Nordic TV group Viaplay released its Q1 financial results this week, posting year-on-year organic growth in both advertising and subscription revenues. While overall sales were mixed, with a significant drop in overall revenues, the fact that the broadcaster’s primary revenue streams saw organic growth is a significant positive.
Licensing fall counters ad and subscription growth
It’s over a year now since Viaplay announced a major recapitalisation programme, which itself was part of a massive strategic overhaul. Having pursued an ambitious international expansion plan which failed to deliver revenues as fast as hoped, the company found itself in dire financial straits, and has since then set about streamlining operations and righting the ship.
Given that this process has involved shutting down certain operations, the group expected net sales to fall for a period. But net sales from core operations, which Viaplay started reporting at the start of last year, have generally risen.
In Q1 this year, that wasn’t the case. Total net sales fell to SEK 4.37 billion from SEK 4.76 billion last year. Net sales for core operations meanwhile were down 4.8 percent on an organic basis, and 6 percent on a reported basis.
This fall was entirely attributable to a sharp drop in sublicensing sales. Viaplay’s ‘sublicensing and other’ category was down by over 53 percent on an organic basis, which is partly due to a shift in focus from the company. Sublicensing revenues were boosted last year by large scripted content deals, but the broadcaster is putting less focus nowadays on making these sorts of sales, turning instead to sports sublicensing and creative partnerships.
Viaplay’s primary revenues streams, advertising and subscriptions, were up on an organic basis. Viaplay streaming subscription revenues saw organic growth of 0.7 percent, linear channel subscriptions were up by 1.8 percent, and advertising grew 0.7 percent. On the advertising front, Viaplay said that digital and radio ad revenues outweighed structural declines in linear TV advertising.
Still much to do
While Viaplay’s organic ad growth might look like a positive for the wider European market (with Viaplay the first of the big broadcasters to post Q1 earnings), the group said the wider TV advertising market is estimated to have declined in Norway, Denmark, and Sweden in Q1.
The results also demonstrate further challenges for Viaplay itself. Operating income before associated company income and items affecting comparability (Viaplay’s key metric to measure underlying profitability) sat at SEK -227 million in Q1. This was an improvement on the previous year’s SEK -317 million, but a big swing from Q4 last year, when this figure was firmly in the positive at SEK 174 million.
Jørgen Madsen Lindemann, Viaplay’s president and CEO, acknowledged there is “still much to do for the company”, but maintained that steps taken over the last year have put the broadcaster on the right track.
“We have refined our content strategy, launched new products, strengthened monetisation, and sold our UK business and studio operations, and are on track to exit the remaining non-core market by summer 2025,” he said. “We have secured long-term key sports rights, and formed new partnerships that support our strategic direction. We have identified and dealt with a range of value-leaking partnerships and products.”
The CEO added that Viaplay will continue to look at new types of partnerships wherever they bring value to the company, while not being afraid to cut off any deals where the value is less clear.
“Our curious and creative people remain fully focused on operational improvements, new commercial opportunities, and smart ways to bring our content to market together with our partners,” he said. “We know the value of what we create and deliver. And while we will stay flexible, we will not compromise on our belief that collaborations must be fair, sustainable, and deliver joint long-term value. This means forming new, creative collaborations that reflect our strategy and ambitions and, in some cases, parting ways where alignment no longer exists.”
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