Netflix, HBO Competition Hits Shares of Sweden's Modern Times Group

Nordic VOD – Netflix and HBO launch VOD services in Scandinavia

The VOD market in Scandinavia just got a lot hotter, with both HBO and Netflix this week announcing plans to launch their own VOD services in the Nordic territories. Netflix's Scandinavian expansion follows the group's international roll-out to Canada, Latin America and the U.K.. Time Warner's HBO has agreed to launch HBO Nordic, a multi-platform video distribution joint venture with European pay TV veteran Peter Ekelund and his company Parsifal International, that will serve Sweden, Norway, Finland and Denmark.

Stock in the Scandinavia brodcaster drops 15 percent as VOD competition increases.

COLOGNE, Germany - Shares in Nordic broadcaster Modern Times Group fell close to a 52-week low on Friday after the company warned increased competition from new VOD players, including Netflix and HBO, would mean a drop in its pay TV subscriber base.

Netflix this week launched a local versions of its online streaming service across Scandinavia. HBO is set to bow Nordic versions of its HBO Go offering later this month. Filmnet, a new SVOD service run by established Scandinavian media companies CMore, TV4 Group and Bonnier, bowed on Sept. 25.

Modern Times Group operates a highly-successful pay TV operator, Viasat, in the Nordic region, as well as an over-the-top VOD service, Viaplay.

“The increasing competition levels in the Nordic region are currently expected to result in the Nordic premium pay TV subscriber base (excluding Viaplay) continuing to decline with a stable total Nordic pay TV sales development in Q4 and 2013,” Modern Times Group President and CEO Jorgen Madsen Lindemann said. “The combination of this with the investments that we are making are therefore also currently expected to result in lower margins for our Nordic pay TV business in Q4 and 2013 but will position us to grow our subscriber base, revenues and profits for the longer term.”

The announcement sent MTG shares tumbling. The stock fell nearly 15 percent and by early afternoon Friday was trading at SEK 213.60 ($32.53) close to a 52-week-low.

Subscribers for MTG' pay TV offerings in the Nordic territories fell in the third quarter to 1.023 million from 1.031 million three months ago and 1.042 million this time last year. While sales revenue its Nordic pay TV division posted slight growth year-on-year, operating profits were down 6 percent.

Overall, MTG's third quarter results were mixed, with net sales down 5 percent year-on-year to SEK 2.94 billion ($448 million) but net income actually up slightly to SEK 308 million ($47 million).

Modern Times Group owns and operates dozens of pay- and free-TV channels in Europe, the bulk of them in Scandinavia and Eastern Europe. The company is also a major shareholder in leading Russian broadcaster CTC Media, holding a 37.94 percent stake.