Telecom Italia Media: Board of Directors approves Group Interim Financial Report at 30 June 2011

07/27/2011 - 03:22 PM

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First half results confirms the improvement in margins and reduction of losses

REVENUES: 118.2 million euro; -8.4 million euro (126.6 million euro in H1 2010)

EBITDA: 9.0 million euro; +0.5 million euro (8.5 million euro in H1 2010)

EBIT: -20.2 million euro; +0.9 million euro (-21.1 million euro in H1 2010)

NET INCOME: -16.3 million euro; +6.0 million euro (-22.3 million euro in H1 2010)

NET FINANCIAL DEBT: 144.6 million euro, substantially in line with Q1 2011 at 146.1 million euro (115.5 million at 31 December 2010)

Continues in H1 2011 the significant growth in advertising revenues for the La7 channels (+34.6%); La7 reaches an average audience share of 3.65% (+29.4%)

This press release contains a number of alternative performance indicators not contemplated under IFRS accounting principles (EBITDA, Net Financial Debt). Definitions of these terms are provided in an attachment.
 

The Telecom Italia Media Board of Directors, chaired by Severino Salvemini, today examined and approved the Group’s Interim Financial Report at 30 June 2011.
 

The first half of 2011 posted an improvement over the same period in 2010, building on the positive trend registered during previous accounting periods. EBITDA was positive and losses were further reduced. The first half showed significant growth in advertising revenues and a higher audience share for La7.

Consolidated Group revenues in the period amounted to 118.2 million euro, down 6.6% (126.6 million euro in H1 2010) after a fall in revenues from Network Operator due to the wind up of Dahlia TV activities and a drop in revenues from MTV Group. The result was partly offset by the growth in advertising revenues from La7 (+ 10.4 million euro) and La7d (+2.1 million euro) thanks to the concessionary's success in turning La7's excellent audience share performance into higher advertising receipts, strongly countering the falling trend in the TV market (-2,3% January-May 2011 - Source Nielsen).

EBITDA amounted to 9.0 million euro, a 0.5 million euro improvement (8.5 million euro in H1 2010). Ongoing Group-wide cost containment made it possible to offset the drop in revenues and to maintain EBITDA to slightly above the levels recorded in H1 2010.
 

EBIT, net of amortization for the period, amounted to -20.2 million euro, registering a 0.9 million euro improvement (-21.1 million euro in H1 2010).

Net income amounted to -16.3 million euro, a 6.0 million euro improvement (-22.3 million euro in H1 2010) as a result of the positive impact of operational management, and lower financial charges following the company’s recapitalization, and non-operating activities.
 

Net financial debt amounted to 144.6 million euro, substantially unchanged from Q1 2011 (146.1 million euro) and, in line with expectations for the period, up 29.1 million euro compared with 31 December 2010 (115.5 million euro). The difference may principally be ascribed to industrial investments over the period and those made by the Network Operator at the end of 2010 (26.4 million euro) as well as funding requirements (16.8 million euro) partially offset by fiscal consolidation benefits.

Breakdown of results by business area

1. TI Media – La7

TI Media – La7 revenues in H1 2011 amounted to 71.5 million euro, up 25.9% compared with H1 2010 (56.8 million euro). This result was achieved thanks to the significant increase in La7 and La7d gross advertising revenues of 92.2 million euro, 34.6% up on H1 2010 (68.5 million euro).
This positive outcome was in countertrend with the TV market (-2,3% January-May 2011 - Source Nielsen).
 

Improvement in advertising revenues was driven by the excellent performance of La7 in daily average audience share, which reached 3.65% in H1 2011, up 29.4% compared with H1 2010. La7 is the only generalist network to post steady growth in audience share throughout the period with a number of significant peaks: in June average share reached 4.44% for the full day and exceeded 8% on certain specific days (such as 30 May, during the second ballot for local government elections, and 13 June, on the occasion of the Referendum).
The most impressive audience performance was recorded in the early evening slot (+75%) and in prime time (+50%).

H12011 revenues for “Digital Content” activities amounted to 8.1 million euro, up from the 6.2 million euro for H1 2010. Operations are focused on enriching the range of content offer for the Cubovision and Connected TV platforms.

EBITDA amounted to -5.6 million euro, a 15.1 million euro improvement compared with H1 2010 (-20.7 million euro). This performance was boosted by higher revenues, which more than offset higher costs associated with La7d. La7 programming costs remained more or less in line with the figures for H1 2010.

EBIT amounted to -19.4 million euro, a 14.3 million euro improvement compared with H1 2010 (-33.7 million euro).

2. MTV Group

MTV’s H1 2011 revenues amounted to 35.6 million euro, down 21.9% (45.6 million euro in H1 2010). Performance was impacted in particular by the contraction in advertising revenues from One (-5.8 million euro) and the lower revenues from the Satellite-Music Platform channels (-3.3 million euro) and MTV Mobile (-1.1 million euro). The reduction in revenues was tackled through a far-reaching cost cutting drive which has brought down costs of materials and services by over 5.4 million euro by optimizing the programming schedule, making greater use of the library, and reducing labour and other operating costs.
Gross advertising revenue fell by 17.3%, from 35 million euro in H1 2010 to 29.0 million euro in H1 2011. The performance, weaker than the market1, is largely due to the loss of advertising spending by some big customers.

EBITDA amounted to 2.9 million euro (5.5 million euro in H1 2010).

EBIT was break-even (1.9 million euro in H1 2010).

3. Network Operator (TIMB)

Network Operator revenues in H1 2011 amounted to 26.3 million euro, down 13.4 million euro compared with H1 2010. This performance is principally ascribable to the liquidation of Dahlia TV and the resulting termination of its activities in January 2011. In H1 2010 Dahlia generated 14.6 million euro in revenues.

EBITDA amounted to 11.7 million euro, down 10.3 million euro compared with H1 2010 (22.0 million euro). The fall in revenues is partly offset by lower operating costs achieved through more efficient network management.

EBIT amounted to -0.8 million euro, down 9.8 million euro compared with H1 2010 (9.0 million euro).

The Network Operator continues to seek to fill its multiplexes following the Dahlia wind up. After the airing in January of two new channels (HSE 24 and RTL 102.5), Switch Over Media Group's CanalOne began broadcasting in June and another two channels will be launched as soon as they have received the necessary authorization.

As at 30 June 2011, TIMB’s three Digital Multiplexes (excluding the fourth, for which trial HD/3D broadcasts have been run in some parts of Italy) respectively covered 83.9%, 90.5% and 61.5% of the Italian population. The TIMB3 Multiplex covers around 95% of regions and areas where the switch off process has already been completed.
Multiplex Digital coverage remained unchanged in Q2 2011 due to the postponement of the national switch-off process from the first half to October-December following a revision to the calendar by the Ministry of Economic Development.

 

Outlook

In view of the economic and regulatory environment in which Telecom Italia Media operates, the company plans to pursue the following orientations for its operations in 2011:

  • Consolidate the editorial approach of the La7 and La7d channels by orienting programming choices towards “high-value timeslots” via a range of distinctive and high-quality offerings;
  • Grow La7 and La7d TV advertising revenues by leveraging audience share increased and the impact of the contract renewal with Cairo Communication, which guarantees advertising revenue linked to increases in audience share;
  • Continue to pursue an advisory and digital content supplier role to Telecom Italia platforms, and build on the positive results achieved so far;
  • Tackle the rescaling of revenues from the main MTV channel by working toward evolving the new MTV Music channel and implementing major cost efficiencies, particularly with regard to programming, in the pursuit of higher profitability levels;
  • Continue to procure new customers for the Network Operator by renting digital bandwidth at remunerative prices which, by the end of 2011, will make it possible to fully exploit the available Multiplex capacity;
  • Continue with the network digitization process in accordance with the switch off calendar;
  • Compete in the digital dividend beauty contest, valorising to the full the quality of the network and its content, as well as the consolidated know-how.
     

Given this situation, in 2011 Telecom Italia Media expects to consolidate its positive first half EBITDA performance and achieve profitability substantially in line with 2010.
Net financial debt will continue to rise to meet planned investment requirements in the second half.

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Pursuant to sub-section 2, clause 154 bis of the Unified Finance Act, the manager in charge of drafting the company’s accounting documents, Mr. Paolo Serra, has declared that the accounting disclosures contained in this press release correspond to the data records, accounting books and accounts entries.

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The interim Group results at 30 June 2011 will be illustrated to the financial community today during a conference call scheduled for 3 pm (Italian time). Journalists may follow the presentation over the phone by dialling 800 408 088 (from Italy) or +39 06 33 485 042 (from outside Italy). Those unable to call at that time may listen to a recording of the presentation over the following two days by calling: +39 06 334 843 (access code: 356211# for the Italian-language version; 245100# for the English-language version).