Telecom Italia Media: 2009-2011 guidelines and strategic plan approved

09/22/2008 - 00:00 PM

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REVENUES: FORECAST AN AVERAGE ANNUAL GROWTH OF 7%-10%, BOOSTED BY THE MULTIMEDIA AND DIGITAL TERRESTRIAL BUSINESS

EBITDA: BREAK EVEN IN 2010

TOTAL INVESTMENTS OF ABOUT € 190 MILLION, INCLUDING ABOUT € 70 MILLION FOR THE NETWORK OPERATOR AND ABOUT € 90 MILLION FOR PURCHASING TV RIGHTS

The Board of Directors of Telecom Italia Media, chaired by Berardino Libonati, examined and approved the Group’s 2009-2011 Guidelines and Strategic Plan.

Below is a summary of the market scenario that Telecom Italia Media Group expects to operate in during the period covered by the plan:

a slowdown in advertising market growth;

a greater use of the digital terrestrial platform, which is constantly growing and has surpassed satellite;

a progressive closure of TV content market and a corresponding increase in prices as a result of recent agreements on premium content among the Majors and the main broadcasters;

awarding of the AgCom bid for the rental of the digital band triggering growth in this market.

 
The strategic guidelines for the coming three years allow the Group to take a series of actions to restore profitability, among which:

the strengthening of synergies and integration with Telecom Italia Group;

consolidation of the current editorial line for the analog channels, notwithstanding major cost savings, resulting from a deep-rooted reorganization and efficiency improvements already started in 2008. In detail, La7 will continue to revise its programming with the objective of significantly reducing network losses, maintaining a high standard of quality. Playmaker production operations within MTV, which are currently in the start-up phase, will also be developed;

continuation of the multi-channel and multimedia development strategy. In this context, TI Media will consolidate its current satellite and MTV Web businesses, with the objective of improving the positive results achieved so far, and it will develop and expand its mobile business through the expansion of MTV-Mobile; 

revision of the Digital Terrestrial strategy, calling for:

the formation of a joint-venture on PPV, in which TI Media will have a minority stake, through which to resolve structural problems and the growing difficulties in purchasing premium content at competitive prices. Negotiations with several international partners are in the final stages;

the focus on core operations as DTT network operator, calling for further development of the digital networks, their technical management, and the rental of available band to third parties, allowing for full realization of the assets value;

restoring profitability to the Apcom press agency.

Hence for the 2009-2011 period, Telecom Italia Media Group expects to achieve the following results based on the assumptions made.

Average revenue growth of 7%-10% per year, driven by 20% growth in multimedia sectors and 30% in DTT.
 
Average annual cost increases of 1.5%, due to the increase in development costs for new business segments (DTT Network Operator, Multimedia, Playmaker content production), already taking into account cost savings from efficiency improvements on the analogue channels and their operating structures.

Deconsolidation of the PPV business, which is a structural money-loser. 

Break-even at EBITDA level in 2010.

Around € 190 million in investments, including around € 70 million allocated to the Network Operator, mainly for the digitalization of the digital network, and around € 90 million for the purchase of television rights.

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In light of the findings of the Supervisory Body and the Internal Control and Corporate Governance Committee, the Board of Directors approved a series of updates and extensions to the Group’s Organizational Model within the meaning of article 6 of Legislative Decree no. 231/2001.
The Board co-opted Marco Patuano,Telecom Italia’s CFO, whose résumé is attached to this press release, to replace director Enrico Parazzini, following the latter’s resignation from office.

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The Group’s 2009-2011 Strategic Plan will be presented to the financial community tomorrow, 23 September, during a conference call starting at 3:00pm (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 7 days at the number: +39 06 334 843 (access code 213543#).

 

Rome, 22 September  2008