Telecom Italia Media: the Board of Directors Approves the Group’s Interim Financial Report at 30 September 2012

10/29/2012 - 03:27 PM

- + Text size
Print

REVENUES: 160.7 million euro; -8.9 million euro compared to the first nine months of 2011 (169.6 million euro)

EBITDA: -26.4 million euro; -53.5 million euro compared to the first nine months of 2011 (27.1 million euro)

EBIT: -72.0 million euro; -55.7 million euro compared to the first nine months of 2011 (-16.3 million euro)

NET INCOME: -53.8 million euro; -38.9 million euro compared to the first nine months of 2011
(-14.9 million euro)

NET FINANCIAL POSITION: 224.1 million euro; +85.4 million euro compared to the end of 2011 (138.7 million euro); +23.1 million euro compared to first half 2012 (201.0 million euro)

The growth trend of advertising revenues of the La7 channels (+6.6%) continued, bucking the trend of the market (-10.9%); substantially stable the audience performance of La7 (3.4%) against a strong decline in audience of the other general-interest networks; continued growth of La7d, which reached a 0.40% share

The first Auditel survey results for MTV place the network above the estimates at 0.68% share, with a strong presence among the “young adults” segment (15-44 years of age.
 

TIMB continued to report improving margins thanks to its full rental of the available bandwidth and offering of innovative services

                                           ***

The Telecom Italia Media Board of Directors, chaired by Severino Salvemini, examined and approved the Group’s Interim Financial Report at 30 September 2012.

More in detail:

Consolidated Group revenues for the first nine months of 2012 reached 160.7 million euro, slightly down compared to the same period of 2011 (169.6 million euro).

This performance was influenced by the loss of revenues from the Competence Center activities, which in the first nine months of 2011 recorded revenues of 13.3 million euro, lower revenues from MTV Group     (-13.5 million euro), mainly due to the decline in advertising revenues, partly offset by the higher total gross advertising revenues of the La7 channels (+8.1 million euro; +6.6%) — in sharp contrast compared to the decline of the television market — and the increase in revenues of the Network Operator TIMB (+15.6 million euro).

EBITDA amounted to -26.4 million euro, decreasing by 53.5 million compared to the same period of 2011 (27.1 million euro), which included the 20.5 million euro indemnity for the early termination of the Competence Center contract. This result was affected by the increase in costs of programming of 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 -72.0 million euro, decreasing by 55.7 million euro compared to the first nine months of 2011 (-16.3 million euro).

Net income was -53.8 million euro, a decrease of 38.9 million euro compared to the first nine months of 2011 (-14.9 million euro).

Net financial position amounted to 224.1 million euro, up by 85.4 million euro compared to year-end 2011 (138.7 million euro). The increase was mainly attributable to the industrial investment requirements for the period (40.9 million euro) and the result of the operating activities (61.3 million euro), which were partially offset by the collection of receivables related to the fiscal consolidation scheme (19.3 million euro). Investments mainly refer to television rights of La7 Network and MTV and investments of the Network Operator.

It should be noted that a total of 21.1 million euro in trade receivables were factored in December 2011.

Compared to the first six months of 2012, net financial position increased by 23.1 million euro.

Results by Business Unit

1. La7 (formerly, and up to June 2012, this business area was called TI Media-La7 and included corporate operations, in addition to the television operations which have now been transferred to the newco LA7 S.r.l.).

La7’s proforma revenues amounted to 89.0 million euro in the first nine months of 2012, down by 8.9 million euro compared to the same period of 2011.

Overall gross advertising revenues increased (6.6%) compared to the first nine months of 2011. The net increase of 3.7million euro partly offset the lack 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 about 3.4%. Although this figure is slightly lower than that recorded in the first nine months of 2011 (3.7%), it is however positive when compared to the continuous and strong decline in the audience figures of the other general-interest networks. The channel’s ability to draw an audience remained unchanged: the number of daily contacts held very near the 2011 level, with 12.1 million individuals watching La7 each day.

Moreover, the audience share of La7d continued to increase reaching 0.40%, improving compared to both the first nine months of 2011 (0.27%) and the first half of 2012 (0.35%).

EBITDA amounted to -47.9 million euro, a 57.8 million euro decrease compared to the first nine months of 2011 (9.9 million euro). This result has been significantly affected by the increase in programming costs of La7 and La7d channels to provide a schedule enriched with the launch of new programmes and new network faces aimed at consolidating and expanding current audience targets and better establishing the network’s identity within an extremely competitive general-interest digital television scenario. Moreover, this result was also impacted by the loss of revenues from the Competence Center operations.

EBIT amounted to -69.5 million euro, decreasing by 58.8 million euro compared to the first nine months of 2011 (-10.7 million euro).

2. MTV Group

MTV revenues for the first nine months of 2012 amounted to 39.9 million euro, down 13.5 million euro compared to the same period of 2011 (53.4 million euro). This performance was mainly impacted by the decline in advertising sales, which in the first nine months of 2012 amounted to 32.0 million euro, down by 18.2% compared to the same period of 2011 (39.1 million euro).

During the first nine months of 2012, the relaunch of the MTV network continued, with the aim of further enhancing the network’s positioning through investments in new contents and formats, thus allowing MTV to evolve as an all-around entertainment channel. Network audience figures began to be published by Auditel on 16 September, coming to 0.68% share (0.55% for the main channel alone), a positive result in excess of expectations; in particular the network registered a strong presence among the “young adults” segment (15-44 years of age).

The first nine months of 2012 closed with an EBITDA of -6.5 million euro, down by 10.3 million euro compared to the first nine months of 2011 (3.8 million euro).

EBIT amounted to -10.5 million euro, decreasing by 10.1 million euro compared to the substantial break-even recorded in the first nine months of 2011 (-0.4 million euro).

3. Network operator (TIMB)

Network Operator revenues in the first nine months of 2012 amounted to 56.3 million euro, increasing by 15.6 million euro compared to the same period of 2011 (40.7 million euro). This positive performance was due both to the evolution of extant contracts and new channels contracted from the end of 2011, which led to the full rental of the available digital bandwidth as early as last February. Revenues from the rental of bandwidth to third channels amounted to approximately 60% of the Network Operator’s digital revenues.

EBITDA was 32.5 million euro, a 14,1 million euro improvement compared to the first nine months of 2011 (18.4 million euro).

EBIT was 12.6 million euro, a 12.8 million euro improvement compared to the break-even recorded in the first nine months of 2011 (-0.2 million euro).

The three digital multiplexes of TIMB covered 94.9% of the Italian population.

Events subsequent to 30 September 2012

On 9 October 2012, Effe2005-Feltrinelli Group and LA7 signed an agreement to create a company that will give rise to a new multiplatform channel (TV, Internet and mobile devices).

The Company, in which a 70% interest is held by the Feltrinelli Group and 30% by LA7, aims to launch, in spring of next year, an innovative channel featuring entertainment and in-depth cultural exploration, addressed to an open-minded audience, spurred by curiosity and attentive to cultural growth. Responsibility for the Company has been entrusted to Managing Director Gianluca Paladini, assisted by Chairman of the Editorial Committee Gad Lerner. The channel will initially be launched on the digital terrestrial platform. Advertising sales will be entrusted to the agency PRS.

Outlook

In Q4 2012 Telecom Italia Media expects:

  • a continued growth in television advertising revenues for the La7 channels, thanks to the expected growth in audience share;
  • the completion of programming investments in the La7 channels aimed at increasing audience share;
  • the conclusion of the restructuring process for MTV, recovering the efficiency of operating costs, and the positive impact on revenues of the new schedule;
  • continued positive revenue and profitability performance by the Network Operator.

On the basis of the foregoing, taking account of the current economic and advertising market context, Telecom Italia Media confirms that at the end of financial year 2012 it will report a negative performance at the level of operating results and a negative EBIDTA, marking a slight decline compared to the results at the end of September.

Institution of an advisory committee

The Board of Directors has instituted an internal Advisory Committee, the majority of the members of which are Independent Directors, and which will be tasked with aiding the full Board of Directors of Telecom Italia in adopting decisions regarding the ongoing disposal process.

The Advisory Committee is composed of the members of the Internal Control and Corporate Governance Committee Adriano De Maio, Lorenzo Gorgoni, and Sergio Ristuccia, the Chairman Severino Salvemini and Director Piergiorgio Peluso, CFO of Telecom Italia.

The Committee’s activities, which will be advisory and preliminary in nature, and will be aimed at allowing the Board of Directors to pass informed resolutions in the interest of the Company and all of its shareholders, will be coordinated by the Chairman of the Board of Directors in concert with the Lead Independent Director Adriano De Maio, also Chairman of the Internal Control and Corporate Governance Committee.

                                            ***

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.

                                               ***

The Group’s results at 30 September 2012 will be illustrated to the financial community during a conference call scheduled for 4:00 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 two days at the number: +39 06 334 843 (access code: 460626# for Italian; 359515# for English).

 

Milan, 29 October 2012