Jørgen Madsen Lindemann
Viaplay announced the proposal of a comprehensive recapitalization of the group, in order to address its financial challenges and provide for the future development of the company. This follows the group’s strategic review of the entire business and extensive discussions with its major shareholders and debt providers, and includes the renegotiation of its credit arrangements and the proposed injection of new equity into the group.
“We have been implementing a wide range of measures since we introduced our new strategy and plan with our Q2 report in July, in order to improve our operating performance and financial position. These have included the introduction of our new country-based operating model, a major cost reduction programme, which sadly resulted in a more than 30% reduction in the size of our workforce, the renegotiation of partner distribution agreements to focus on value over volume, and the signing of new commercial deals with content providers that will improve our return on investment. These agreements have included an innovative new strategic partnership with Formula One in the Netherlands, which secures our profitability and adds further value for sports subscribers and F1 fans,” said Jørgen Madsen Lindemann, President & CEO of Viaplay.
According to the company, its core Nordic, Netherlands and Viaplay Select operations have stable Viaplay subscriber volumes and rising ARPU levels, a much-improved content mix, and growing content sales to third party platforms. Now, the company is “well on track” to reach its year end revenue and profitability targets for these operations, as it set out in July.
The non-core international operations in the Baltics, Poland and the UK have continued to perform below expectations, but better year-on-year due to the range of cost savings initiatives that the company has implemented. Viaplay now expects to report higher full year losses for these operations than previously guided for, due to the range of commercial initiatives that it has not been able to initiate now that it is exiting the markets. “The route to profitability for these operations is not clear or realistic, which is why we have now reached agreement to sell our UK operation, subject to regulatory approval, and we will exit the Baltic and Polish markets by summer 2025,” Lindemann commented.
Meanwhile, the group organic sales growth of 7% in the third quarter was primarily driven by 17% organic sales growth in Viaplay, which now accounts for 52% of the group net sales. The Nordic organic sales growth was 3%, with Viaplay delivering 9% organic sales growth and accounting for 43% of its total Nordic net sales. The Viaplay sales growth reflected positive ARPU developments in almost all markets, the company said.
“We have further cleaned up the subscriber bases and set clear return requirements for our marketing investments, and we have therefore reset our year end subscriber target to reflect a more stable forward trajectory, where our priority is accurately pricing and packaging our very strong content offerings,” Lindemann declared.
“We understand the current state, and future potential, of the business, our products, and our people. The energy, enthusiasm, and enterprise of our teams, especially in these challenging times, is fantastic to see. We have much to achieve together and the proposed recapitalisation of the business is a necessary part of resetting the group for a much more sustainable future, where our attention and resources are focused on those markets where we can compete for the long term, and where our products are relevant, popular and generate healthy returns,” Lindemann concluded.