Struggling Viaplay Group to sell Paprika Studios, UK operations, plans recapitalisation

Viaplay Group’s Annus Horribilis is not over.

Twice delayed, the streaming group’s Q3 earnings report were finally published Friday morning December 1^st, missing by a few hours the deadline set by the rules of the Stockholm Nasdaq exchange.

The group reported net sales worth SEK 4.5 billion up 7.4% year on year, but operating losses of SEK 538 million for the period.

In the key Nordic market, Viaplay’s net sales at SEK 3.7 billion grew 3.3% year on year on an organic basis, thanks notably to bumped up prices across all markets, better subscriber package mix, higher sports sub-licensing revenues and external sales by the group’s Studios.

But the 14.2% rise in operating expenses and profits nose dive by 92.3% year on year, were blamed by the group’s President CEO Jørgen Madsen Lindemann on ”lower advertising sales (down 10%), the locked in inflation in content costs and continued adverse currency exchange rate developments”.

Viaplay’s global subscriber base reached 6,6 million, slightly up compared to 6.4 million in the same period 2022, but in the Nordics, it dropped 2% to 4.1 million year on year.

Lindemann still maintained that Viaplay subscriber volumes are “stable” in the group’s core Nordic, Netherlands and Viaplay Select operations, where he envisaged to deliver profitability targets for the year end results.

Divestment from UK, Polish, Baltic markets
However the substantial losses in the non-core international markets have prompted the group to sell its UK operations back to Premier Sports (just a year after its acquisition), based on regulatory approval, while an exit from the Baltic and Polish markets are planned by the summer 2025.

To “further sharpen the Nordic focus”, Lindemann said his group has reached an agreement to sell its Paprika Studios - based in the Baltics and Central Eastern Europe -, subject to shareholder approval.

As Viaplay operation losses for the full year are set to reach SEK 1 billion to SEK1.5 billion, the CEO unveiled on Friday a full recapitalisation programme, including a SEK 4 billion new equity raise and SEK 14.6 billion debt renegotiation package. The rescue plan was backed by Viaplay’s shareholders including French group Canal+ which acquired a 12% share in July 2023.

“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,” concluded Lindemann.

The Nordic streaming group Viaplay’s dramatic turn of fortune and change of strategy which led to Lindemann’s replacement of the former CEO Anders Jensen and his team in June 2023, was one of the most dramatic and damaging events of 2023, for the Nordic content industry, as reminded by Jørgen Ramskov, head of the Danish Producers Association.

“Viaplay was a key player in the Danish TV and film market up until 2023. What we see now is that they keep commissioning non-scripted content, however at a lower level due to the decline in advertising. When it comes to scripted, we see a total stop as of the summer 2023,” Ramskov told us.

“Viaplay was together with Netflix and TV 2 Denmark the top three investors in scripted, primarily TV series. We estimate that Viaplay commissioned for between DKK 250-300 million on a yearly level. So the withdrawal from the Danish market is of course very harmful to the industry,” he said.

Looking ahead, Ramskov said: “Unfortunately we see no clear indication, that Viaplay will re-enter the scripted market, and we have the same indications from Norway and Sweden. Right now, we think that the whole future for the group in very uncertain, and from what we hear from the investors’ meeting on Friday [December 1^st], Viaplay will have no future position in original Danish scripted content.”

Major Viaplay series still waiting for a premiere date include Filmlance International’s Ronja the Robber’s Daughter based on Astrid Lindgren’s beloved fairy-tale adventure book.