best way to mitigate churn is Stay very relevant on the content side, and we have planned that quite carefully this year. So we include new Must see content and segment relevant content during the year. And then with the additional sports rights coming in towards the second and third and fourth quarter that increases additionally. Most of it is up to speed now even though it's not normal yet. It's more up speed when it comes to sports availability. But I'm going to have to ask you to repeat your second question because I couldn't catch all of it unfortunately. Sure. Apologies for that. So my second question is related to the originals. Are you seeing any increased competition from the likes of Netflix and Amazon in terms of the demand for independent producers and storytellers within the region, given the amount of originals that you're planning to do. No, I think well, they are ramping up, but on levels that we've seen before. There is still sort of so much creativity and I would say surplus great ideas that there is enough to go around for everybody. We are sweeping up the absolute majority of it, if you look at it from a pan Nordic point of view. And it's not just the global. So I think it's important to remember that we also have strong both competitor and partners in the respective markets representing Traditional linear and pay TV and they're also producing. So it's not that easy for the Globals to come in and ramp up. And the question is, of course, how much Payback there is to do local content in markets like the Nordics to even try to get closer to the kind of volumes we have. So We are very, very sort of humble for the competition that we have. But I think we know pretty much where we have the goal was in that respect. Competition is fierce, but we're in a good position. Thank you. Thanks, Alan. Thank you. Your next question comes from the line of Mikael Lastan of Carnegie. Please go ahead and ask your question. Okay. Hi. A lot of questions on Wireplay subscriber development. And I also have one A quick follow-up there. Can you comment on the sports development versus TV movie subscriptions on the B2B side that is developing and Also with the distributor side. Yes. If you could start with that, Michael. On the distribution side, it's very TV series and move driven. There is good growth in sports in the combination between Via Play and our V channels. But a lot of the volumes that you see and the mix is TV series and movies driven. That's the mix effect that you have in the B2B agreement. Okay. And the underlying demand for those 2 categories, can you comment on that? Well, sports is very much related to what kind of rights You hold, and we are beefing up gradually. And much of that will also be driving our pay TV channels, the addition of the skiing, the addition of the Swedish football team, the addition of the Women's World Cup in So we are making sure that we are acquiring content that drives not just the ViaPlay platform, but also the pay TV business. So we find a good balance and then we link ViaPlay up to that. So demand is strong, I should say, from the discussions that we're having. But I'm also mindful about the fact that we are now in many ways in a breaking point in the market where Traditional TV distribution is going down and many of our distributors are feeling the pain of that. And then we need to find ways together to create value. Otherwise, It's going to be a bit difficult to maintain that demand in B2B distribution. Okay. And when it comes to other subscriptions, Can you talk a bit about the key revenue drivers in the second half twenty twenty and what you see in 2021 for the V channels, carriage fees, Subscriber growth in general and price changes. And also what type of price changes that you already have that Fortress already have implemented and announced. Well, it follows the drivers in the second half 2020 in Q4, it's very much driven by additional upsell and campaigns across the line, but in particular in Alente. So it's a good campaigning, good upsell, more and deeper penetration over content with our distributor partners. Not so much price impact because Those are typically an effect of renegotiations of distribution agreements. And we are starting off now a journey of a number of renegotiations. So Price changes very much lie ahead of us, and we are investing in more content, so prices will go up in that. But again, we're mindful about making sure that we find a way of framing that so we create mutual value for us and our distributor partners. But the effect that we have seen to date is very much driven by good campaigns and good demand for our content prices is in front of us. And what has happened in Denmark? I've seen that some of your partners have increased prices already. Yes. I think that I should sort of probably leave uncommented because I'm not entirely sure what partners you mean when it comes to price increases. Can you elaborate? Yes. I saw that you see you have increased prices, for example, from the All of this year. Yes. Okay. So you mean in the retail side of the EMEA. I think it's up to them to everybody to increase their prices as they see fit. And of course, that is not necessarily driven by us increasing our prices. That will follow anyway. So If there is price increases made already, then there was probably a second round of price increases somewhere on the horizon. All right. And another question here regarding the cost development and how much of that on this SEK 700,000,000 that Yes. Parts of it are sort of, I would say, almost given because we have changed our way of operating. And then the savings in events and travel, as And especially for our linear channels early last year, we are now gradually ramping that up again because the market is coming back and the demand for advertising is also coming back. So but the short and simple answer to question is that the majority of the SEK 700,000,000 will not be reoccurring. The majority was one offs to deal with the pandemic situation. But that also tells you that if something goes from bad to worse, we are ready to take action again. Thanks. Thanks, Mikael. Thank you. That concludes the question and answer session. I will now hand the call back to your host, Matthew Hooper. Thank you all for your time and questions today. We will be hosting our usual digital roadshow meetings next week and look forward to speaking to as many of you as possible then. But as ever, please do not hesitate to reach out to me or Joel with any questions or requests that you may have. So that is it for today's call. So goodbye for now, speak soon and stay safe. Thank you.