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Safe Harbour

This presentation contains statements that constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements appear in a number of places in this presentation and include statements regarding the intent, belief or current expectations of the customer base, estimates regarding future growth in the different business lines and the global business, market share, financial results and other aspects of the activities and situation relating to the Company .

Such forward looking statements are not guarantees of future performance and involve risks and uncertainties, and actual results may differ materially from those in the forward looking statements as a result of various factors.

Analysts are cautioned not to place undue reliance on those forward looking statements, which speak only as of the date of this presentation. Telefónica undertakes no obligation to release publicly the results of any revisions to these forward looking statements which may be made to reflect events and circumstances after the date of this presentation, including, without limitation, changes in Telefónica´s business or acquisition strategy or to reflect the occurrence of unanticipated events. Analysts and investors are encouraged to consult the Company´s Annual Report on Form 20-F as well as periodic filings made on Form 6-K, which are on file with the United States Securities and Exchange Commission.


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To create consumer habits through multiplatform contents and leading brands for Telefonica’s clients in the Spanish and Portuguese speaking world.


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WHY TELEFONICA IN MEDIA? : TELECOM, MEDIA & INTERNET ... CONVERGENCE

Telecom

  • Strong cash generation.

  • Distribution channels.

  • Clients data bases.

  • CRM capacity.

Internet

  • Growth potential businesses.

  • New business models.

  • Interaction with clients.

  • Innovation.

  • Media

  • New business models.

  • Alternative distribution

    channels.

  • Access to clients and

    advertisers.

CONTENTS

CONVERGENCE

Convergence of these industries ensures the leading position

of players focused in an integrated relationship with clients


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T CONVERGENCE

v

I

SINCE 1997, TELEFONICA MEDIA HAS INVESTED ALONG THE WHOLE VALUE CHAIN OF MEDIA

22,74%

51%

20%

100%

100%

47,4%

100%

100%

Telefónica Sport

100%

5%

Telefónica Sport

25%

40%

70%

100%

48,6%

100%

30%

100%

100%

50%

100%

100%

100%

1997

1998-1999

2000


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TELEFONICA MEDIA: SELECTED COMPANIES CONVERGENCE

I) Free-to-air-TV & Radio

  • Number one channel in terms of TV-advertising in 2000.

  • The most attractive audiences for advertisers (best commercial profile)

  • Successful turnaround track record of management team.

  • Outstanding profitability and high growth.

  • Excellent non-advertising growth potential (i.e.:New Media, theme channels, events, etc.).

(Spain)

  • Telefe has been the number one player over the last ten years in Argentina.

  • Excellent brand recognition.

  • Potential for cross-fertilization with Antena 3.

(Argentina)

  • Number 2 radio company in Spanish market.

  • Consolidation play on Spanish market.

  • Re-structuring plans of new management recently in place.

(Spain)


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  • Leading provider of satellite sevices in fastest growing DTH markets in Europe and Latam.

  • Potential for new services (i.e. mobile, broadband, DAB).

  • Core part of Via Digital business. Leading position with Spanish and international clients.

TELEFONICA MEDIA: MAIN COMPANIES

II) Contents

  • Leading content provider with some of the most succesful TV formats worldwide.

  • Potential leverage of Endemol content through traditional and new media networks of

  • Telefónica (Europe - UMTS).

  • Attractive content for convergence as demonstrated by Big Brother success.

  • UMTS applicable content under development.

(Netherlands)

III) Pay TV & Distribution

(Spain)

(Spain)

(Spain)


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TELEFONICA HAS DEVOTED SUBSTANTIAL RESOURCES TO ACHIEVE THIS POSITION

(a)

962

8,102

Investments

€ million

138

313

319

409

974

4,988

Endemol

Telefe & Azul

Vía Digital

Antena 3

Telefonica

Onda Cero

Pearson/

TOTAL

(b)

(c)

others

Sport

As % of

total: 62% 12% 5% 4% 4% 2% 12%

(a) Investments: cash plus equity

(b) Includes Telefonica Sport, GMAF, Audiovisual Sport, Euroleague and Torneos y Competencias

(c) Includes Art Media, Hispasat, Interocio Games, Lola Films, Media Park, Pearson, Patagonik, Rodven, ST Hilo,

Telefonica Servicios Audiovisuales and TMIC


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STRATEGY: CAPTURE SINERGIES AS AN INTEGRATED GROUP POSITION

MANAGEMENT

CORPORATE UNIT

  • Highly professional management teams to improve companies’ results and implement a growth strategy.

  • Well defined business plans and operational control processes.

  • Lead strategic development of each of the three divisions (free-to-air-TV, contents and pay TV).

  • Identify and capture economies of scale among businesses and markets.

TARGETS

  • New management team in Argentina and Onda Cero.

  • Top executives appointed.

  • Control process coordinated by the Corporate Unit.

  • Creation of new units:

    > New Media and Broadband.

    > Alliances and Music.

    > Integration and synergies.

ACTIONS

IN PLACE


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STRATEGY: CREATE VALUE IN TELEFONICA MEDIA’S

THREE BUSINESS LINES

Pay TV & Distribution

Contents

Free-to-air-TV and Radio

Telefónica Sport

Consolidate as a leading

player in free-to-air-TV

in Spanish speaking

countries

Create a leading

content manager

Consolidate Telefonica

Media’s position

in Pay TV


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STRATEGY: CREATE VALUE IN TELEFONICA MEDIA’S

THREE BUSINESS LINES

Pay TV & Distribution

Contents

Free-to-air-TV and Radio

Telefónica Sport

Consolidate as a leading

player in free-to-air-TV

in Spanish speaking

countries

Create a leading

content manager

Consolidate Telefonica

Media’s position

in Pay TV


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MAIN MANAGEMENT CHALLENGES IN ANTENA 3

Management challenges

Audience and advertising investment share

Audience share

Advertising investment share

Maintain strong audience share in segments attractive to advertisers

  • Continue pursuing commercial target audience (under 55 years, from cities with more than 10,000 inhabitants, middle to upper income brackets).

  • Ensure a stable audience share throughout the day, reducing dependence on prime time.

    Improve efficiency of fixed cost structure

  • Maximize the level of in-house production, reducing dependence on majors.

28.3

27.9

27.4

22.8

22.8

21.5

1998

1999

2000

Production figures (% growth 1997-2000)

122%

Minutes produced

Cost/minute produced

-40%

1997

1998

1999

2000


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MAIN MANAGEMENT CHALLENGES IN ANTENA 3

(cont’d)

Management challenges

Net sales

696

€million

602

New businesses

13%

Diversify into new media activities

  • Identify new business opportunities to leverage value of the brand, content and promotional capabilities.

  • Optimise sale of advertising services through different delivery platforms (TV, cinema, Internet, etc).

    Strict control of operating expenses

  • Consolidate as a cash generating company.

Antena 3 Television

9%

468

5%

386

600

547

431

386

1997

1998

1999

2000

Financial statements

179

144

€ million

96

78

-30

€ million 2000 CAGR 00-04

Sales 696 11%-16%

EBITDA 200 16%-21%

Net Debt (Cash)*: -78

* as of 31/12/2000

-41

-111

Net debt

EBT

-225

1997

1998

1999

2000


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MAIN MANAGAGEMENT CHALLENGES IN TELEFE AND AZUL

Management challenges

Telefe: Advertising sales (€ '000)

+ 33%

4,424

3,337

  • New management team in place with strong focus on return and cash generation.

  • Improvement of the commercial division with the hiring of executives focused on profitability.

  • Cost-control policy: renegotiation of contracts with key artists.

  • Preliminary results of turnaround on both assets.

jan 2000

jan 2001

Telefe: Coproduction costs (€ '000)

13

- 50%

7

TELEFE (€ mill)2000 CAGR 00-04

Sales 296 8%-13%

EBITDA -24 Breakeven in 2001

Net Debt (Cash)*: 428

* as of 31/12/2000

2000

2001E


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MAIN MAGAGEMENT CHALLENGES IN ONDA CERO

Management challenges

Onda Cero Revenues

(€ millions)

+ 45%

4.8

  • New management in place with focus in:

    • Internal operations: strict cost cutting policy and improvement of advertising sales.

    • External operations: national third party alliances (Radio Blanca, Europa FM, Radio Marca)

    • New programme portfolio with the hiring of solid talents with a view to increase audience share consolidating as the 2nd option.

3.0

jan-00

jan-01

Onda Cero Audience

Thousands of people

+ 35%

2,530

1,879

€ million2000 CAGR 00-04

Sales 52 14%-19%

EBITDA 12 Breakeven in 2001

Net Debt (Cash)*: 26

* as of 31/12/2000

3rd. survey 99

3rd. survey 2000


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REINFORCE PRESENCE IN LATINAMERICA

Main trends

Growth strategy

  • Attractive growth market:

    - Advertising investment above

    US$ 50,000 mill. in 2000.

    - 500 mill. inhabitants.

  • Industry deregulation.

  • Absence of a global main player due to the high number of family owned companies.

  • Higher segmentation and a more sophisticated audience.

  • Acquire assets in those markets where Telefonica has presence (Peru, Brasil, Chile).

  • Create alliances in those markets with high entry barriers (Brasil, Mexico).

  • In an selective way, acquire presence in other markets through acquisitions (Colombia, Uruguay).


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Successful model in Spain

Argentina

T

v

I

REPLICATE SUCCESSFUL DIVERSIFICATION MODELS IN OTHER MARKETS

Free-to-air-TV

Peru

Children

Cinema advertising

Artists’ management

Events

Direct marketing

New Media

Megatrix Argentina

Chile

Brasil

FAMA Argentina

Mexico

Battres Argentina

Colombia


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STRATEGY: CREATE VALUE IN TELEFONICA MEDIA’S

THREE BUSINESS LINES

Pay TV & Distribution

Contents

Free-to-air-TV and Radio

Telefónica Sport

Consolidate as a leading

player in free-to-air-TV

in Spanish speaking

countries

Create a leading

content manager

Consolidate Telefonica

Media’s position

in Pay TV


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MAIN MAGAGEMENT CHALLENGES IN ENDEMOL

Management challenges

Maximise synergies with Telefonica

  • Leverage Endemol as main content provider of Grupo Telefonica.

  • Monitor and transfer creative skills among the companies.

Consolidate leading position in a convergence context

  • Support Endemol’s growth strategy of entering into new markets (Latam, USA) through acquisition of leading local players or through organic growth in a convergence and interactive context.

Reinforce management and pursue new projects

  • Enhance coordination with Telefonica Media and Telefonica.

  • Optimise e-business resources to pursue new projects.

Leverage European footprint

  • Vehicle to explore alliances with European media players.

€ million2000 CAGR 00-04

Sales 519 31%-36%

EBITDA 88 29%-34%

Net Debt (Cash)*: -4

* as of 31/12/2000


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SPORT

STRATEGY: CREATE VALUE IN TELEFONICA MEDIA’S

THREE BUSINESS LINES

Pay TV & Distribution

Contents

Free-to-air-TV and Radio

Consolidate as a leading

player in free-to-air-TV

in Spanish speaking

countries

Create a leading

content manager

Consolidate Telefonica

Media’s position

in Pay TV


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MAIN MAGAGEMENT CHALLENGES IN VIA DIGITAL

Number of subscribers and average fee per subscriber (€)

Number of subscribers

Management challenges

Average fee per subscriber

30

30

1,000

30

27

24

  • Non recourse bank financing, already in place, to compete in a highly competitive market with low operating margins and high fixed costs.

  • Improve market position and financial risk via strategic international alliances.

  • Focus on short and medium term results:

    • Increase number of subscribers and their

      average fee on a profitability basis.

    • Increase revenues of interactive TV and

      t-commerce.

650

750

633

20

450

500

290

10

250

2

75

0

0

1997

1998

1999

2000

jan 2001

New sources of revenues

5%

iTV, t-commerce

20%

€ million2000 CAGR 00-04

Sales 227 31%-36%

EBITDA -287 Breakeven in 2003

Net Debt (Cash)*: 842

* as of 31/12/2000

95%

Monthly fee, PPV

80%

2000

2005P


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Thematic channels packager

Contents distribution channel

Technical infraestructure

STRATEGY IN PAY TV AND DISTRIBUTION

Consolidate Telefonica Media’s position in Pay TV

  • Strategic defense asset for Telefonica Media in the DTH and ADSL platform (full positioning of Telefonica Media in UMTS, DTH, ADSL, TDT and Broadcasting).

  • Powerful distribution channel integrated with Telefónica (i.e. package of ADSL and Via Digital).

  • Consolidate TSA as the thematic channel packager within Telefonica.

  • Examine synergies and economies of scale that might potentially arise from close cooperation with other European DTHplatforms.


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IN THE NEW MEDIA ARENA WE ARE WELL POSITIONED TO CAPTURE VALUE

Cash Flow

Growth

New Media

Traditional media

  • New channels

  • Interactive advertising

  • Technological standards

  • Transmission, distribution streaming

  • Digital content management

  • Free TV

  • Pay TV

  • Radio

  • Events

  • Brand promotion

Broadband

Internet

iTV

Telephone


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... BASED ON A COMMUNITIES MANAGEMENT MODEL VALUE

PCs

iTV

PDA’s

Thematic

channel

TV

Website

Fridges

Radio

COMMUNITIES

Telephone

Cinema

ADSL(Telef. España)

Consoles

Teletext

Promotional platforms

Broadband

Platforms

Communities / Brands

Children

Young

Women

Travel

Music

Cinema

Sports

Others:

Health /

Education

News

Games


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THE STRATEGIC BUSINESS PLAN PROJECTS AN IMPROVEMENT OF ALL ASSETS

Companies’ EBITDA(a) (2000P - 2004E)

€ million

CAGR

2000E - 2004E

Investment

Stake

2000

Free TV

16%-21%

200

47,4%

Antena 3

318

Telefe

Breakeven in 2001

100%

-24

974

Azul TV

-27

100%

Breakeven in 2002

Radio

Onda Cero

138

100%

-12

Breakeven in 2001

Contents

29%-34%

15

Endemol

830

100%

Pay TV & related companies

Breakeven in 2003

Via Digital

-287

49%

409

13%-18%

Media Park

30

25%

63

TSA

21%-26%

8

19

100%

Hispasat

27

72

24%

11%-16%

140

Aggregated of the other

(a) Represents 100% of companies’ EBITDA

The EBITDA of Telefonica Media is not the sum of the EBITDAs of the companies above, since some of them do not

consolidate through global consolidation.


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“Per se” value ASSETS

Independent assets operator

CAPTURE SYNERGIES WITH TELEFONICA

AND TELEFONICA MEDIA (I)

Synergies with global operators

Main player in a global market

Synergies with Telefonica

Convergence among divisions

Synergies with Telefonica Media

Media assets integrator

EXAMPLES


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CAPTURE SYNERGIES WITH TELEFONICA ASSETS

AND TELEFONICA MEDIA (II)

Synergies with global operators

Main player in a global market

Synergies with Telefonica

Convergence among divisions

Synergies with Telefonica Media

Media assets integrator

“Per se” value

Independent assets operator

EXAMPLES


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MEDIA IN TELEFONICA : TELECOM, MEDIA & INTERNET ... CONVERGENCE

Telecom

Internet

CONTENTS

Media

CONVERGENCE

Integrated management of these industries

maximises value for clients


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Main player in a global market CONVERGENCE

Synergies with Telefonica

Convergence among divisions

Synergies with Telefonica Media

Media assets integrator

“Per se” value

Independent assets operator

CAPTURE SYNERGIES WITH TELEFONICA

AND TELEFONICA MEDIA (III)

Synergies with global operators

EXAMPLES


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Synergies with global operators CONVERGENCE

Main player in a global market

Synergies with Telefonica

Convergence among divisions

Synergies with Telefonica Media

Media assets integrator

“Per se” value

Independent assets operator

CAPTURE SYNERGIES WITH TELEFONICA

AND TELEFONICA MEDIA (IV)


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TELEFONICA MEDIA’S STRATEGY AND CHALLENGES IN THE SHORT AND MEDIUM TERM

Value creation in the short term

Strategy

  • Focus on operations’ management and consolidate “turnaround” of Telefe, Azul and Onda Cero.

  • Promote synergies in advertising sales, based on the know how of Antena 3.

  • Active management of Via Digital, reinforcing customer growth and migration to interactivity.

  • Create solid brands, supported by successful and integrated management of the assets.

  • Develop an educational project.

  • Synergies with other divisions of Telefonica.

  • Enhance customer relationship management.

  • Brand and content consolidation focused on the development of new businesses.

  • Asset acquisition in those markets where Telefonica has presence (Perú, Brasil, Chile) and creation of alliances in those markets with high entry barriers (Brasil, Mexico).

  • Development of new business models based on the potential growth of broadband.

  • Alliances with key players.

  • Ongoing reassesment of our investment in order to maximise value and divest from non-core assets.


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To create consumer habits through multiplatform contents and leading brands for Telefonica’s clients in the Spanish and Portuguese speaking world.


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