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In the third quarter, Viaplay reported an organic sales increase of 7% to SEK 4,536 million, with its Viaplay segment contributing 52% to the group’s net sales and experiencing a substantial 17% growth. However, this was overshadowed by a sharp decline in operating income to SEK 321 million before accounting for restructuring costs, which further deepened the operating loss to SEK 538 million. Net loss plummeted to SEK 693 million, resulting in a significant loss per share (EPS) drop to SEK 8.85 (USD1 = SEK10.4362).
In response to the financial strain, President and CEO Jørgen Madsen Lindemann announced a comprehensive recapitalization plan, which includes credit renegotiation and equity injections. This follows aggressive cost-cutting measures taken after a second-quarter review, which saw workforce numbers slashed by over 30%. The company is also recalibrating partner agreements to prioritize value over volume, exemplified by a strategic Formula One partnership in the Netherlands designed to enhance sports content offerings and drive profitability.
Despite stable subscriber volumes and rising average revenue per user (ARPU) levels in core Nordic regions and Viaplay Select, Viaplay’s international operations, especially in the Baltics, Poland, and the UK, have underperformed. This has led to a strategic decision to exit these non-core markets by summer 2025 and to sell UK operations, pending regulatory approval. These moves are expected to incur a negative cash effect of approximately SEK 2.2 billion over the coming years. Furthermore, the sale of Paprika Studios is on the table, subject to shareholder agreement.
While Nordic organic sales grew modestly at 3%, the company’s advertising revenues faced a 10% decline, primarily due to weak traditional media performance. However, this was somewhat mitigated by growth in digital advertising video on demand (AVoD) sales.
Looking ahead, Viaplay maintains steady sales projections for the fiscal year-end of 2023 but anticipates increased operational losses before adjustments for ACI and IAC, estimated to be between SEK 1 billion and SEK 1.15 billion. This is largely due to challenges in non-core international markets. Nevertheless, there is an optimistic outlook for core operations in the fiscal year 2024, with the company expecting to achieve long-term profitability targets.
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