Nordic Entertainment Group (NENT) said has raised its year-end international Viaplay subscriber target to 500,000 from more than 250,000 as the streaming service added 27,000 international subscribers over the course of the second quarter to 30 June. The company said it will be announcing new international markets at or before a capital markets day in September. It also reported 113,000 new Nordic subscribers during Q2.
NENT said sales in the second quarter grew by 31 percent on an organic basis to SEK 3.07 billion from SEK 2.62 billion a year earlier, when it had included a SEK 238 million from the Viasat Consumer business, since spun off into Allente. Paying subscribers to NENT’s streaming service Viaplay rose by 21 percent year on year in the second quarter to 3.29 million from 2.72 million in Q2 2020, as it added 140,000 subscribers. Of these, 113,000 were Nordic customers and 27,000 were international subscribers. NENT has raised its year-end international Viaplay subscriber target upgraded to 500,000 and said it is on track to hit its year-end target of at least 400,000 more paying Nordic subscribers.
CEO Anders Jensen said NENT is "well on track" to reach its goals, with 21 percent Viaplay subscriber growth, 31 percent group organic revenue growth and 98 percent underlying profit growth. This was the first quarter when Viaplay was NENT’s largest revenue-generating unit, and the streaming service is launching in Poland on 03 August.
Viaplay accounted for 35 percent of sales and Viaplay revenue was up 34.7 percent year on year at SEK 1.08 billion, reflecting price adjustments done in spring. Total streamed viewing minutes for NENT’s original productions were up 82 percent year on year and its coverage of the European football championships boosted subscriber intake in Denmark. NENT has increased its Viaplay originals ambition to at least 50 for the year, and several major sports rights will come on stream after the summer
NENT said the launch of Viaplay in the three Baltic countries has gone according to plan. It has a "healthy pipeline" of subscribers on free trial periods and is introducing a number of new B2B and D2C campaigns. NENT has increased investment in the international Viaplay expansion and now expects a negative EBIT impact of approximately SEK 500 million in 2021, of which it has incurred SEK 86 million. It will provide updates on its five-year plan at a capital markets day in September.
NENT said ‘Other’ subscription revenues made up 33 percent of sales. They rose by 30 percent year on year on an organic basis when excluding last year’s contribution from the Viasat Consumer business. This reflects growth in revenues from Allente in particular, as well as the low comparison in Q2 2020. On a reported basis, ‘Other’ subscription revenues were down 2.3 percent to SEK 1.01 billion.
Advertising revenues contributed 31 percent of sales and were up 27.5 percent year on year at SEK 941 million, as advertising spending kept recovering from the lows in Q2 2020. NENT estimates that its overall Nordic TV and radio advertising market share was up, and demand levels remain high.
Revenues for the continuing studios businesses (2% of sales) were up 19 percent year on year on an organic basis, with the NENT Studios UK content distribution business having been sold in June. On a reported basis, Studios revenue was down by 15.4 percent at SEK 47 million. NENT’s continuing businesses have seen higher external order and production volumes but are now primarily focused on producing output for Viaplay.
NENT said Q2 operating income before associated company income (ACI) and items affecting comparability (IAC) rose by 56 percent to SEK 244 million from SEK 156 million including a SEK 50 million negative impact of its Viaplay International expansion. Operating income was up 98 percent on an underlying basis when excluding a SEK 33 million contribution from the Viasat Consumer business in Q2 2020.
Total reported operating income was SEK 179 million, down from SEK 2.59 billion, including ACI of SEK 9 million (SEK 54 million) and previously announced negative IAC of SEK 74 million, compared with a SEK 2.38 billion capital gain arising from the merger with Canal Digital to create the Allente joint venture.
Net income from continuing operations fell to SEK 87 million from SEK 2.52 billion.
Adjusted net income from continuing operations was SEK 266 million, up from SEK 148 million, with adjusted EPS of SEK 3.41, up from SEK 2.20. Net income from total operations was SEK 92 million (SEK 2.52 bln), with EPS of SEK 1.18 (SEK 37.34).
NENT said EBIT before ACI and IAC was up 98 percent when excluding last year’s contribution from the Viasat Consumer business but including its investments in the international expansion of Viaplay.
The Allente joint venture is on track to deliver the SEK 650 million of full run-rate cost synergies next year and is working to upsell Viaplay to the rest of its subscriber base. The quarterly integration costs are now increasing as the planned programme accelerates, so NENT expects limited earnings contribution this year. NENT will receive quarterly dividends from Allente from Q3 and expects FY 2021 dividends to be at least SEK 400 million.
As well as NENT’s launches in the US and the Netherlands, the company will announce more international expansion markets at or before its capital markets day.
At its May AGM, NENT shareholders approved a long-term incentive plan for 2021 and for the group to enter a swap agreement with a third party to hedge the plan by acquiring and transferring class B shares. The AGM also approved repurchases of no more than 10 percent at any time of all shares issued by NENT.
