Private Reports New Media Now 50% of Sales

BARCELONA - In its first-quarter results issued on Friday, Private Media Group announced that wireless, internet and VOD accounted for 50% of the company's total net sales for the period ending March 31.

Private reported a loss of 100,000 EU with first-quarter sales totaling $5.4 million EU ($7.8 million US). The figure represents a 15% decrease in net sales compared to last year's results for the same period, a drop Gillborg attributed to lower DVD and magazine sales.

Private Media Group CFO Johan Gillborg noted that 2007 has marked a transitional phase for the company.

"We are currently shifting our business model towards new media, which already grew exceptionally during 2006," Gillborg said. "Unfortunately, this is affecting our overall sales and operating profit in the short-term. However, in view of the extraordinary margins, and in particular the rapid expansion taking place in the European IPTV market, this will impact our business very positively during the remainder of the year and going forward."

All of the company's new media divisions showed growth, with wireless up 65%, broadcast gaining 18% and internet rising by 5%. Of these revenue sources, the internet netted the highest sales at $1.1 million EU, fueled by the development of the company's affiliate program Private Cash and the February launch of its newly revamped website

Foreign video-on-demand deals helped boost Private's broadcast income to $1 million EU, offset by a slight decline in domestic VOD sales. The company has also formed new partnerships to license its content through branded Private TV channels in Europe and Latin America.

Gillborg expects the company's reach into the wireless market to expand dramatically this year.

"Our content is currently available to approximately 657 million handsets in 33 countries via 72 operators, of which 7 operators went live during the first quarter of 2007," Gillborg said."Asia and the Americas are currently underexploited and therefore represent a significant growth potential to the company."

While restructuring its DVD and magazine distribution to adjust to the changing marketplace, Private is "aggressively" targeting IPTV as the wave of the future.

According to the report, Private has contracted with 14 cable operators to offer its content through IPTV-based services in Germany, the Netherlands, Belgium and France. The company hopes to double that number of contracts by year's end to reach a projected 16 million subscribers worldwide.

"Most of these platforms are relatively new, but as they are operated by major multinational corporations, showing high adoption rates and swift expansion, it is clear that this type of broadcasting method is the new way of television and we are currently securing our place as a main provider in this new arena," Gillborg said.