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Czech RepublicTV Nova
2
Czech Republic
New foreign investments will bring additional ad spending:
Car manufacturers
Mobile operators – Telefonica, Vodafone
Banks – Unicredito, Non-banking institutions – consumer credits
Political environment - new Government not yet confirmed by Parliament
8.08.99.5Unemployment (%)
3.93.83.8TV Households (million)
4.110.84.0FDI (US$ billion)
2.71.92.7Inflation (%)
6.65.56.3Wage Inflation (%)
6.16.14.2Real GDP Change (%)
14,09812,12110,552GDP per Capita (US$)
10.210.210.2Population
2006 Forecast 20052004Key Statistics
Sources: ING, Informa, Global Insight
Country and Economy Update 2006
3
Background
20022
100%201412.6% CR19.2% SR24n/an/an/an/a0.2%
Galaxie Sport
TV Nova
19941
100%2017100%
2431%53%42%43%72%
:LaunchedO :wners hip
:Licence expiryTechnical :reach
: Hours broadcas t daily
Locally produced content:- Prime time locally produced content:
2006: All day audience s hare YTD June 2006:Prime time audience s hare YTD June
TV advertis ing net revenue s hare 2005:
Station’s All Day Audience ShareYear to Date to June 30, 2006
1 TV Nova was acquired in May 20052 Galaxie Sport was acquired in September 2005Sources: CME Estimates, ATO - Mediaresearch
General channel, market leader in the Czech Republic, high rated news, local series, internationally successful movies and series. Main target: 15-54 year old general audience
Sports cable channel with local and international sporting events, news and magazines. Main target: 15-54 year old male audience
CT211%CT1
21%
Others6%
TV Nova42%
Prima TV20%
4
Competition
Terrestrial TV stations with national coverage: CT1, CT2, TV Nova, Prima TV
Digital (DVB-T) channels: TBD
General channels with cable distributions: Foreign free to air and free to satellite channels (RTL, ZDF, TVP1, ORF, etc)
Specialized CATV local channels:
Movie Channels: Hallmark, CS Film, Romantica, AXN, Spectrum, Reality TV, Club, Minimax, Jettix, National geographics, Discovery, Animal Planet, new MGM channel planned
Sport channels: Eurosport, Sport 1
News channels: TA3, 24CZ
Music Channels: Ocko
Others: TV Paprika, TOP TV
Premium Channels: HBO, HBO2
Specialized foreign channels: MTV, VH1, Mezzo , Private Gold, Private Blue, Eurosport 2, Extreme sport, DSF, ESPN-classic sport, BBC, BBC Prime, CNN
5
Competition
4 terres trial s tations are dominant and have continued to retain s hare
Digital Update
DVB-T set-top boxes started sale in early 2006 due to Olympics and World Cup covered by CT4 (only distributed by DVB-T and DTH)
The decision of the Media Council to grant 6 new DVB-T licences was cancelled by the court on September 6, 2006
Only about 50,000 households equipped with DVB-T set-top boxes
Transition to Digital will take several years
Adults 15+, All Day Share2000 2001 2002 2003 2004 2005 2006YTD
4 Terrestrial Stations 94.2% 94.4% 94.5% 93.6% 94.2% 93.9% 93.0%Other TV Stations 5.8% 5.6% 5.5% 6.4% 5.8% 6.2% 7.0%
% Change of Terrestrial 0.2% 0.1% -0.9% 0.6% -0.3% -0.9%
6
Market leaders hip
The Leadership Map
Source: TV Nova
Czech Republic audience shares Jan 1 - Aug 31, 2006
Adults 15+
Adults 15-54
Adults 15-34
Time Mon Tue Wed Thu Fri Sat Sun Time Mon Tue Wed Thu Fri Sat Sun Time Mon Tue Wed Thu Fri Sat Sun
06:00 06:00 06:0006:30 06:30 06:3007:00 07:00 07:0007:30 07:30 07:3008:00 08:00 08:0008:30 08:30 08:3009:00 09:00 09:0009:30 09:30 09:3010:00 10:00 10:0010:30 10:30 10:3011:00 11:00 11:0011:30 11:30 11:3012:00 12:00 12:0012:30 12:30 12:3013:00 13:00 13:0013:30 13:30 13:3014:00 14:00 14:0014:30 14:30 14:3015:00 15:00 15:0015:30 15:30 15:3016:00 16:00 16:0016:30 16:30 16:3017:00 17:00 17:0017:30 17:30 17:3018:00 18:00 18:0018:30 18:30 18:3019:00 19:00 19:0019:30 19:30 19:3020:00 20:00 20:0020:30 20:30 20:3021:00 21:00 21:0021:30 21:30 21:3022:00 22:00 22:0022:30 22:30 22:3023:00 23:00 23:0023:30 23:30 23:3000:00 00:00 00:00
1. TV Nova 1.TV Prima, 2.TV Nova 1.ČT1, 2.TV Nova 1.ČT 1, 2 TV Prima, 3 TV Nova 1 ČT 2
1.1.- 31.8.2006 1.1.- 31.8.2006 1.1.- 31.8.2006
7
Market Share Evolution
Winter Olympic Games (Czech National Ice Hockey Team won a bronze medal)
0
10
20
30
40
50
60
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35
ČT 1 ČT 2 TV Nova TV Prima Others2006 YTD
Hockey Championship
Football World Cup
Start of Fall Season
Prime time audience share trendsTarget group: 15 - 54
8
2006 New Sales Policy
We decided to implement a new sales policy to grow TV advertising market
New Sales Policy accepted by anti-monopoly office and the market
New s ales model in place since the beginning of 2Q 2006
Going forward, the main characteristic of the sales strategy will continue to be trans parency
Sales goal is to be recognized as the driver of the market
To underpin the long term approach of TV Nova, we will focus on building strong partnerships with agencies and clients, as a condition for future deve lopment
9
Autumn Programming Schedule
10
: Autumn programming s trategy Continue with local, fic tion news and entertainment formats and the bes t fore ign product
Succes s ful locally produced s eries
Hospital in the Rose Garden (Ordinace v ruzove zahrade) 2 (Ordinace 1 – 50.7% share in 15-54 Spring 2006). Fall season thus far 52.9% in 15-54
Insuring Happiness (Pojistovna Stesti) 1 and 2 (Pojistovna 1 first run – 70.2% share in 15-54 Fall 2004). Rerun performs better than 2 new series on Prima and Czech TV.
The Street (Ulice) (44.4% share in 15-54 Spring 2006). 50% thus far in Fall season
Entertainment formats
Pop Idol 3 (Pop Idol 1 – 72.2% share in 15-54 Spring 2004, Pop Idol 2 – 59.9% share in 15-54 Spring 2005). Performing in line with casting episodes of previous two series. 55.1% share in 15-54 and growing. Last episode 61.2%.
Autumn Programming Schedule
11
( )Autumn programming s trategy continued
Highly rated news and current affairsprogramming
112 (58% share in 15-54)
TV News remains strong (27.4 rating, 70.4% share in 15+)
Internationally s ucces s ful fore ign product
LOST strong start (21.2 rating, 53.9% in 15+, 22.6 rating, 60.6% share in 15-54)
CSI growing (CSI – 43.8% share in 15-54 Spring 2006, CSI Miami – 42.6% share in 15-54 Spring 2006). CSI 51% share and CSI Miami 47.3% share thus far.
Increas ed focus on marketing and inves tment in our brand power
Autumn Programming Schedule
12
TV Nova Res tructuring
Res tructuring proces s initiated from Q2 2006. Outcome will be evident in 2007:
Changes in sales strategy
Organization
Efficiency
Programming and production
Growth in revenues is expected to come from:
Continuing increases of CPP under the new sales policy
Legislation eliminating advertising space on public Czech Television
More sophisticated sales techniques
New channels
Cos t reduction driven by:
Introduction of strong cost control
More efficient program planning and production
Consolidation of operations
13
0
20
40
60
80
100
120
140
2004 2005 2006 Guidance
US
$ m
Czech Republic
99.4*
0
50
100
150
200
250
2004 2005 2006 GuidanceSegment Net Revenues¹
US
$ m
.
Segment Net Revenues, EBITDA and EBITDA Margin
For a reconciliation of non-GAAP financial measures presented here to most comparable GAAP financial measures, please see the corresponding reconciliation slides on pages 52 – 53 of our Q2 2006 results presentation on www.cetv-net.com
48%
99.4
208.1
2004*FY
46%
110.8
235.0
2005*FY
11%
13%
%Growth
48%EBITDA Margin %
(14%) 95EBITDA
(15%)200Net Revenues
%Growth2006 Guidance
Czech Republic( )US$ m
208.1*
154.0
235.0*
* Including pre-acquisition data, based on management estimates for the periods prior to our May 2, 2005 acquisition. Reported results for our ownership in 2005 were: Net revenues US$ 154.0m and EBITDA US$ 71.5m
110.8*
95
71.5
48%
EBITDA MARGIN %
48%
0%
10%
20%
30%
40%
60%
50% 200
EBITDA¹
¹ Lighter colour denotes pre acquisition results
14
Looking Ahead
Development of Brand
Driven by Marketing expertise
Development of Product
Stronger News
More local content
More Channels
Development of Res ources
Talent
Facilities
Multiple distribution (DTH, ADSL, Cable, IPTV, DVB-T)
Development Beyond TV
Internet
And transition into other new media…