Telecom Italia Media: Report on Group Operations at 30 June 2010 examined and approved by the Board of Directors

07/29/2010 - 00:20 PM

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First half results confirm the exceeding of the break-even specified in the Business
Plan for the full-year 2010, with positive EBITDA growing by €12.7 million on the first six months of 2009

This press release refers to certain performance indicators (EBITDA, Net Financial Debt) that do not conform to International Financial Reporting Standards (IFRS). These terms are defined in the Appendix.
 

Revenues: €126.6 million; +14.1% compared with H1 2009 (€111.0 million)

EBITDA: €8.5 million; +€12.7 million compared with H1 2009 (-€4.2 million)

EBIT: -€21.1 million; +€12.8 million compared with H1 2009 (-€33.9 million)

Net result: -€22.3 million (-€42.2 million in H1 2009)

Net financial position: €93.3 million; -€251.8 million compared with 31 December 2009 (€345.1 million) following the positive outcome of the capital increase for about €240 million

The Telecom Italia Media Board of Directors, chaired by Berardino Libonati, today examined and approved the Report on Group Operations at 30 June 2010.

The first half of 2010 closed with improved results for Telecom Italia Media with an EBITDA of €8.5 million, confirming the trend already seen in Q1 2010. The company thus recorded a positive EBITDA for the Group, fully exceeding the break-even target outlined in the Business Plan for the FY 2010.
The positive first-half results are strongly linked to the increase in revenues of the Network Operator which grew by more than €17.6 million, and to the recovery in television advertising market which partly benefited both La7 and MTV.

Consolidated Group revenues in H1 reached €126.6 million growing by €15.6 million (+14.1%), compared with €111.0 million for the first six months of 2009.

EBITDA reached €8.5 million with an increase of €12.7 million.

EBIT
, net of amortization for the period, amounted to -€21.1 million, registering a €12.8 million improvement with respect to the -€33.9 million of H1 2009. The variation is almost entirely due to growth in EBITDA.

The net result attributable to shareholders of the parent company, excluding contribution from assets due for disposal, was at -€22.3 million, up €19.9 million (-€42.2 million in H1 2009).

Net financial position stood at €93.3 million, down €251.8 million compared with 31 December 2009 (€345.1 million), primarily due to the positive outcome of the capital increase (€239.5 million) and to tax rebate for the fiscal consolidation at Telecom Italia Group level (€33.8 million), partially offset by capital expenditure requirements for the period (€20.7 million).

 

BUSINESS BREAKDOWN

1. Telecom Italia Media S.p.A. (La7, La7d, Digital Content)


Telecom Italia Media S.p.A.’s H1 2010 revenues amounted to €56.8 million, down €4.0 million compared with the first half of 2009. Advertising revenues for the channel La7 in the first half of 2010 are in line with those of H1 2009 by virtue of a guaranteed minimum agreement with Cairo Communication. Advertising revenues for Telecom Italia Media S.p.A. nevertheless rose compared with the first half of 2009 thanks to the contribution of the new channel La7d. Specifically, net advertising revenues came to €49.0 million, compared with €48.3 million for the first half of the previous year. Real gross advertising revenues of Cairo  exceeded by 4.3% the guaranteed minimum and were substantially in line with the overall recovery in the television market (+6.0% with respect to 2009 over the January-May period; source Nielsen).
While net advertising revenues for the two channels La7 and La7d improved, Telecom Italia's Digital Content revenues were down as a result of the new contract at a lower value which came into effect in April, as were revenues from Media Services following the end of the service business to Dahlia TV.

EBITDA amounted to -€20.7 million, down €4.8 million compared with H1 2009 (-€15.9 million). 

EBIT was -€33.7 million (-€29.5 million in H1 2009).

La7 closed the first half of 2010 with an average daily share of 2.82% (2.99% in the year-ago period) but with a steady growth over several months from 2.71% in January to 3.14% in June 2010. The drop in audience figures with respect to 2009 was largely due to the switch-off to digital terrestrial and the consequent overlapping of several platforms. Within this context La7, which enjoys the solid loyalty of its audience and attractive programming for new viewers, was one of the non-specialist networks least affected by the change.

22 March 2010 saw the launch of La7d, a free-to-air digital terrestrial channel with generalist content targeting young and female viewers alongside La7's consolidated audience and maintaining its reliability and brand originality, enjoying gross advertising revenues in its first three months of activity €1.3 million (3.9% above the guaranteed minimum).

Digital Content revenues for the first half of 2010 came to €6.2 million (€7.3 million in H1 2009), reflecting – as already mentioned - the contractual changes which took effect in Q2 based on a less remunerative mechanism than the previous agreement, though set to increase over time.
 


2. MTV Group

Revenues
for MTV Group in the first half of 2010 amounted to €45.6 million, up 0.2% on H1 2009 (€45.5 million). Revenues benefited from the growth in advertising revenues of the channel MTV, the new digital MTV+ channel and the satellite channels, which more than compensated for the fall in revenues of Playmaker, MTV Mobile and the web channels.

EBITDA was €5.5 million (€4.3 million in the first half of 2009); the increase is substantially due to the positive effects of last year's corporate reorganization as well as to the closer control of operational costs.

EBIT amounted to €1.9 million, an increase of €1.4 million on H1 2009 (€0.5 million).

Gross advertising revenues for MTV Group rose from €30.8 million in H1 2009 to €35.0 million in H1 2010, an increase of 13.8%, much higher than the growth rate for the TV market as a whole (+6.0% on 2009 for January-May; source Nielsen).


3. Network Operator (TIMB)

Revenues
generated by the Network Operator in the first half of 2010 amounted to €39.7 million, up €17.6 million from H1 2009 (+79.6%). The improvement was mainly due to higher revenues from digital bandwidth renting and services to third parties which represent around 74% of total digital revenues for Telecom Italia Media Broadcasting.

EBITDA amounted to €22.0 million, up €14.8 million on H1 2009. 

EBIT was €9.0 million, up 14.0 million from H1 2009.

Capex during H1 2010, amounting to €3.9 million, was down €1.0 million compared with year-ago period. This is because for 2010 the planned switch-off of the analogue network and conversion of the broadcasting systems to digital terrestrial is mainly concentrated in the second half of the year.

As of 30 June 2010, the three Telecom Italia Media Broadcasting digital multiplexes (excluding the fourth, which at the time of writing is operational in Sardinia only), respectively covered 79.3%, 88.9% and 29.5% of the Italian population. In particular, the Multiplex TIMB3 has a coverage of 94.0%, calculated solely on the regions/areas in which the switch-off process is already completed.


EVOLUTION OF OPERATIONS

Given the above scenario and bearing in mind the current economic and regulatory climate in which the company operates, Telecom Italia Media expects the following in 2010:

  • higher television advertising revenues for Telecom Italia Media, in line with the Strategic Plan 2010-2012, thanks to a new guaranteed minimum agreement signed with Cairo Communication for the new channel La7d, in addition to the existing contract for La7;
  • increased advertising revenues for MTV compared with the previous year, also thanks to the launch of the new channel MTV+, as stated in the Plan;
  • increased profits for the Digital Terrestrial Network Operator, compared with 2009, also thanks to new multi-year bandwidth hosting agreements. Among the main clients, Dahlia TV is finalising, forecasting a positive closing in short-time, a major financial restructuring to support its growth and development plans. Also TI Media is involved in this operation, which will allow the confirmation of profit targets for the Network Operator;
  • broader take up of the other innovative platforms (IPTV, Web, Satellite) which will generate increasing demand for personalized content. Telecom Italia Media will thus continue to perform advisory services and supply content for Telecom Italia (Digital Content) as well as investing in satellite, web and mobile platforms in an attempt to confirm the positive results achieved thus far. New Internet channels have also been launched by La7 (La7.tv) and MTV (MTVmusic.com) which will reinforce the company’s web presence.

Based on these assumptions, Telecom Italia Media expects to consolidate over the whole of the financial year the positive EBITDA already achieved in the first half, while taking into account its increased commitments to programming for La7 and the start up of the new La7d and MTV+ channels.

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The Manager designate for the preparation of accounting corporate documents, Paolo Serra, hereby declares, pursuant to paragraph 2, Art.154-bis of the Italian Consolidated Financial Law, that the accounting information contained herein corresponds to the company’s documentation, accounting books and records.

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The interim Group results at 30 June 2010 will be illustrated to the financial community during a conference call scheduled for 1.30 pm (Italian time). Journalists may listen in to the presentation by phone on 800 408 088 (callers from Italy) and +39 06 33 485 042 (International callers). It will also be possible to listen to the presentation again over the following two days by calling +39 06 334 843 (access code 302772# for the Italian version; 291661# for the English version).

> Appendix (file .pdf, 100 KB)


Milan, 29 July 2010