Telecom Italia Media: the Board of Directors approves the Group's Report at march 31, 2008

05/07/2008 - 00:00 PM

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This press release includes alternative performance indicators not considered under IFRS (EBITDA, Net Debt). These terms are defined in the appendix.

The Board of Directors Approves the Group's Report on Operations at March 31, 2008

REVENUES: € 73.9 milLION; +28.3% (€ 57.6 milLION in Q1 2007)

Free to Air: € 35.8 million; -7.0%

Multimedia: € 7.0 million; +37.3%

Digital Terrestrial Television: € 29.1 million; +136.6% (mainly due to THE increase in pay-per-view revenues)

News: € 2.3 million; +9.5%

EBITDA: - € 20.6 milLION (-€ 11.0 milLION in Q1 2007)

EBIT: - € 37.4 milLION (-€ 26,2 milLION in Q1 2007)

NET RESULT: - € 29.0 milLION; (-€ 19.5 milLION in Q1 2007)

NET DEBT: € 266.3 million (€ 215.8 million at december 31, 2007)

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DEPUTY CHAIRMAN GIOVANNI STELLA APPOINTED CHIEF EXECUTIVE OFFICER

The Board of Directors of Telecom Italia Media, chaired by Berardino Libonati, examined and approved the Group’s results at March 31, 2008.

The Board first confirmed its intention of proceeding with the process of consolidation of the Telecom Italia Media Group and improving economic results, through increased advertising revenue, the development of new initiatives and more incisive cost cutting.

Consolidated revenues for the first quarter amounted to € 73.9 million, up 28.3% (€ 57.6 million in the first quarter 2007). This result is linked to the strong performance of Digital Terrestrial TV (+€ 16.8 million) — mainly from pay-per-view, following the sale of football rights to Mediaset and TIM as well as from Multimedia (+€ 1.9 million) —while the Free-to-Air segment decreased (- € 2.7 million) due to reduced advertising sales in Italy (-3.5%).

EBITDA was - € 20.6 million, decreasing by € 9.6 million (- € 11.0 million in the first quarter 2007). This result is due to higher programming costs for the winter season of the two Free-to-Air networks (LA7 and MTV), which did not achieve the expected increase in advertising sales.

EBIT, after depreciation and amortization for the period, was - € 37,4 million, decreasing by € 11 million (-€ 26.2 million in Q1 2007). Amortization for the first quarter 2008 amounted to € 16.7 million and consisted notably of € 6.1 million for the purchase of television rights and € 7.6 million relating to digital network infrastructure.

Net result attributable to the Parent Company was - € 29,0 million (- € 19.5 million in Q1 2007).

Net debt amounted to € 266,3 million, up by € 50,5 million compared to December 31, 2007 (€ 215.8 million). The change was mainly due to investments for the purchase of TV rights for Free to Air operations (€ 17.8 million), as well as the requirements for operating activities in the quarter (€ 30.6 million).

Results by Business Unit

Free to Air Television

In the first quarter 2008, the Free to Air Business Unit recorded revenues of € 35.8 million, down 7.0% from € 38.5 million in the first quarter of 2007, which nevertheless had been marked by an extraordinary growth of about 18%.  Operating profitability decreased compared to the figure for Q1 2007, due to higher costs borne for developing and strengthening the programming format.

EBITDA therefore came to -€ 13.3 million, down by € 9.2 million compared to the first quarter of 2007 (- € 4.1 million), and EBIT amounted to - € 21.9 million, decreasing by € 9.8 million from the first quarter 2007 (- € 12.1 million). 

In detail:

LA7

La7 revenues, amounting to € 24.4 million, decreased by 5.1% from € 25.7 in the first quarter 2007; in light of advertising sales virtually in line with the corresponding period of 2007 (+0.6%); this reduction is attributable to a slowdown in the sale of television rights compared to the first quarter of the previous year, which had been marked by the sale of America’s Cup rights. EBITDA was - € 11.9 million (- € 6.6 million compared to Q1 2007); EBIT was - € 19.2 million (- € 7.3 million compared to Q1 2007). 

During the first quarter 2008, LA7 increased its average daily share to 3.1% against a background of decreasing shares for general-interest TV. The major increases were recorded in the prime time slot, +17%  (2.6% share), and during the late-night slot, +5% (3.3% share).  

Sports continue to contribute highly to LA7 success: the Six Nations Rugby Championship recorded an average share of 4.6%, and the World Superbike Championship improved compared to last year: after the first three GPs, the average share was 5.2%. Football also recorded good results, both with Coppa Italia matches, and the two Uefa Cup Fiorentina-Everton matches.
 
The News sector maintained its key role in LA7's programming. During the first quarter 2008, Omnibus obtained a significant 4.6% average share. TG LA7 confirmed the results posted in the first quarter of 2007, with an average share of 2.2%; specifically, the midday edition grew to 2.7%.
 

MTV

MTV revenues amounted to € 13.8 million (-4.2% compared to 14.4 million in Q1 2007). The quarterly results were impacted by the negative performance of domestic advertising sales (-12.2%), partially offset by higher revenues from events and productions (+ € 1.6 million). In detail, with regard to advertising revenues, TIM reduced its investment deciding to concentrate its advertising budget in the second half of the year, at the time of the launch of the joint offering with MTV. EBITDA was - € 1.4 million (- € 2.5 million compared to Q1 2007); EBIT was - € 2.7 million (- € 2.5 million compared to the same period of the previous year).

                                                
Multimedia

In the first quarter 2008, performance was positive for the multimedia business unit, which reached revenues of € 7.0 million, up 37.3% (€ 5.1 million in Q1 2007), mainly driven by the Content Competence Center activities (which did not exist in the first quarter of 2007), with revenues of € 1.6 million. The Satellite platform also posted growing results, partly offset by a decrease in Interactive activities. The good performance of this business unit is confirmed by the positive EBITDA results (€ 2.6 million compared to € 1.9 million in the first quarter of 2007; up 36.8%) and EBIT (€ 2.2 million, compared to € 1.6 million in Q1 2007; up 37.5%).
 

Digital Terrestrial Television

Revenues for the first quarter of 2008 amounted to € 29.1 million, thus increasing 136.6% (€ 12.3 million in Q1 2007), mainly driven by the increase in pay-per-view revenues, thanks to the sale of audiovisual content for Serie A football matches to Mediaset and TIM and also the commercial development of the offering “LA7 Cartapiù”, and the growth in revenues from the rental of digital band to third parties by the Network Operator.

The increase in revenues was offset by a reduction in profitability, both in terms of EBITDA (- € 5.6 million compared to the - € 3.6 million in the first quarter of 2007) and of EBIT (- € 13.3 million compared to -€ 10.4 million in the first quarter of 2007), due to the growing weight during the period of the costs sustained for acquiring football rights.

In the first quarter of 2008, the Cartapiù sales strategy was based on a series of actions intended to increase sales of packages, recharges and smart cards, as well as by a policy of enrichment of non-football content aimed at building customer loyalty and expanding the customer base.

For QOOB TV, 2008 opens with the Sundance Film Festival (17-27 January) where the short Spider by Nash Edgerton, funded by Qoob, received an honorable mention.

The Network Operator (TI Media Broadcasting) continued to perform well during the first quarter 2008. Specifically, revenues from the rental of digital band to third parties amounted to € 2.2 million, up 75.4% compared to the same period of the previous year. At March 31, 2008 the coverage of Italian population  of the two Digital Multiplexes was 87.2% and 74.9%, respectively.


News

In the first quarter of 2008, revenues of the “News” business area (APCOM press agency) amounted to € 2.3 million, up 9.5%, with a more marked increase by 72,8% for the New Media segment. Despite the increase in operating costs, EBITDA was virtually stable, as was EBIT.

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The Board of Directors, having acknowledge the resignation of Antonio Campo Dall’Orto from the position of Chief Executive Officer appointed Giovanni Stella, the current  Deputy Chairman, as Chief Executive Officer of the Company, with the same powers already conferred at the meeting on 11 April 2008. 

Pursuant to Art. 18.5 of the Bylaws, the Board of Directors also confirmed the manager responsible for the preparation of the Company’s accounting documents, Paolo Serra (head of Administration and Control of the Company), a role he has held since 7 November 2007.
The Board of Directors also verified the appropriateness of the powers and means attributed to him for the execution of his tasks. 

The Board of Directors, to further enhance the role of the independent Directors (9 out of a total 13), also confirmed the figure of Lead Independent Director selecting for the role Mr. Mario Zanone Poma, Chairman of the Committee for checks and corporate governance. The Lead Independent Director will be the point of reference and coordination for the instances and contributions of the independent Directors. In particular, the Lead Independent Director can call, either independently or at the request of other Directors, for special meetings of only independent Directors (independent Directors sessions) to discuss matters which, from time to time, may be considered of interest with regard to the functioning of the Board or the running of the Company.

In conclusion, the Board of Directors introduced several amendments to the Company’s Corporate Governance Code for the purpose of coordinating the document (last updated in March 2007) with some corporate governance tools adopted by the Company.

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The manager responsible for the preparation of the Company’s accounting documents, Paolo Serra, declares, in accordance with paragraph 2 of article 154-bis of the Testo Unico della Finanza (Financial Law) that the accounts information contained in this press release corresponds to the accounts documents, books and records.

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The Group’s results as of March 31, 2008 will be presented to the financial community today during a conference call, starting at 4:30pm (CET). Journalists are invited to follow the conference call at the number: + 39 06 33 485 042. For those who are unable to follow the live conference call, a recorded version of the presentation will be available for 48 hours at the number: +39 06 334 843 (access code 197695#).


Enclosures (file .pdf, 114 Kb)