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Portuguese Media

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15/04/2016

Media Market
Since the crisis of 2007, AD spending has been
dropping constantly, reflecting the Portuguese
economy. From 2010 to 2015 we saw a CAGR of
-11.18%.
AD Market

We expect a continuation of this trend as TV gains a

small market and with the Internet and Digital Market
growing the most, with a representation of 18% by
2020, more 5,5 p.p. than 2015.

Duopoly in TV segment
On March 7, 1957 public broadcaster Rdio e
Televiso de Portugal (RTP) began broadcasting
RTP1, the first television channel in the country. A
second RTP channel, RTP2, started broadcasting on
December 25, 1968. Private commercial channels
were launched in the early 1990s, with SIC on
October 6, 1992 and TVI on February 20, 1993.
Public television is still the most watched in 2016, but
Pay-Tv market is still growing as penetration in
Portugal has been growing following the push from
Telecom operators. Differently from other countries
the main channels with bigger audience from PAY-TV
are the news channels.
Pay-Tv household Penetration

INE and Eurostat

As the economy recovers, we expect an annual GDP

growth of 1.5% until 2020 and 2% from that year.
However the percentage of GDP in AD spending is
expected to grow slightly until 0.38% by 2020,
reflecting the historical average: CAGR of 1.36%.
AD Market forecast
INE

In the TV AD segment all that matter is audience

share, mainly prime time, from 20h00 to 00h00. TVI
has the lead, as from January 2016, with 22.4%
followed by SIC with 17.5%. They belong to MEDIA
CAPITAL and IMPRESA, respectively, which jointly
controls ~55% of the total revenues.
TV AD Revenues

FFC Analysis

While television is still the preferred channel of

spending, the Internet and Digital market are growing
rapidly which is in line with the worldwide trend. On
the other hand we have press and radio losing their
preference amongst the Portuguese community.
AD Market Structure
Companies Data and FFC Analysis

FEP
INE

Finance
Club

This duopoly is expected to continue as MEDIA

CAPITAL with TVI and TVI24 will continue to be
market leader followed by IMPRESA slightly behind
with SIC and SIC Notcias as the main channels.

Corporate Finance Department | www.fepfinanceclub.org

15/04/2016

Press - from paper to digital

Press has also reached its peak in 2007, and has
been dropping ever since.. In this segment we can
also differentiate two main players: IMPRESA and
COFINA, with Correio da Manh and Pblico as the
main newspapers, respectively.
Press AD Revenues

INE, Company Data and FFC Analysis

Summary
In the Portuguese advertisement market we can find
three big players: MEDIA CAPITAL, COFINA and
IMPRESA.
Companies Data

Investment Comparison

Not only are the revenues dropping but also the

number of newspapers and magazines in circulation.
By the end of 2015 only 109 of the 171 (2011)
magazines and newspapers were still alive.
Total number in Circulation (Millions)

Yahoo Finance

MEDIA CAPITAL and COFINA leaders in TV and

Press segment, respectively, followed by IMPRESA in
both segments

Main Risks

ACPT and FFC Analysis

Companies started to react to this macro-economic

trend, as newspaper and magazines can now be
found online and on mobile.

Radio is still worth mentioning

Radio has a small piece of the pie; however MEDIA
CAPITAL with Rdio Comercial, amongst others, has
gained a huge market share in the past three years.
Media Capital Market Share

Evolution of Advertising Market: on-going process

fragmentation and diversification
Development of Media Sector: Technology is
disrupting the media industry by broadening the
competitive landscape and changing habits of media
consumption
Content Production: high investment risk
production of proprietary high-quality content.

in

Valuation Methodology
A discounted cash flow analysis was used to estimate
the intrinsic value of companies share price due to the
predictability of cash flows in relation to growth and
profitability. The model is forecasted for five years
which is heavily dependent on macro-economic
factors. We also perform a valuation cross-check for
the implied EV/EBITDA and PER for each company.

1Y Price Targets

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15/04/2016

Note

FFC Analysis

The following content is original and created by the

FEP Finance Club, which is run by students from
School of Economics and Management of Porto. The
report may contain inaccurate or outdated information
and should not be used as an exclusive mean for
investment decisions.

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15/04/2016
Headquarters: Pao de Arcos, Oeiras
Potential: -9.28%

Current Price: 0.35

Target Price: 0.32

Business Description
Share Price

Impresa Sociedade Gestora de Participaes Sociais SA (IMPRESA SGPS SA) is a Portugal-based holding
company involved in the media industry, with interests covering television broadcasting, newspapers and
magazines publishing, among others.
The Company divides its business into three main segments: Television segment, which includes video production
and operation of private television channels in Portugal, such as SIC, SIC Noticias, SIC Radical, SIC Internacional
and SIC;
segment, which is active in the publishing of a range of newspapers and magazines, including
YahooPublishing
Finance
such titles as Expresso, Viso, Exame and Caras, and Others segment, which comprises activities in the real
estate sector, multimedia solutions and geo-location technological solutions.
As of December 31, 2011, the Companys subsidiaries included Impresa Publishing SA, SIC - Sociedade
Independente de Comunicao SA, Impresa Digital Produo Multimedia Lda and Impresa Servios Sociedade
Unipessoal Lda, among others.

Investing.com

Multiples

Source: Company Data and FFC

Analysis

The company increased its subscription revenues by 11.7% YoY, but its publishing side dropped 2.7% leading to a
drop in advertising by 2.2% YoY. The continuation of the plus the restructuring effect of its operational business
leads to a small decrease in the next year reaching an EBITDA Mg of 9.65% 1YF.
Its deleveraging
FFC Analysis process is still in place since 2008, however due to expected drop on EBITDA, its Net Debt /
EBITDA is expected to maintain in the upcoming years.
The company has a target to tighten its operational costs, keep the deleveraging effect and start turning the
company
ratios
around.
Sensitivity
Analysis
With the recovery of the Portuguese economy ROE is expected to start growing but is still too low when taking into
consideration the risk that the company is facing.

FFC Analysis

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15/04/2016

P&L
EBITDA

Source: Team Estimates

Revenue structure 2016F

Source: Team Estimates

BS
Net Debt

Source: Team Estimates

Assumptions

FCFF

Source: Team Estimates

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15/04/2016
Headquarters: Porto
Potential: -30.42%

Current Price: 0.36

Target Price: 0.25

Business Description
Share Price

Cofina SGPS SA (Cofina) is a Portugal-based holding company primarily involved in the publishing industry.
The Company develops activities in the area of media and content through traditional press and online publications
in various segments, including general information, sport, business and automobile, among others.
The Company is engaged in the publishing of a number of newspaper and magazine titles, such as Correio da
Yahoo Finance
Manh, Jornal de Negcios, Destak, Record, Metro, Sbado, Maxima, Vogue and Automotor, among others.
As of December 31, 2011, the Company had a number of subsidiaries, including Cofina Media SGPS, Metronews Publicaes SA, Mediafin SGPS SA, Presselivre - Imprensa Livre SA, Grafedisport - Impresso e Artes Grficas
SA and Web Works - Desenvolvimento de Aplicaes, among others.

Multiples
Investing.com

Company Data and FFC Analysis

COFINAs revenues has been severed punished by the macro economic landscape that Portugal is passing
through, dropping 2.92% CAGR since 2013 until 2015. Looking forward things are not expected to get better, even
takingFFC
intoAnalysis
consideration the efforts to go digital.
Analysis
BySensitivity
transforming
its business, COFINA will have better gross margins but the huge drop in revenues will lead to a
decrease in EBITDA Mg.

The companys financial situation will be put at pressure, with Interest coverage ratio tending to values near one.
ROE and ROA also tend to decrease nto being enough to cover its risks.
FFC Analysis

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15/04/2016

P&L
EBITDA

Source: Team Estimates

BS

Net Debt

Source: Team Estimates

Assumptions

FCFF

Source: Team Estimates

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15/04/2016
Headquarters: Queluz
Oeiras
Potential: 45.59 %

de

Baixo,
Current Price: 2.50
Target Price: 3.64

Business Description
Share Price

Grupo Media Capital SGPS SA (Media Capital) is a Portugal-based company active in the media industry.
The Company operates essentially in Portugal, Spain and Latin America. The structure adopted by Media Capital
comprises six segments: Television, Audiovisual Production, Music and Entertainment, Cinema and Video, Radio,
and Internet.
Through
itsFinance
subsidiaries, Media Capital is engaged in the television (TV) broadcasting; production of TV programs,
Yahoo
movies and audiovisual works; production and broadcasting of radio programs; music publishing; events production
and provision of agency services to artists; distribution of movie rights; Internet advertising, and creation of
Websites.
As of December 31, 2011, the Company wholly owned Media Global SGPS SA, which was in possession of various
subsidiaries, such as TVI Televiso Independente SA, MCP Media Capital Produes SA, MCR II Media Capital
Radios SA and MCME Media Capital Msica e Entretenimento, among others.

Investing.com

Multiples

Source:

Company

Data

and

FFC

Analysis

Media Capitals EBITDA improved 6% YoY in 4Q. For the full year, there was a slight decrease of 2%, to 40.1
million, with a corresponding margin of 23%. Consolidated advertising revenues went up by 5% YoY in the quarter
FFC
Analysis
and 2%
for
2015 as a whole.
The
TV segment
posted an EBITDA of 13.0 million in Q4. For the full year, the EBITDA was 31.6 million and the
Sensitivity
Analysis
margin 22.3%. The Audiovisual Production segment registered an annual EBITDA of 1.1 million (vs. 1.0 million
in 2014) and a 4Q EBITDA of 1.3.
Although it has a 45.59% upside potential, there is a high risk associated with this stock: the lack of liquidity. As the
Free flow is only 0.26% the liquidity risk is not taken into consideration in our analysis.
FFC Analysis

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15/04/2016

EBITDA

Source: Team Estimates

P&L
BS

Net Debt

Source: Team Estimates

Assumptions

FCFF
Source: Team Estimates

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The Team
Director
Pedro Reis

pedro.reis@fepfinanceclub.org

Media

Analysts
Catarina Lindo
Cludia Castro
Cludia Fernandes

catarina.lindo@fepfinanceclub.org
claudia.castro@fepfinanceclub.org
catarina.fernandes@fepfinanceclub.

Oil & Gas

Telecom
Renewables

org
Eduardo Magalhes
Gil Flores
Joo Santos
Joo Martins
Pedro Silva
Tiago Paiva

eduardopmagalhaes@fepfinanceclu
b.org
gil.flores@fepfinanceclub.org
joao.santos@fepfinanceclub.org
joao.martins@fepfinanceclub.org
pedro.silva@fepfinanceclub.org
tiago.paiva@fepfinanceclub.org

Telecom
Oil & Gas
Telecom
Oil & Gas
Oil & Gas
Telecom

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