Market Insight

MTG sells Hungarian free-to-channels to Sony

February 11, 2015

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Sony Pictures Television (SPT) Networks has agreed to acquire Hungarian free-to-air TV channels Viasat3 and Viasat6 as well as VoD service Viasat Play from Modern Times Group (MTG). Both linear channels are offered through all main DTH, Cable and IPTV operators as part of their entry-level offerings. The cash value of the deal was not disclosed.

MTG said that it will continue to operate pay channels Viasat Explore, Viasat History and Viasat Nature. By selling these non-core Viasat operations in Hungary, MTG is looking to focus in the free-to-air business on countries around the Baltics region as well as Bulgaria and the Czech Republic.

Our analysis
Although pay TV operators pay no affiliate fee to MTG to carry Viasat3 and Viasat6, the channels are still encrypted and cannot be received free-to-air via satellite. According to IHS TV Channel Intelligence, in 2014, Viasat3 and Viasat6 reached 3.2 and 2.3 million households respectively. IHS Technology forecasts an average annual growth in subscribers of 3% for both channels combined up to 2019. MTG's year end 2014 presentation indicated that its channels' share of viewing in the key 18-49 group in Hungary was 7.3% last year, much lower than any of its other operating areas in the central Europe region.
Over the last few years, SPT has expanded its channel business across Europe and beyond. In 2012 it entered into the free-to-air UK market by acquiring Movies4Men and Men&Movies from Dolphin Broadcast Services. Two years later, it bought CSC Media Group which at that point operated 16 free channels supported by advertising, increasing Sony’s total portfolio of free-to-air channels to 18 in the UK. Later on the same year, SPT signed a deal with Dori Media to acquire a 50% share in Israeli owned entertainment channels Viva and Viva Plus. 
With the MTG deal, SPT will increase its portfolio of active channels in Hungary to six. Viasat3 is a female-skewed channel which targets the 18-39 demographic whereas Viasat6 is more focused towards the young male audience. As a result SPT is looking to exploit any potential revenues from advertising, which according to IHS Technology reached €33.4 million for the group in Hungary in 2014. At the moment, in Hungary, SPT is in the place in terms of subscriber reach with 5.8 million after Turner and Viasat. 

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