TMG Trading update first quarter of 2015
TMG IMPROVES OPERATING RESULT DUE TO LOWER COSTS - STRATEGIC PARTNERSHIP WITH DASYM
HIGHLIGHTS FOR THE FIRST QUARTER OF 2015
- At € 7.6 million, the EBITDA stayed virtually the same in the first quarter due to a reduction in total costs bringing them in line with the lower revenues.
- The operating result improved by € 0.3 million to € 0.8 million.
- Revenues declined by 5.7% from € 124.0 million to € 116.9 million in comparison to the first quarter of 2014, in part due to the termination of less profitable titles.
- De Telegraaf’s number of combi subscriptions (print and digital) rose by 9.3%.
- TMG plans to enter into a strategic partnership with Dasym.
Signs of cautious recovery
Geert-Jan van der Snoek, CEO of Telegraaf Media Groep (TMG): ‘We still have far to go as an organisation, but we are happy with the signs of a cautious recovery. In spite of the continued decline, particularly in advertising revenues, the first quarter resulted in a positive EBITDA and an improvement in the operating result in comparison to the first quarter of 2014. Cost savings are the reason that total costs are in line with the lower revenues. In addition to costs savings, we are pursuing the phased implementation of measures resulting from our new course: the focus on key brands and differentiating content, the development of a competent and healthy organisation, and a strong cross-media digital product offer.”
A shift from print subscriptions to combi subscriptions is clearly discernible within De Telegraaf’s subscription portfolio in the first quarter of 2015 (+9.3%). Increasingly more users make use of the digital newspaper, which is published 7 days per week.
At Holland Media Combinatie, the organisation is currently in the process of being configured on the basis of the organisation’s strong brands. Plans in this respect are currently being developed at Landelijke Media and will be announced in the second quarter. TMG attaches a great deal of importance to careful preparation and prior consultation with management and editorial staff members. That requires time.
The initial effects of the increased marketing efforts have since become visible at Sky Radio Group. Keesing Media Group improved its revenues and result as a consequence of new puzzle issues in France and the launch of drawing books in the Netherlands and abroad.
In spite of the persistent decline in revenues, at € 7.6 million the EBITDA stayed the same in the first quarter of 2015.
Total revenues in the first quarter of 2015 declined by 5.7% to € 116.9 million in relation to the same period last year, primarily due to the termination of less profitable activities at Landelijke Media over the course of 2014, such as the free daily newspaper Sp!ts and Zoomin.tv. Revenues and the result at Keesing Media Group improved in the first quarter of 2015.
Advertising revenues declined by € 6.0 million (-14.7%) for print as well as radio activities. Circulation revenues declined by € 1.2 million (-1.7%). The overall decline in the number of daily newspaper subscriptions was marginally lower in the first quarter compared to the same period last year.
Total costs declined by 6.1% to € 116.1 million. The costs of raw and auxiliary materials were € 2.2 million lower due to the lower daily newspaper circulation and the shift to digital subscriptions. In addition, Metro recorded lower distribution costs due to the termination of Sp!ts and changes in contracts with public transportation (OV) parties. The Sp!ts paper publication has been integrated into Metro since October 2014.
Personnel costs dropped by € 3.0 million. This is primarily attributable to an FTE reduction arising from reorganisations initiated in 2014 and the decision not to fill vacancies. The first phase of the reorganisation at Holland Media Combinatie was completed at the end of January 2015. Approximately 80 FTEs were declared redundant during this phase. Approximately 35 FTEs will become redundant during the second phase. This second phase is expected to be completed in the second quarter.
Strategic Partnership with Dasym
“Earlier we announced that we want to strengthen our position in the digital domain in partnership with cross-industry partners. Our strength lies in the production of content in the area of news and entertainment designed to inform, inspire and entertain consumers 24/7, as well as to create consumer loyalty. The rapid emergence of Over The Top (OTT) content (streaming video services, online TV and digital radio content that is distributed across digital channels independent of the parties responsible for distribution) is bringing additional and new providers to the market. TMG wants to carve out its position in these growth segments and, together with partners, develop it and make it suitable for investment. We have found a partner with a proven track record for this purpose: Dasym Investment Strategies.”
TMG and Dasym plan to form a strategic partnership for the purpose of creating a fund that will be used to jointly invest in the development of new, innovative distribution models and in development companies in promising digital domains. One of the initiatives in the context of OTT development is the realisation of a streaming content platform focused on the development of digital distribution models for strong domains, such as sport for example.
This enables TMG to solidly focus on offering cross-media content at a time suitable to the consumer, whereby substance and form is geared to the time, place and device selected by the consumer. In addition, new domains will be developed, including e-gaming, e-gambling and e-health.
A further decline in advertising and circulation revenues for national as well as regional newspapers is expected for 2015.
In this year of transition, the company will regularly announce steps to adjust the organisation. Future scenarios will be developed for business units that do not form part of the core business. These scenarios could result in exceptional charges in 2015 with a clear impact on the expected annual result.
TMG’s business operations are subject to seasonal fluctuations under ‘normal economic circumstances’. Advertising revenues are higher in the second and fourth quarters of the year than in the remainder of the year. This is related to the public holidays during these periods. The single copy sales of De Telegraaf and the Keesing Media Group’s publications are higher in the third quarter due to the holidays.