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MTG Presentation at the Kinnevik Capital Markets Day
1. Modern Times Group MTG AB
“A Modern Media Group
for Modern Times”
Investment AB Kinnevik
Capital Markets Day
23 February 2011
1
2. A Focused Entertainment Group
With an Unrivalled Broadcast
Footprint
• Launched commercial Free-TV & Pay-TV in Scandinavia & spun-out of
Kinnevik in 1997 - market cap of SEK 2.6 billion at listing
• Revenues of SEK 13.1 billion in 2010 with 18% group EBIT margin & 0.9x net
debt/EBITDA – current market cap of SEK 28.1 billion
• Operating 28 Free-TV channels in 11 countries watched by over 100 million
people
• Operating Satellite Pay-TV platforms in 9 countries with Viasat premium
content packages & individual channels also sold over 3rd party networks in
28 coutries
• Largest shareholder in CTC Media - Russia’s largest independent commercial
TV broadcaster
Introduction
2
7. Market Position
Primary Challenger
Sweden Norway Denmark
Position #2 #2 #2
Commercial audience
share (15-49) 36.8% 26.4% 24.5%
FY 2010
Catch-up services Yes Yes Yes
Sold on ’bundled’ basis Yes Yes Yes
7
8. The Opportunity
Digitalisation
Scandinavian TV landscape (2005) Scandinavian TV landscape (2010)
• More than a quarter of homes only received 2 public service channels + 1
commercial channel before digitalisation
• MTG Free-TV channels limited to <70% national penetration through satellite
& cable - NOT considered a ‘national’ media
• Scandinavian markets are first to close down analogue TV – Swe 2007,
Norway & Denmark (2008)
Free-TV Scandinavia
• Arrival of DTT & IPTV offer opportunity to increase penetration & launch new
channels
8
10. Seizing the Opportunity
Catching Structural Tailwinds
National penetration Commercial audience share (15-49)
100% 50%
90%
40%
80%
70% 30%
60% 20%
50%
10%
40%
30% 0%
2006 2007 2008 2009 2010 2006 2007 2008 2009 2010
TV3 Sweden TV6 Sweden
Sweden Norway Denmark
TV8 Sweden TV3 Norway
Viasat 4 Norway TV3 Denmark
TV3+ Denmark
• Inclusion of MTG Free-TV channels in all • Overall TV viewing time increases as direct
major ‘paid for’ digital TV networks result of greater channel choice
• National penetration rises to 90% for some • Launch of new channels in all 3 countries not
MTG channels – NOW considered a national
Free-TV Scandinavia
only counters potential fragmentation of TV3
media audience share but increases combined share
of viewing & closes CPT gap to incumbent
10
11. Seizing the Opportunity
The “Media House” Model
Complementary channel profiles Average weekly reach (15-49)
100%
Old & Male Old & Female
90%
+0%
80% +24%
70% +10%
60%
50%
40%
30%
20%
10%
0%
Young & Male Young & Female
Bonnier MTG ProSiebenSat.1
Free-TV Scandinavia
Source: MMS
2003 2010
11
12. Free-TV Scandinavia
Operating Results
(SEK million)
• Advertising market growing faster than 4,500 50%
GDP and TV gaining share from other 45%
4,000
advertising media
40%
3,500
• Triple Play effect leads to substantial 35%
3,000
advertising market share gains due to:
30%
• Rising penetration levels 2,500
• New channel launches 25%
2,000
• Reducing CPT discount 20%
1,500
15%
• Sales only down 1% at constant exchange
rates in 2009 ‘year of recession’ & up 16% 1,000
10%
again in 2010 ‘year of recovery’
500 5%
• Controlled programming investments yield 0 0%
incremental profitability despite launch of 2006 2007 2008 2009 2010
Free-TV Scandinavia
new channels each year Revenue EBIT EBIT margin
12
14. Market Position
Primary Challenger
Czech
Estonia Latvia Lithuania Bulgaria Hungary Slovenia Ghana Russia
Republic
Position #1 #1 #1 #2 #2 #3 #2 - #4
Commercial
audience share
41.9% 38.1% 40.7% 23.4% 28.2% 7.5% 10.1% 15.6%
FY2010
(15-49) (15-49) (15-49) (15-54) (18-49) (18-49) (18-49) (14-49)
(target
demographic)
Catch-up services Yes Yes Yes No Yes No No No Yes
Sold on ’bundled’
Yes Yes Yes Yes Yes Yes N/A N/A N/A
basis
14
15. The Opportunity
Attractive Market Dynamics
TV Advertising Spend (USD million) TV Advertising Spend Per Capita (USD)
50,000 USA
180
6,000 UK USA
140
3,000 Russia
800 100 UK
600 60
400
200 20
0 -20
TV Ad Spend / Total Ad Spend TV Viewing (minutes per day)
60% 300
50% 250
40% 200 UK
USA
30% 150
Free-TV Emerging Markets
20% 100
10% 50
0% 0
15
2010 data except * 2009 statistics
16. Seizing the Opportunity
The “Media House” Model
• Implementation of same multi- Commercial Audience Share (FY2010)
channel strategy in Emerging
50%
Markets to defend market leadership
in Baltics & challenge incumbents in
40%
other markets
• Complementary secondary channels
launched in all scale markets 30%
• Selective investment in programming
during recession to build market 20%
positions
• Bundled pricing introduced to erode 10%
pricing advantage of incumbent
• Taking audience & advertising market 0%
2006 2007 2008 2009 2010
Free-TV Emerging Markets
share from previously dominant
incumbents in Czech Republic & Czech Republic (15-54) Bulgaria (18-49)
Hungary (18-49) Slovenia (18-49)
Bulgaria with rising power ratios Pan-Baltic (15-49)
16
17. Free-TV Emerging Markets
Operating Results
(SEK million)
• Exponential growth pre-Recession with 2,500
lagging recovery in 2010 – sales up 4% in
2010 at constant exchange rates
2,000
• Baltic operations leading recovery with
sales up 20% year on year in Q4 2010 at 1,500
constant exchange rates
1,000
• Combined operating loss in 2010 reflects
ongoing investments in early stage
Slovenian & Ghanaian businesses & sub 500
scale Hungarian business
0
• Baltic, Czech & Bulgarian businesses 2006 2007 2008 2009 2010
reported combined profit in 2010
Free-TV Emerging Markets
-500
• Highly operationally geared to advertising Revenue EBIT
market recovery
17
18. Investing in Growth
CTC Media
• 38.3% shareholding acquired for USD 83 mn with Operating results (USD millions)
current equity market value of ~USD 1.3 bn 700
(February 2010) 600
500
• Sales up 15% y/y in ruble terms to USD 379.0 mn
400
for 9M 2010
300
• OIBDA of USD 116 mn for 9M 2010, with 200
margin of 31% 100
• Net cash position & payment of USD 80 million 0
dividend in 2010 2005 2006 2007 2008 2009 9M 9M
2009 2010
Sales OIBDA excl. non-recurring items
Audience share (4+) CTC Media Russian Ad Sales growth (RUB)
25%
20%
48%
15%
10%
5% 32%
0%
19%
8%
-3%
18 2006 2007 2008 2009 9M 2010
2009 2010
20. Market Position
Premium Content Provider of
Choice
• MTG & 3rd party Free-TV channels
• MTG thematic sports channels – Viasat Football, Viasat Hockey, Viasat Motor,
Viast Golf, Viasat Sport HD
• MTG thematic movie channels – TV1000 Nordic, TV1000 Action, TV1000 Family,
TV1000 Classic, TV1000 Drama
• MTG thematic documentary channels – Viasat History, Viasat Nature,
Viasat Explorer, Viasat Crime
• Leading 3rd party premium channels – music, news, documentaries, kids, nature etc
• MTG & 3rd party HD channels
Breaking News: ‘Last night MTG aired the first ever sports event to be produced in 3D in
Scandinavia – live coverage of the last 16 clash between FC Copenhagen vs. Chelsea in the
UEFA Champions League’
20
21. Seizing the Opportunity
Growing Viasat...ellite
DTH Satellite Premium subscribers Premium DTH ARPU (SEK)
750
(000’s)
5,000
700 4,000
650 3,000
600 2,000
550 1,000
500 0
2006 2007 2008 2009 2010 2006 2007 2008 2009 2010
Value-added services (000’s) • Operating in Europe’s most competitive &
250 digitalised pay-TV market
200 • Satellite gradually losing share to other
distribution forms BUT Viasat gaining market
150
share in the satellite environment
100 • Clear premium pay-TV market leader
50 • Low churn levels following acquisition of key
Pay-TV Nordic
sports rights + new channel launches
0
• Steadily rising premium DTH ARPU due to
2006 2007 2008 2009 2010
price rises & increasing penetration of VAS
21
HDTV PVR Multi-room
22. The Evolving Opportunity
Technology Shift
Gatekeeper
Virtual Operator
Owned & Operated Viasat Channels in Independent
in 3rd Party
Satellite Platform 3rd Party Networks Internet
Networks
Environment
Pay-TV Nordic
22
23. Seizing the Opportunity
The “Platform Agnostic” Approach
Premium subscriber development (000’s)
1,500
1,000
500
0
2006 2007 2008 2009 2010
DTH Satellite 3'rd party network*
Jun 2008 Oct 2009 Mar 2010 Jun 2010
Pay-TV Nordic
23
*IPTV subscribers for 2006-2008, 3’rd party network
subscribers for 2009 and 2010
24. Seizing the Opportunity
Entertainment “at your Command”
First to Market with Full Service
‘Over-The-Top’ Solution Mobile
Set -Top Box
• Anytime
Access all services ‘on demand’
• Anywhere
Access subscription online Tablet Media
Players
• Any Device
Enjoy subscription on multiple PC/Mac
devices in and out of home
Uniquely Combining Advertising
& Subscription Funded Models Game consoles
Embedded
TV Set
Applications OTT Set-Top box
Pay-TV Nordic
24
25. Pay-TV Nordic
Operating Results
(SEK million)
• Top line growth driven by 3rd party 5,000 50%
subscriber acquisition & rising DTH 4,500 45%
premium ARPU
4,000 40%
3,500 35%
• Margins stable due to underlying
improvement off-setting investments in 3,000 30%
sports rights (English Premier League),
2,500 25%
new technologies (HD, 3D & Viaplay) and
additional channels 2,000 20%
1,500 15%
• Highly cash generative with lower SAC for 1,000 10%
subscribers on 3rd party networks
500 5%
0 0%
2006 2007 2008 2009 2010
Revenue EBIT EBIT margin
Pay-TV Nordic
25
27. Market Position
Seeking New Opportunities
Year 2003 2004 2005 2006 2007 2008 2009 2010
Countries 7 11 15 22 23 24 25 25
Channels 2 3 5 6 7 8 10 15
DTH platforms Baltics Ukraine Russia
27
28. Seizing the Opportunity
Growing the Subscriber Base
DTH Subscribers (000’s) Mini-pay subscriptions (000’s)
300 60,000
250
50,000
200
40,000
150
30,000
100
50 20,000
0 10,000
2006 2007 2008 2009 2010 2006 2007 2008 2009 2010
Basic DTH Premium DTH Mini-pay TV subscriptions
• Viasat is the only satellite Pay-TV operator • Business launched in 2003 with sale of
in the Baltics – premium offering with stable Viasat movie & documentary channels
subscriber base & ARPU to 3rd party networks in C&E Europe
• Premium subscriber base includes • Now more than 50 million
Ukrainian offering since Feb 2008 & Basic subscriptions to 15 Viasat movie,
Pay-TV Emerging Markets
primarily comprises rapidly growing documentary and sports channels to
Raduga platform in Russia ~2,500 3rd party networks in 25
countries including US
28
29. Ukraine
Europe’s 2’nd Largest Territory
TV distribution market share DTH satellite market share - All
1%
100% 2% 0%
0%
80%
60%
40%
20%
0%
97%
Free satellite TV Viasat NTV+
Cable (tot.) Pay DTH Free DTH Poverkhnost Other
DTT (tot.) IPTV (tot.) Terr. Analogue
DTH satellite market share – Pay-TV
• Substantial market opportunity – Europe’s second
largest country by land mass 2% 2%
5%
• 50% of ViaStrong DTH satellite platform acquired
in Q2 2008 & further 35% acquired in Q2 2010 29%
Pay-TV Emerging Markets
• Selling premium packages of Viasat & 3rd party
channels 63%
• Already larger than NTV+ with unprompted brand
awareness levels of over 60%
• 5 year breakeven horizon from launch in 2007
Viasat NTV + Tricolor Viva Poverhnost' TV
29
Sources: Screen Digest, GFK and internal analysis
30. Russia
Europe’s Largest Territory
TV distribution market share DTH satellite market share - All
100% Orion- Raduga TV,
Express, 2%
80%
NTV+, 10% 4% Platform
60% HD, 1%
40%
20%
0%
Tricolor,
83%
Cable (tot.) Pay DTH Free DTH
DTT (tot.) IPTV (tot.) Terr. Analogue
Subscriber development in 2010
• Even more substantial market opportunity –
(indexed)
Europe’s largest country by population
250
• Low levels of satellite penetration
• 50% of Raduga DTH satellite platform acquired in 200
Pay-TV Emerging Markets
Q1 2010 150
• Mid-tier mass market offering with competitive
offering of 80 MTG & 3rd party channels at 100
attractive price
50
• 5 year breakeven horizon from launch in 2009
0
30
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
Sources: Screen Digest and internal analysis
31. Pay-TV Emerging Markets
Operating Results
(SEK million)
• Top line growth driven by expansion of 1,000 50%
mini-pay business from launch in 2003 &
900 45%
growth of Baltic satellite platform
800 40%
• Profitability of Baltic satellite platform & 700 35%
mini-pay business supports ongoing
600 30%
investments in Ukrainian & Russian
satellite platforms 500 25%
400 20%
• 2010 profitability impacted by full
300 15%
consolidation of Ukrainian platform from
July & inclusion of Russian platform from 200 10%
February
100 5%
0 0%
• Business highly geared to subscriber
2006 2007 2008 2009 2010
Pay-TV Emerging Markets
growth & rising consumer spending power
Revenue EBIT EBIT margin
31
33. Financial Performance
Flexible Position
Income Cash flow Financial position
SEK millions FY2010 SEK millions FY2010 SEK millions FY2010
Sales 13,101 Net cash flow from Total debt 2,526
1,533
operations
EBIT (incl. Associates) 2,355 Cash & equivalents 500
-300
Pre-tax profit Cash flow to investing
2,321
Net debt 2,026
Net income from Cash flow to financing -707
1,750 Net debt / LTM
continuing operations 0.9x
underlying EBITDA
Total net incl Net change in cash &
3,541 -135
discontinued ops cash equivalents Available liquid funds 4,400
• Significant impact on reported results • Cash flow from operations up 48% & • New unsecured SEK 6.5 billion 5 year
of y/y strengthening of SEK reporting equivalent to 70% of Group EBITDA revolving multi-currency credit facility
currency vs. operating currencies arranged in October 2010
• Receipt of USD 31 mn (SEK 216 mn)
• Annual tax rate of 25-30% of dividends from CTC Media • SEK 9.6 billion public equity market
value of 38.3% shareholding in CTC
Media (SEK 1.8 billion book value)
33
34. Capital Allocation
Reinvesting in Growth
Cash flows from Scandinavia invested into
Emerging Markets
- 1997: Launch of Baltic Free-TV operations
- 2000: Acquisition of 95% of Hungarian operation
- 2001: Acquisition of 75% of DTV in Russia
- 2002: Acquisition of 36% of CTC Media in Russia
- 2003: Launch of Mini-Pay business
- 2004: Launch of Baltic Pay-TV platform
- 2005: Acquisition of 50% of Prima TV in Czech Republic
- 2006: Acquisition of 100% of Slovenian operation
- 2007: Acquisition of 50% of Diema channels in Bulgaria
- 2008: Acquisition of 50% of pay-TV platform in Ukraine
- 2008: Acquisition of 100% of Nova TV in Bulgaria
- 2008: Launch of channel in Ghana (W Africa)
- 2010: Acquisition of 50% of pay-TV platform in Russia
- 2010: Acquisition of additional 35% of Viasat Ukraine
Financial Resources
- Combined with ongoing launch of Free-TV & Pay-TV
channels every year
34
35. Capital Allocation
Shareholder Returns
• 25% Return On Capital Employed for 2010 Annual Cash dividends (SEK)
16
• 30% Return On Equity for 2010 14
12
10
• CDON Group (MTG’s internet retailing
8
operations) distributed to shareholders in
6
December 2010 with market value of
4
>SEK 2 billion
2
0
• Board of Directors to propose increased 2007 2008 2009 2010
annual cash dividend of SEK 7.50 per
share to AGM in May 2011 Ordinary Extraordinary Proposed
Financial Resources
35
37. Clear Objectives
& Priorities
• Annual organic sales growth of more than 10%
• Operating profit margin of more than 20% for Viasat Broadcasting
(even excluding associated company income)
• Increasing proportion of Emerging Market sales & operating income
• Generation of healthy ROE & ROCE
• Generation of healthy Total Shareholder Returns
Summary
37
38. The Lean & Mean
Broadcasting Machine
• Operationally geared growth company with balanced (advertising &
subscription revenues) & diversified (geographically) revenue mix
• Driving growth primarily through organic expansion & start-ups
• Challenger to incumbents in structurally evolving markets
• Successful multi-channel, multi-platform, multi-territory media house model
• Efficient integrated operating structure yields competitive advantage &
synergies
• Investing healthy cash flows from Nordic region into emerging markets
• Strict cost control, cash management & capital allocation
• Strong & flexible financial position
• Delivering enhanced shareholder returns
Summary
38
39. For Further Information, please visit www.mtg.se or contact:
MTG Investor Relations
Tel: +44 7768 440 414 / +46 73 699 29 91 /+44 779 113 84 86
Email: investor.relations@mtg.se
Nasdaq OMX: ‘MTGA’, ‘MTGB’
Contact information
39
