2018-02-13

Annual Report Bonnier Broadcasting 2017
Stockholm, 13 February 2018

TV4 POSTS RECORD EARNINGS

  • Bonnier Broadcasting reports EBITA for 2017 of SEK 423 million (SEK 373 million in 2016), on sales of SEK 7,497 million (SEK 7,397 million in 2016).
  • TV4 AB posted record earnings, with profit rising to SEK 1,022 million (SEK 734 million in 2016), up almost 40 per cent. Sales were also up, rising to SEK 4,469 million (SEK 4,314 million), and the operating margin rose to 23 per cent (17 per cent in 2016).
  • Underlying TV4’s record earnings is consistent investment in Swedish quality content in all genres over the past few years, yielding major viewing successes on all platforms. This long-term commitment to ‘Total TV’ – where the platform on which TV4 content is consumed is immaterial – has paid dividends. Thanks to growth of AVOD service TV4 Play, the total reach of TV4’s TV offering is increasing over time. This has been well received by the advertising market.
  • TV4 broke both its linear and its digital sales record, and bolstered its position as the largest supplier of linear and digital advertising contacts. Numerous other records were broken during the year. TV4 Play had more than 3.8 million logged-in users, and accounted for over half of all MMS-monitored time spent on AVOD. The TV4 Group recorded its highest-ever share of viewing time, attracting over a third of all viewers in the main 15–64-year-old target group.
  • C More grew both SVOD and digital TV revenues, and was the fastest-growing SVOD provider in Sweden for the third year in succession. The number of subscribers more than doubled after major technical improvements in the service, increased brand recognition and a successful year for content. 2017 saw the advent of C More original drama, which was a great success, accompanied by the launch of a completely new Sportkanalen and a new OTT sports package. This notwithstanding, C More did not achieve the ambitious growth targets that had been set for it. Major investments in content, technology and organisation, along with slower than anticipated growth, continued to weigh on EBITA. Earnings did improve, however, with C More reporting a loss of SEK -296 million (SEK -307 million in 2016).
  • MTV in Finland continued to struggle in a very challenging market situation, in which advertising spending continues to fall. MTV’s investments in Finnish quality content continued to yield ratings and consumption successes. MTV was market leader among all commercial target groups, recording 2 million logged-in users. During the year MTV also launched C More SVOD in Finland. EBITA fell in a very tough business climate, with MTV posting a loss of SEK -218 million (SEK -56 million in 2016).
  • 2017 also saw continuing focus on rapid transition and digital transformation. As part of this process, Nyhetsbolaget staff were transferred to the core business at TV4/Bonnier Broadcasting, and coordination between TV4 and C More was further strengthened. The restructuring process also led to some 90 redundancies during the year.

EBITA BONNIER BROADCASTING:

 

Full year 2016

Full year 2017

 

TV4

 

 

 

Sales

4,314

4,469

 

EBITA

734

1,022

 

Nyhetsbolaget*

 

 

 

Sales

463

453

 

EBITA

1

-18

 

C More

 

 

 

Sales

1,407

1,545

 

EBITA

-307

-296

 

MTV

 

 

 

Sales

1,923

1,732

 

EBITA

-56

-218

 

Other central costs**

 

Sales

479

 

EBITA

-67

 

Bonnier Broadcasting

Sales***

7,397

7,497

EBITA

373

423

* The company was wound up in 2017. Earnings include restructuring costs.
**Structural costs and other non-allocated costs.
***Sales after intra-group eliminations.

BONNIER BROADCASTING SWEDEN

The digital transformation undergone by the TV4 Group, C More and Bonnier Broadcasting over the past few years has involved an extensive process of transition and restructuring, a central feature of which is ever closer coordination of advertising funded FTA TV operations at TV4 and pay-TV operations at C More. These two segments are dependent on one another for their long-term success.

This process was further intensified in 2017. Restructuring led to some 90 redundancies at companies in the segment, as the organisation was further rationalised and optimised.

Late in the year Mathias Berg – formerly TV4’s COO – was appointed COO of C More as well, and is thus now COO for all Bonnier Broadcasting operations in Sweden. All TV4 news and current affairs coverage also returned to TV4/Bonnier Broadcasting at the end of the year, having been run as a separate company – Nyhetsbolaget – for a number of years.

THE TV4 GROUP

2017 was a record year for the TV4 Group in terms of viewing and consumption. These successes are the result of continuing emphasis on high-quality Swedish content in all programme genres, along with further investments in enhanced technological and platform capability to meet users’ high demands for functionality and stability. 2017 saw a breakthrough for TV4’s long-term and consistent commitment to ‘total TV’, where the viewer’s choice of linear or digital platform is immaterial, and where TV4’s total reach has grown over time.

At the end of 2017 AVOD service TV4 Play had no fewer than 3.8 million logged-in users, essentially smashing all previous records – including time spent using the service, number of streaming starts and advertising contacts (see also under “Sales and Advertising Market”). In time terms, consumption grew by 18 per cent, which means that TV4 Play accounted for over half of all AVOD consumption openly monitored and reported by MMS (TV4 Play: 52 per cent, MTG: 18 per cent, Discovery Networks: 14 per cent, Aftonbladet TV: 15 per cent). On average, each streaming start on TV4 Play was seen by 1.5 people, with an average viewing time of 17 minutes per streaming start. A high level of shared viewing and longer time spent using the service are in line with TV4’s aim to continue to build TV4 Play into the natural starting point for the digital TV experience.

As expected, traditional TV viewing continued to fall, to just over 2 hours and 20 minutes per person and day (down 8.5 minutes and 5.8 per cent). Just over 1 hour and 58 minutes per person and day was spent watching TV among the TV4 Group’s main 15–64-year-old target group. The TV4 Group continued to display resilience in the face of the PUT decline; on average, each person spent 45 minutes a day watching TV4 Group channels (down 1 minute). Thanks to this, the TV4 Group’s 33.8 per cent audience share among its 15–64-year-old main target group (32.7 per cent in 2016) was its highest audience share ever. TV12 also broke its record with a 3.0 per cent viewing share (2.3 per cent in 2016). And the main TV4 channel reported its highest viewing figures since 2006, with a 21.5 per cent audience share (21.1 per cent). TV4 Group channels also increased their share among the main target groups of their commercial competitors, thereby strengthening the TV4 Group’s position as the primary TV operator among all commercial target groups.

Ratings successes were achieved in drama, entertainment, sport, current affairs and news. News consumption continued to grow, both viewing of TV4Nyheterna (TV4 News) and Nyhetsmorgon (breakfast TV). Consumption of news on TV4 Play grew by 75 per cent; live broadcasts were up no less than 95 per cent. Major entertainment series such as Idol, Så mycket bättre, Let’s dance and Mandelmanns gård were a huge hit with the viewers. The same goes for the C More Original–TV4 joint drama productions – such as Saknad, Farang and Rebecka Martinsson – which are first shown exclusively on C More, before being freely broadcast on TV4, and then returning to the C More library. This strategy has been a success, and has driven viewing and consumption on both TV4 and C More.

Growth-wise, TV4 Group invested further in the Köket (“Kitchen”) food ecosystem, which won another prize during the year – “Food Inspiration of the Year” at the Dagligvarugala (“Non-Durable Goods Gala”). There was a sharp rise in the number of subscribers to the Köket box. Late 2017 also saw the launch of the next phase of the Köket food ecosystem – online courses featuring some of Sweden’s foremost chefs and pastry cooks. Sweden’s leading digital football platform – Fotbollskanalen – had another good year, with traffic remaining at all-time-high levels for several weeks in 2017, thereby paving the way for the World Cup in 2018, the year that TV4 and C More will be taking over all men’s national matches. ENT, the TV4 Group’s creative network, continued to do well in terms both of consumption and revenues, and continued to cement its position as an attractive partner for both talents and advertisers. A dedicated ENT channel was launched during the year.

Sales and advertising market

The TV4 Group continues to pursue its goal of establishing platform-independent high-quality consumption and a platform-independent and transparent advertising offering. The total reach of the TV4 Group is growing over time, since the expected decline in TV4 Group linear channels is outweighed by the reach added by AVOD service TV4 Play. TV4 Group total reach has increased by 1 per cent since 2014, to a weekly reach of 66 per cent (TNS-Sifo Orvesto).

The TV4 Group’s offering to the advertising market was enhanced in 2017, thereby entrenching the group’s position as market leader. TV4 is by far the largest commercial TV operator in terms of total reach, linear TRP deliveries and delivered advertising contacts for online video.

The roll-out of a total TV offering for the local market continued during the year, combining linear TV and digital video for maximum reach and effect. In 2017 the WOO video alliance – the largest Swedish video advertising offering, including TV4 Play, Expressen TV, DN TV and Di Play – was also expanded, with added first-party data target groups, more control options and formats/categories. Pre-specific bookings, i.e. specific bookings planned three months ahead to give advertisers greater flexibility, introduced in 2016, were appreciated by the market and have been a great success. This option was also introduced on Sjuan and TV12 during the year.

TV4 Play’s successes continued, and TV4 Play is capturing market share in the total digital advertising market. By year-end no fewer than 3.8 million people had logged in to the largest Swedish AVOD service. The 18 per cent rise in consumption meant that over half (52 per cent) of all time spent on MMS-monitored AVOD services (TV4, MTG, Discovery and Aftonbladet) was devoted to TV4 Play. TV4 Play’s advertising stock rose by 38 per cent, and the number of advertising exposures delivered rose by no less than 75 per cent. TV4 Play therefore accounted for nearly half (46 per cent) of all MMS-monitored AVOD advertising contacts in 2017. The completion rate (how many people actually saw the whole advertisement) was 97 per cent. Shared viewing of TV4 Play averaged 1.5 people per streaming start; average viewing time per streaming start was 17 minutes. Growing demands with regard to transparency, measurability, content and advertising environment, viewability and a high completion rate, mean that demand for advertising on TV4 Play will remain high in 2018.

According to IRM’s December forecast (results for the full year will not be published until 20 February 2018), total media spending increased by 8.3 per cent in 2017, to SEK 37,806 million. The forecast is that, having fallen the previous year, spending on linear TV is expected to have risen by 1.7 per cent, to SEK 5,497 million. The increase for web TV is 38 per cent, to SEK 1,606 million).

The increase seen by the TV4 Group was higher, as it broke its previous linear and digital records. Demand for traditional TV advertising rose, with a large influx of new and returning advertisers. TV4’s linear national advertising sales grew by 7.3 per cent. Digitally, TV4 Play saw an increase of no less than 74 per cent (the increase for WOO was 78 per cent). This means that TV4 strengthened both its linear and digital position, and is growing faster than average growth in those markets. Interest in sponsorship, content collaborations and conceptual holistic solutions also grew in 2017 – by 4.2 per cent. Interest in advertising and sponsorship solutions has continued into 2018, where large formats have seen growth. Last year’s successes have meant that larger formats are being sold at record speed.

Just as before, the TV4 Group remains the unchallenged premier TV operator in terms both of reach and TRP**** deliveries to the advertising market. Although TV4 Group reach fell slightly, the decrease was considerably smaller than that for MTG and Discovery Networks, both among TV4 Group target groups and among those of our competitors. TV4 Group channels’ weekly reach was 61.6 per cent among the main 15–64-year-old target group, and during the year TV4 channels recorded their highest-ever total share of viewing time – 33.7 per cent of all TV viewing among the main target group. The main channel, TV4, recorded its highest share of viewing time since 2006; TV12 reported its highest share ever.

TV operators delivered a total of 1,027,000 TRPs to the advertising market among the 15–64-year-old target group, down 6.5 per cent (representing just over 71,000 ratings). Thanks to a much smaller decline than those of its competitors, the TV4 Group increased its share of the total number of TRPs sold to 53 per cent (50.2), whereas MTG’s share fell to 22.2 per cent (25.8), Discovery Networks’ share was 20.1 per cent (20.0). The main TV4 channel alone delivered a far higher number of TRPs than all MTG commercial channels together, or all Discovery Networks’ commercial channels together. And Sjuan delivered almost as many TRPs in 2017 as TV3.

  • TRPs delivered by the TV4 Group fell to 543,900, down 1.4 per cent (7,700 TRPs) on 2016. The main TV4 channel produced 374,000 TRPS, 11,000 TRPs fewer than in 2016 (down 3 per cent), and Sjuan lost 4,900 TRPs (6 per cent), down to 73,200 TRPs. TV12, which was still growing, bucked the trend, producing 49,000 TRPS, which was 11,000 TRPs more than the previous year (up 29 per cent), and was thus also the channel that grew its TRP production most of all commercial channels.
  • MTG lost no less than 19.5 per cent (equivalent to 55,400 TRPs), falling to 228,200 TRPs, the decline being greatest for TV3 and TV6, which lost 32,200 TRPs (30 per cent, down to 74,400 TRPs), and 20,600 TRPS (23 per cent, down to 69,900 TRPs), respectively.
  • Discovery Networks fell to 206,500 TRPs, a decline of 6.1 per cent (equivalent to 13,400 TRPs). Kanal 5 lost 13 per cent (13,800 TRPs), falling to 96,200 TRPs, whereas some of the smaller channels produced more TRPs.

**** TRP, Target Rating Point, 1 TRP=1 per cent of viewing among a specific target group. The figures refer to TRP delivery among TV4’s 15–64-year-old main target group.

C MORE

Bonnier Broadcasting has been resolute in its efforts to reverse C More’s negative earnings trend. These efforts involved a large number of initiatives, investments and actions in 2017 aimed at content, the C More brand and the technical stability and user-friendliness of the service.

C More continues to attract many new subscribers. For the third year in succession it was Sweden’s fastest-growing SVOD provider, growing faster than the market as a whole thanks to a doubling of its customer base. C More was rated highest among Swedish SVOD providers in the Svenskt Kvalitets-Index (“Swedish Quality Index”), and the substantially improved technical stability of the service helped C More to greatly improve its NPS (Net Promoter Score).

C More’s strategy, involving a focus on local content, became even clearer to users in 2017. TV4’s content was included without commercials on C More, and on SF Kids. The first C More Original series were premiered; all of them were hugely successful, both in terms of subscriptions sold and consumption. Saknad, Farang, Torpederna and Modus were particularly well received.

The year also saw a new sports strategy manifested by the launch of Sportkanalen and the new OTT package C More Standard Sport. The new sports offering – which includes selected matches from the Swedish Hockey League, Swedish Soccer League Allsvenskan, major championships, handball, floorball, PGA golf and much more – was adapted to a broader target group, and at a lower price than the full sports package. The launch has been a success, and Sportkanalen is already offered by all major operators.

In the autumn there was also an extensive SVOD growth project, greatly increasing direct conversions from TV4 Play. Efforts to further strengthen and bring TV4 Play closer to C More continue. This also applies organisationally, so that the two operations are now synchronised more clearly, under the new COO, Mathias Berg.

Both SVOD and digital TV revenues increased, but notwithstanding the many successful initiatives during the year, C More has not achieved the ambitious growth targets set for it. C More’s earnings improved slightly, but continuing high costs for rights and the transition process, major investments in technology and content, and a growth rate below projections continue to result in large losses. EBITA came in at SEK -296 million (SEK -307 million in 2016).

The C More SVOD service was also launched in Finland in February 2017, by MTV (see also under MTV).

BONNIER BROADCASTING FINLAND

MTV

The market situation in Finland continued to constitute a major challenge for MTV, celebrating its 60th year. Although the business climate improved, the fall in Finnish advertising spending gathered pace. The market as a whole shrank by 2.8 per cent; there was a 5 per cent decline in TV advertising.

MTV’s continued investments in, and focus on, local Finnish quality content was a linear and digital success factor. The main channel, MTV3, increased its share of viewing time for both news and entertainment. During the year MTV had a 25.7 per cent share of viewing time (among the 10–54-year-old target group). At year-end MTV was market leader among all commercial target groups. The MTV Katsomo AVOD service had reached 2 million logged-in users by the end of the year.

February saw the launch of the C More SVOD service in Finland. The service, which offers a wide selection of premium sports, entertainment and drama, was well received by the Finnish public, and has grown rapidly, a trend that is expected to continue in 2018.

In an very unfavourable economic climate, MTV’s EBITA came in at SEK -218 million (SEK -56 million 2016).

MISCELLANEOUS

  • Against a backdrop of the worldwide #metoo movement, TV4 was the subject of scathing criticism for its failure to deal with inappropriate behaviour during production of one of its programmes. The criticism was justified, as was confirmed by TV4’s own investigations, and the independent inquiry that TV4 instigated. Following an extensive process of review and preparation, TV4 launched a far-reaching action plan – Nollmissionen (“Mission Zero”) – aimed at preventing and combating harassment and offensive behaviour, and also designed to make it easier to identify and deal with such behaviour. Nollmissionen includes clearer guidelines, training of all managers and employees, initiatives for sector-wide meetings, an internal ethical council, clearer dialogue and specification of requirements in relation to external productions, and a new whistleblower system that also covers employees at production companies hired by TV4.
  • The ongoing and extensive process of transition, restructuring and transformation taking place at TV4, C More and Bonnier Broadcasting over a five-year period continued. Coordination between the various operations – particularly between commercial FTA TV operations at TV4 and pay-TV operations at C More – was intensified. Some 90 employees left the company during the year as a consequence of the transition and rationalisation programme presented during the spring.
  • During the autumn the transition process involved discontinuing the linear TV channels TV4 Fakta XL and TV4 Komedi. The channels had been important components in the TV4 Group’s multi-channel strategy, but the need for linear channels of this kind has diminished over time. Discontinuation of the channels freed up resources and created scope to further concentrate efforts on the major channels TV4, Sjuan, TV12, as well as AVOD service TV4 Play and C More.
  • As part of the rationalisation process, it was decided during the year that the independent news company Nyhetsbolaget, which had produced all news and current affairs journalism for TV4, would be wound up, and that its employees would be transferred to the core business. This was done at the end of 2017.
  • During the autumn C More launched an integration project entitled Filmtegration. The idea of the project is to use selected Swedish films and accompanying educational materials to make it easier and more fun for recent immigrants to Sweden to learn the Swedish language and familiarise themselves with Swedish culture. By the end of the year Filmtegration was being used by 1,800 teachers of Swedish as a second language in 67 Swedish municipalities. In a survey conducted among the teachers, eight out of ten said that the Filmtegration project had made it more enjoyable for recent immigrants to learn Swedish and to become acquainted with Swedish culture – over half said that the learning process had been made easier.