Modern Times profits soar

Piracy still claims toll as half-year net sales hit $383 mil

AMSTERDAM — Net profit at Scandinavian media outfit Modern Times Group nearly doubled in the first half year to $10 million, while second quarter net profit skyrocketed to $7.6 million year on year, up from $1.9 million a year earlier.

The figures came on the back of modest single digit growth in net sales across both earnings periods, leaving prexy-CEO Hans-Holger Albrecht guardedly optimistic that the company is on the way to recovery from a miserable 2002, one of the worst earnings periods in its history.

Last year, MTG posted a net loss of $7.9 million, down from $14.3 million in net profit in 2001.

Half-year net sales were $383 million, up from $358 million a year ago, and net sales in the second quarter rose from $186 million to $202 million year on year.

Net revenue for MTG’s free TV operations grew by 11% year on year for both the second quarter and half year on the backs of increased audience shares for its channels in Scandinavia, the Baltic States and Central and Eastern Europe.

“Our increased spending on programming is clearly paying off,” Albrecht said, adding the company was putting even more cash into programming in the next season.

Albrecht said piracy is still the company’s No. 1 problem, a factor underscored by a drop in digital premium subscribership, high churn rates and flat net revs in the pay TV ops.

MTG is implementing the NDS Video Guard security system to fight piracy, but in a live teleconference of the results, the CEO frankly laid bare a case in which one apprehended pirate had sold as many as 20,000 pirated decoding cards in Denmark alone.

“You can imagine how monumental the problem is for us,” Albrecht said.

Digital subscribership as of March was 424,000.

Modern Studios, the division housing MTG’s format cruncher Strix, reported a 21% increase in net sales in the second quarter, with Strix itself posting a 16% increase in net sales for the same period.