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August 12, 2011
Polish broadcaster TVN Group reported a 7 per cent year-on-year increase in net revenues from €138m to €147m in the second quarter of 2011. The broadcaster has business activities within traditional free-to-air television, pay TV and online.
The group's TV net advertising revenues (NAR), including sponsorship, were up by 5.2 per cent, helped by strong multichannel advertising performance which climbed by 12.3 per cent, outperforming flagship channel NAR growth (+3.7 per cent). Nevertheless, flagship channel TVN remains by far the primary source of advertising revenue income, with NAR of €84m in Q2 2011 compared to €18m for multichannel operations in the same period.
The group's overall revenues in the online segment grew year-on-year by 12.1 per cent to €15m. Its flagship online property Onet.pl grew steadily and contributed 87 per cent to the group's online revenue, same as in the previous year. Online advertising revenue has increased by 18 per cent year-on-year to €13m and accounted for 85 per cent of total group's online revenues.
63 per cent of total TVN group revenues came from advertising, in comparison to 66 per cent in the same period last year. The remainder of revenues stem from pay TV operations on TVN's platform 'n', which saw a health boost by 19 per cent in Q2 to €45m, mainly due to increase in the number of subscribers (13 per cent growth) and the successful start of its pre-paid HD service.
TVN Group's EBITDA reflects the positive revenue performance and improved by 19 per cent to €29m from €25m in the same period last year. The group posted net losses of €14m, an improvement from net losses of €62m in Q2 2010.
The broadcasting group increased audience share by 0.6 percentage points to 25 per cent for the commercially relevant target (16-49 yrs) in Q2 2011. In the same demographic segment, competitor Polsat audience stood at 23.4 per cent and public broadcaster TVP recorded an aggregate audience of 32.9 per cent.
In Q2 2011, total TV NAR grew year-on-year by 8.5 per cent. The market recouped its losses from April 2010, when during the nine-day national mourning period due to the government plane crash almost no advertising was aired. TVN Group was able to recoup the majority of the April advertising slump still in the remaining months of Q2 2010 ahead of its competitors. Due to tougher comparatives, its TV NAR growth in Q2 2011 (4.8 per cent), was therefore below overall TV ad market growth.
TVN Group dominates the Polish TV advertising market, with its TV NAR share at 34.7per cent in Q2 2011. Main competitor Polsat stood at 25.9 per cent and TV NAR of public broadcaster TVP accounted for 28.4 per cent of the total TV advertising market.
Although TVN Group still commands the lead in terms of NAR, in Q2 2011 its market share fell by 0.7 percentage points compared to Q2 2010. Public broadcaster TVP suffered more as its share contracted by 2.6 percentage points. In terms of market share, Polsat gained ground in Q2 2011, up 1.3 percentage points. This increase reflects the increased reach of Polsat's thematic channels. Their audience share grew by 1.5 percentage point year-on-year in Q2, while Group TVN's thematic channels share dropped by 1.3 percentage points. For both groups, the flagship channels, Polsat and TVN, noted a 0.9-percentage-point increase in audience share, while shares of TVP's flagship channels (TVP1 and TVP2) declined by 3.7 percentage points. With heavy investment in local TV production, as well as planned expansion of its entertainment schedule to Saturday and Sunday peak time (previously only Sunday), TVN will maintain a strong position on the Polish TV market.
TVN channel advertising sell-out rate during peak time (18:00-23:00) increased by 9.6 percentage points in 2Q 2011 year-on-year, reaching 99.3 per cent. During off-peak, growth was at a more moderate 4.5 percentage points, with spot sell-out of 71.2 per cent. However, the group reported that, excluding the one-off effect of the mourning period in Q2 2010, the level of peak time sell-out increased only by 0.1 percentage point, whereas off-peak time sales dropped by 2.6 percentage points.
In H2 2011, we expect a slight increase in the group's TV NAR, but at a slower rate than in H1 due to tougher comparatives with post-recessionary recovery in H2 2010. TV NAR-growth for TVN will mainly stem from price increases in H2. Overall, the Polish TV advertising market will slow in the second half of 2011. We forecast total TV NAR for full year 2011 at €988m, reflecting an increase of 4.1 per cent year-on-year.
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