MTG: business split will enable more growth and higher profits

MTG’s decision to split the business in two will create greater focus and flexibility and enable more growth, higher profits and increased shareholder value, according to CEO Jørgen Madsen Lindemann.

Jørgen Lindemann

In a statement issued with MTG’s annual report, Lindemann said that transformation has always been part of the company’s DNA and the formation of its digital arm MTGx in 2013 marked the start of its evolution from a “traditional national broadcaster into a global digital entertainer”.

MTG plans to create a ‘Nordic entertainment champion’ by combining Nordic Entertainment, MTG Studios and Splay Networks into a new business called Nordic Entertainment Group. The remaining MTG will then be a pure-play digital entertainment company focused on eSports and online gaming.

“We always aim to invest our time, energy and money in those areas where our customers spend most of theirs,” said Lindemann, explaining the company’s transformation strategy.

“Online video consumption rises every year and is soon set to be 50% mobile, as well as 50% on-demand. This is why we are investing so much in our streaming services and in original content, including our most recent move into the world of virtual reality with Viareal.”

MTG reported its “best year yet” in 2017 with organic sales growth of 8% to SEK17.5 billion. Operating income grew by 19% to SEK1.26 billion. MTGx was also EBITDA profitable for the full year, which the company hailed as an “important milestone”.

MTG’s online gaming business reported revenues of SEK 1.23 billion, which included the consolidation of InnoGames from 1 May and Kongregate from 21 July. MTG said that MTGx’s net sales would have totalled SEK 3.7 billion for 2017 if the acquisitions had been consolidated from the start of the year.

Looking forward, MTG said that its key priorities for MTGx include establishing it as “a leading global digital entertainer through selective acquisitions”. It also aims to capitalise on the growth of mobile gaming and to focus more on branded entertainment and original digital video content.

“MTG’s performance in 2017 shows just how well positioned we are in the highly competitive and rapidly evolving content and communications landscape,” said Lindemann.

“We have the best and broadest content offerings and streaming services in the Nordics, and we have closer and deeper partnerships with content creators, owners and distributors than ever before. We also offer next generation entertainment services on a global basis through our MTGx businesses.

“The model is working and our strategic transformation continues, which is why we are now taking the next step by initiating work in order to be in a position to propose a split of MTG into two listed companies.”