MTG sells Czech TV assets to invest in ‘digital transformation’

Jørgen Madsen Lindemann, MTG president and CEO.

Modern Times Group has sold its 50% shareholding in Czech free-to-air broadcaster Prima, with plans to invest further in “digital transformation”.

Announcing the sale, Nordic free and pay TV broadcaster MTG said it is considering using the proceeds to increase its ownership in Germany-based online games developer InnoGames from 21% to 51%.

The sale means MTG is cashing out of FTV Prima Holding, a company that operates one of the biggest free-to-air networks in the Czech republic, Prima, alongside a sting of other Prima-branded TV channels and the Prima Play streaming service.

MTG agreed to sell its stake in the business to Czech company Denemo Media at an enterprise value of €237.4 million. MTG bought the 50% holding for €87 million in 2005 and said it will make a total cash return of double its original investment.

“Prima Group is a great business with a very talented team delivering popular news and entertainment programming,” said MTG president and CEO, Jørgen Madsen Lindemann.

“Over the past 11 years, we and our local Czech partner have transformed the Czech media landscape by launching a wide variety of channels and services, and establishing Prima as the go-to brand for information and entertainment.”

Alongside its flagship Prima channel, FTV Prima Holding runs: male-skewing Prima Cool; female-focused Prima Love; family channel Prima Zoom; movie channel Prima Max; and online streaming service and app Prima Play. Earlier this month the company also launched a new channel aimed at Slovak households called Prima Plus.

On top of this, the company operates a number of websites, including: cooking and health site Prima Fresh; fashion and beauty site Prima Style; women’s site Prima Zeny; and price comparison site Prima Radce.

Discussing MTG’s future plans, Lindemann said that it is constantly reviewing opportunities to “expand our digital operations and footprint further” and is considering investing part of the FTV Prima sales proceeds to take a majority holding in InnoGames.

“This is perfectly in line with our strategy to invest in relevant, complementary and scalable digital content and communities, and online gaming is the third vertical in our MTGx digital video entertainment portfolio,” he said.

MTG completed its acquisition of 21% of InnoGames in December and said at the time it would look to acquire a further 14% during 2017 based on a total enterprise value of €260 million for the company.

InnoGames was founded in Hamburg in 2007 and makes free-to-play online strategy and role-playing games that are monetised through in-game purchases. Its titles include Elvenar, Tribal Wars I & II, Grepolis, The West and Forge of Empires, which between them have more than 150 million registered players.

MTG said that FTV Prima Holding contributed SEK 1.226 billion of sales and SEK 201 million of operating income (EBIT) for the twelve months to the end of Q3 2016.

It estimated its total cash return on the investment, including dividends received and the sale price, will come to approximately SEK 1.6 billion.

Denemo Media is a Czech joint venture between Denemo Invest, which owns 75% of the business, and GES Media Asset, which holds the remaining 25%.