Telecom Italia Media: Board examines results for year to september 30, 2006

11/06/2006 - 00:00 PM

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This press release includes alternative performance indicators not considered under IFRS accounting standards (EBITDA, Like-For-Like Changes in Revenues, EBITDA and EBIT, Net Financial Borrowings). These terms are defined in the appendix.


Revenues: €135.7 million, up 12.1% (up 13.2% on a like-for-like basis) compared with the first nine months of 2005

EBITDA: -€70.9 million (-€70.6 million for the first nine months of 2005); up €4.4 million (6.3%) on a like-for-like basis

NET RESULT: -€78.1 million (€832.7 million for the first nine months of 2005, which was boosted by the sale of Virgilio Tin.it and Buffetti Group operations)

LA7 FREE TO AIR: sharp rise in advertising revenues (10.5%) and audience share (15.2%) to around 3%; EBITDA up 9.7% compared with the first nine months of 2005

MTV FREE TO AIR: domestic advertising revenues up 3.6% after new platform-generated revenues of €14.9 million (compared with €10.7 million for the first nine months of 2005); EBITDA up 10.8% compared with the first nine months of 2005

DIGITAL TERRESTRIAL: revenues trebled compared with the first nine months of 2005 (€14.7 million for 2006, €5.4 million for 2005)

Today the Telecom Italia Media Board of Directors, chaired by Riccardo Perissich, examined and approved the Group’s results for the first nine months of 2006.


Telecom Italia Media Group results for the first nine months of 2006

Consolidated Revenues amounted to €135.7 million, up 12.1% (up 13.2% on a like-for-like basis) compared with €121 million for the corresponding period in 2005. Strong growth was driven by domestic advertising revenue, which significantly outperformed the otherwise essentially stable market. Growth was also driven by digital terrestrial pay-per-view revenues. Nevertheless, advertising revenues growth rate slackened during the third quarter with respect to the first half of the year.
 
EBITDA for the first three quarters of 2006 came to -€70.9 million, essentially unchanged in comparison with the figure of -€70.6 million recorded for the corresponding period in 2005. Excluding variations to the consolidation area and one-off charges, EBITDA registered a €4.4 million improvement (up 6.3%). The EBITDA figure reflected improved profitability in analogue and digital Free to Air TV, DTT TV costs incurred for content development on the new “free” channels (i.e. La7 Sport), better PPV margins, and the benefits of a 40% overhead cost reduction (-€6.8 million) with respect to the first three quarters of 2005, generated by the La7/TI Media merger.

EBIT for the first three quarters of 2006 was equal to -€111.2 million (-€96.2 million over the corresponding period in 2005). This may principally be ascribed to the full amortization of the new television network acquired in late 2005, and to investments undertaken during the period to develop infrastructure and complete the digital network.

The Parent company’s share of the net result corresponds to -€78.1 million (€832.7 million for the first nine months of 2005, which was boosted by proceeds from the sale of Virgilio Tin.it and Buffetti Group operations).

Industrial investments worth €65.1 million were made in the first three quarters of 2006 (compared with €32.3 million during the corresponding period in 2005). Of this, around €43.7 million was invested in digital terrestrial expansion, €16.8 million in rights acquisition, and €4.6 million in other investments.

Net financial debt at September 30, 2006 was equal to €102.9 million (compared with a net cash position of €436.1 million at December 31, 2005). Performance during the first nine months of the year was impacted by the €550.6 million dividend payout, resources required for investment (€65.1 million), and operating requirements (€114.1 million in cash flow), alongside improved financial standing following the sale of Buffetti (€65.8 million) and the collection of €126.8 million in tax receivables after the parent company joined the Italian Tax Consolidation programme. Compared with June 30, 2006 (€41.9 million), net financial debt increased by €61.0 million: €39.2 million generated by operations over the quarter, and €21.8 million for the acquisition of indefeasible Rights of Use (IRU), which as at June 30 was entered as a trade payable.

  
First Three Quarters of 2006 Results Breakdown by Business Sector

Free to Air Television

Financial results for the first nine months of 2006 show a substantial improvement as Free to Air Television revenues increased by 4.4% compared with the corresponding period in 2005 to €115.1 million. Growth was driven by a sharp increase in domestic advertising revenues (+7.4%); despite a slow down during the third quarter, it far outstripped the market average of around +0.9% over the first eight months of the year (source: Nielsen). In greater detail:

• La7 Revenues rose 11.3% to €58.7 million compared with the first nine months of 2005 (€52.7 million), driven by a 10.5% rise in gross advertising revenue. Strong sales raised profitability over the period, EBITDA (up €2.6 million or 9.7% compared with the first three quarters of 2005) and EBIT (up €1.5 million) on equivalent terms.
La7 also achieved a significant viewing figure increase over the first nine months of 2006. Average daily audience share reached 3.0%, up 15.2% on the same period in 2005.

• MTV consolidated its position, recording 3.6% domestic advertising revenue growth and a €4.2 million rise in revenues generated by new platforms, at a time when advertising revenue for pan-European network suffered a drop-off. The unit achieved a 10.8% rise in EBITDA compared with the same period last year.

DTT Television

Revenues grew strongly in the first three quarters of 2006 to €14.7 million, three times the figure of €5.4 million recorded for the corresponding period in 2005, attributable to sales of pay-per-view events, deals with Mediaset and TIM, and the sale of bandwidth. Pay-per-view margins improved, though they are still negative. Operating costs increased as a result of expenses incurred through the start-up of new “free” channels such as LA7 Sport, for which advertising revenue is still in the early stages. Long-term prospects very much depend on decoder penetration.

News

The News business unit (APCOM wire service) posted revenues of €6.9 million for the first three quarters of 2006, up 53.3% on the corresponding period in 2005. Growth was generated predominately by new services (New Europe Bulletins, mobile phone news services) and a broader customer base.


Evolution of operations: perspectives for the current year

Notwithstanding a slow down in the growth rate of advertising revenues during the third quarter, as of today we may confirm the trend experienced during the first nine months also taking into account the reduction in the growth rate of digital terrestrial decoders’ penetration as well as the sector regulation under review.


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Telecom Italia Media has announced the 2007 calendar of company events and the publication dates for Telecom Italia Media S.p.A’s earnings and finance figures.
Any alterations to this timetable shall be announced in good time.
• March 7 - Board Meeting to adopt the full-year 2006 operating accounts and consolidated financial statements;
• April 12/13 - (first and second call) - Shareholders’ Meeting to adopt the full-year 2006 company accounts;
• May 7 - Board Meeting to adopt the first-quarter 2007 report;
• July 23 - Board Meeting to examine the Telecom Italia Media Group preliminary first-half 2007 financial results;
• September 6 - Board Meeting to adopt the first-half 2007 report;
• November 7 - Board Meeting to adopt the third-quarter 2007 report;

Pursuant to Article 82 of CONSOB ruling no. 11971/99 (and subsequent amendments and additions), the company invokes the dispensation from the obligation to publish quarterly reports for the fourth quarter of 2005 and the second quarter of 2006.

The results for the first nine months of 2006 will be presented to the financial community during a conference call today starting at 3:00 pm (Italian time).

Journalists may listen to the conference call – which will not entail a Q&A session – by calling: +39 06 33 485 042.
Journalists who are unable to listen in live may hear a recording of the presentation on +39 06 334 843, (access code 125425#).

 

 

Attachments:

Alternative performance measures (file .pdf, 232 Kb)