Nordic Entertainment (NENT) said third quarter sales were almost 10 percent higher year on year on an organic basis, with Viaplay subscribers up 28 percent as the streaming service lifted sales by nearly 15 percent on an organic basis. It said it is on track to achieve its year-end target of adding at least 400,000 Nordic subscribers and 500,000 international ones in 2021. Advertising revenue was up 10 percent year on year.
NENT said organic sales growth rose 9.9 percent from Q3 2020, with reported sales at SEK 3.05 billion, up from SEK 2.83 billion a year earlier. Operating income before associated company income (ACI) and items affecting comparability (IAC) was SEK 80 million, down from SEK 176 million, including a SEK 200 million negative effect of the expansion of Viaplay International. Total reported operating income fell to SEK 114 million from SEK 256 million, including ACI of SEK 34 million from SEK 80 million.
Net income from continuing operations dropped to SEK 91 million from SEK 199 million. Adjusted net income from continuing operations declined to SEK 179 million from SEK 219 million and adjusted EPS shrank to SEK 2.30 from SEK 3.25 a year earlier. Net income from total operations fell to SEK 55 million from SEK 188 million and EPS decreased to SEK 0.71 from SEK 2.79.
NENT said paying subscribers for Viaplay rose to 3.61 million by 30 September from 2.81 million a year earlier. It added 322,000 Viaplay subscribers during Q3, of which 36,000 were Nordic subscribers and 286,000 were international ones.
Viaplay has become its largest revenue-generating unit and comprised 36 percent of Q3 sales at SEK 1.10 billion, up by 14.9 percent year on year on an organic basis. This was because of rising subscriber numbers but also after price adjustments made in the Nordic markets in spring 2021.
Total streamed minutes of Viaplay viewing of NENT original content increased by 38 percent year on year, and its coverage of the Bundesliga, English Premier League, UEFA competitions and Formula One boosted sports viewing, too.
Other subscription revenues made up 34 percent of sales, and these were 1 percent higher year on year on an organic basis at SEK 1.03 billion, reflecting growth in revenues in particular at Allente, the venture combining NENT’s Viasat Consumer arm with Telenor's Canal Digital. NENT said Allente 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. NENT received the anticipated SEK 125 million quarterly dividend from Allente in Q3 and expects the same amount again in Q4.
Third quarter advertising revenues comprised 27 percent of sales and were 9.8 percent higher year on year on an organic basis at SEK 837 million. NENT said advertising expenditure continues to recover, and sold-out ratios were high as NENT focused on major industry segments such as travel, leisure and entertainment.
Revenues for the continuing studios businesses made up 3 percent of sales and were 118 percent higher year on year on an organic basis, excluding the NENT Studios UK business that was sold in Q2. This reflects higher external order and production volumes for NENT’s continuing businesses, now rebranded as Viaplay Studios and mainly focus on creating content for Viaplay. The company reported Q3 sales in the ‘Studios & Other’ category at SEK 87 million, up from SEK 78 million a year earlier. NENT completed the sale of the other, discontinued studios businesses at the end Q3.
NENT’s Nordic profits were up 60 percent and the total EBIT result included the increasing investments in the international expansion of Viaplay. It said the adjusted net income levels indicate the health of the business and its ability to generate rising profits in the Nordic countries while investing in international expansion.
The company said it has learned lessons from the pandemic and has introduced hybrid and flexible ways of working. The pandemic has accelerated the adoption of streaming services and increased the demand for high quality content, regardless of language. These trends are here to stay, it added.
