Telia’s struggling media arm fails to dent overall upward trajectory

(Source: Telia)

Nordic telco Telia’s TV and media arm’s restructuring is going according to plan in a tough market environment, according to outgoing CEO Alison Kirkby, with the overall Telia group returning to revenue and earnings growth in the third quarter.

Media revenue was down 8.3% on a like-for-like basis to SEK1.78 billion (US$162 million), while adjusted EBITDA was down 45.8% to SEK127 million.

On the upside, the linear market share of TV4 grew further and the linear portfolio increased its share of viewing to 36.3% compared to 34.6% in the corresponding quarter of last year.

Kirkby said that TV and media “continues to experience a tough advertising market whilst in the midst of a major business transition” that has seen the launch of the new TV4 Play service and the gradual phasing out of the C More pay TV brand.

Advertising sales fell 16% in the quarter, in line with the company’s expectations, while OTT revenue grew by 9%. The company added 45,000 SVOD subscriptions in the quarter.

EBITDA from the unit fell, but less than in the previous quarter.

“Our agenda for returning TV and Media to profitability remains. First, we are executing on the merger of the C More services into TV4 and MTV, the launch of the new hybrid service from TV4, and the closing of the C More brand,” said Kirkby.

“Second, we are making a fundamental change to our premium sports business by only pursuing rights with certain clear profiles that support the TV4 and MTV local positions going forward, and with a significantly improved cost/revenue ratio. And third, we are addressing the TV4 and MTV cost base. In taking these steps, our TV and Media business will accelerate its digitalization, become even more relevant for both viewers and advertisers, and be in a stronger position to restore profitability and cash generation when the advertising market returns.”

Overall, Telia’s revenue was up 1.1% like-for-like to SEK22 billion, while adjusted EBITDA was up 9.5% to SEK8.5 billion.

Telia was able to. Upgrade its EBITDA outlook to low-single digits for the year, up from flat-to-low-single digits.