Modern Times Group AB (MTGB), Sweden's largest publicly traded media company, said second-quarter profit rose after sales in eastern Europe increased and earnings in the Scandinavian free-television unit recovered.
Net income climbed to 332 million kronor ($50 million), or 4.90 kronor a share, from 318 million kronor, or 4.76 kronor, a year earlier, Stockholm-based Modern Times Group said today in a statement. Sales rose 10 percent to 2.84 billion kronor.
Modern Times Group, the owner of the TV3 television channel and TV1000 pay-TV channel, in June raised its financial targets and forecast sales will be 20 billion kronor in 2011. The company has turned around the struggling TV3 channel in Sweden by focusing on a young, female audience, Chief Executive Officer Hans-Holger Albrecht said today in an interview. The Group aims to become a leading media house in Europe through acquisitions.
``We're primarily looking at an expansion of free TV in Eastern Europe, in countries where we don't have operations, with Africa as a second step,'' said Albrecht. ``There isn't anything imminent, though, to be announced within the next two weeks.''
Modern Times has expanded in the Czech Republic, Russia and Slovenia to spur growth. In February the company agreed to buy 50 percent of Balkan Media Group Ltd., with broadcasting operations in Bulgaria and the Former Yugoslav Republic of Macedonia.
The shares rose as much as 17 kronor, or 4.1 percent, to 442.50 kronor and traded at 433.50 kronor as of 3:16 p.m. in Stockholm. Before today, the stock was down 5.6 percent this year.
Analysts had anticipated earnings of 338 million kronor, based on the average of six estimates compiled by Bloomberg. Sales were expected to be 2.85 billion kronor.
Earnings include a 17 million kronor gain from the sale of TV Shop Europe AB to Guthy-Renker Corp. Modern Times sold the business in May for 70.3 million kronor in cash because it was an ``odd'' presence in Modern Times' portfolio. Albrecht said he isn't planning any imminent disposals of other assets as TV Shop was the only asset that didn't naturally fit into the company.
The development of the advertising market is hard to predict because people are on vacation and not buying ads, Albrecht said. Modern Times doesn't expect it to worsen during the rest of this year. If it's going to be flat or improve ``is the million dollar question.''
The third quarter is generally the weakest quarter of the year in terms of advertising sales with the fourth being the strongest, Albrecht said.
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