Telecom Italia Media: the Board of Directors approves the Group's half–year report at 30 June 2012

07/27/2012 - 02:30 PM

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

REVENUES: 119.4 million euro; +1.2 million euro compared to H1 2011 (118.2 million euro)

EBITDA: -16.1 million euro; -25.1 million euro compared to H1 2011 (9.0 million euro)

EBIT: -45.8 million euro; -25.5 million euro compared to H1 2011 (-20.3 million euro)

NET INCOME: -35.0 million euro; -18.5 million euro compared to H1 2011 (-16.5 million euro)

NET FINANCIAL POSITION: 201.0 million euro; +62.3 million euro compared to the end of 2011 (138.7 million euro)

Continues the growth trend of advertising revenues of the La7 channels (+13.6%); compared to Q1, both the audience share of La7(3.5%) and La7d (0.35%) increased

Transfer of the Television Business Unit to La7 S.r.l. approved

With the completion of the national switch-off, the three digital multiplexes of the Network Operator TIMB cover 95% of Italian population

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The Telecom Italia Media Board of Directors, chaired by Severino Salvemini, examined and approved the Group’s half-year report at 30 June 2012.

More in detail:

Consolidated Group revenues reached 119.4 million euro in H1 2012, with an improvement of 1.2 million euro compared to the same period of 2011 (118.2 million euro).

This performance was influenced by the total gross advertising revenues of the La7 channels (+12.6 million euro; +13.6%) — in sharp contrast compared to the decline of the television market[1] — and the increase in revenues of the Network Operator TIMB (+11.4 million euro).

EBITDA amounted to -16.1 million euro, a 25.1 million euro decrease compared to H1 2011 (9.0 million euro). The result decrease was affected by the costs of programming of TI Media – La7, significantly expanded by the launch of new programmes and new faces, as well as the decrease in EBITDA of MTV and the loss of revenues from the Competence Center activities, which were discontinued in September 2011 and were partially offset by the improvement in EBITDA of the Network Operator TIMB.

EBIT amounted to -45.8 million euro, decreasing by 25.5 million euro compared to H1 2011 (-20.3 million euro).

Net result was -35.0 million euro, a decrease of 18.5 million euro compared to H1 2011 (-16.5 million euro).

Net financial position amounted to 201.0 million euro, up by 62.3 million euro compared to year-end 2011 (138.7 million euro). The increase was mainly attributable to the investment requirements for the period (30.2 million euro) and the result of the operating activities, which were partially offset by the collection of receivables related to the fiscal consolidation programme (19.3 million euro). In particular, investments are related to the completion of Terrestrial Digital network, and programming costs. Compared to Q1 2012, net financial position improved by 5.9 million euro.

Results by Business Unit

1. TI Media – La7

TI Media – La7 revenues amounted to 70.0 million euro in H1 2012, down by 1.5 million euro (-2.1%) compared to the same period of 2011.

This performance was influenced by the overall net advertising revenues, equal to 67.7 million euro, up 10.1% compared to H1 2011 (61.5 million euro); the increase almost fully offset the loss of revenues from the Competence Center operations, which were discontinued in September 2011.

The improvement in advertising revenues was driven by the audience share of La7, with a daily average of approximately 3.5%. Although this figure is slightly lower than that recorded in H1 2011 (3.7%), it is however up on Q1 2012 (3.4%), seen against a continuous decline in the audience figures of the other general-interest networks.

The audience share of La7d continued to increase reaching 0.35%, improving compared to both H1 2011 (0.25%) and Q1 2012 (0.34%).

EBITDA amounted to -34.5 million euro, decreasing by 28.8 million euro compared to H1 2011 (-5.7 million euro). This result has been significantly affected by the increase in programming costs to provide a schedule enriched with the launch of new programmes and new network faces aimed at consolidating and expanding current audience targets, and the loss of revenues from the aforementioned Competence Center activities.

EBIT amounted to -49.1 million euro, decreasing by 29.6 million euro compared to H1 2011 (-19.5 million euro).

2. MTV Group

MTV revenues for H1 2012 amounted to 29.7 million euro, down 16.6% compared to the same period of 2011 (35.6 million euro). This performance was mainly impacted by the decline in gross advertising sales, which in H1 2012 amounted to 24.3 million euro, down by 16.2% compared to the same period of 2011 (29.0 million euro).

MTV has already undertaken major network relaunch initiatives strengthening its programming to encourage a recovery in H2 2012 to coincide with the publication of Auditel figures (16 September 2012). Investments in the field of content and communications, which are instrumental for the channels’ new positioning and for the recovery in profitability, have hence had a negative effect on half-yearly performance which closes with an EBITDA of -3.6 million euro, down 6.5 million euro on H1 2011 (2.9 million euro).

EBIT amounted to -5.8 million, down compared to the break-even reported for H1 2011 (41,000 euro).

3. Network operator (TIMB)

Network Operator revenues in H1 2012 amounted to 37.7 million euro, increasing by 11.4 million euro compared to the same period of 2011 (26.3 million euro). This positive performance was due both to the evolution of extant contracts and new channels contracted from the end of 2011 to year-to-date, which led to the full rental of the available digital band.

EBITDA was 22.0 million euro, increasing by 10.3 million euro compared to H1 2011 (11.7 million euro).

EBIT was 9.1 million euro, increasing by 9.9 million euro compared to H1 2011 (-0.8 million euro).

At 4 July 2012, the date of the national switch off, the three digital multiplexes of TIMB covered 94.9% of the Italian population.

Outlook

Taking account of the current economic and market context and uncertainty regarding advertising investment trends, for H2 2012 Telecom Italia Media expects:

  • a continued growth in television advertising revenues for the La7 channels, thanks to the growth in audience share;
  • an increase in the La7 channel’s programming costs and investments aimed at increasing audience share;
  • a reduction in revenues of the main MTV channel, which led to the launch of a restructuring process for the channel and the continuation of the operating cost-efficiency programme;
  • an increase in the Network Operator’s revenues and profitability following achievement of full rental of multiplexes and completion of the network digitalisation.

Based on the foregoing, in 2012 Telecom Italia Media forecasts for H2 a minor improvement in operating results but nonetheless a negative EBITDA at the end of 2012.

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Corporate restructuring process

Within the corporate restructuring process which started on 9 May 2012, the Board of Directors acknowledged today the sworn valuation report prepared by Reconta Ernts & Young that, referring to Q1 2012 financial statement, estimated 81,260,029 euro the current notional value of the Television Business Unit to be transferred to La7 S.r.l.

The Board of Directors at the same time approved the transfer and assigned the execution to the President Severino Salvemini.

The transfer of the Business Unit is supposed to become effective as of 1 September 2012. 

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The Board of Directors also took note positively of the 2013-2015 Plan outlines, still to be defined, which foresees:

  • EBITDA positive at end 2013
  • Cash Flow positive at end 2014
  • Net financial position down at end 2014

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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. Luigino Giannini, 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 Group’s results  at 30 June 2012 will be illustrated to the financial community during a conference call scheduled for 2.30 pm (CET). Journalists may listen in to the presentation by phone on 800 408 088 (callers from Italy) and +39 06 33 485 042 (international callers). For those who are unable to follow the live conference call, a recorded version of the presentation will be available for 2 days at the number: +39 06 334 843 (access code: 437727# for Italian; 326616# for English).
 

 

Rome,  27 July 2012