Mediaset Espana Comunicacion SA

MAD:TL5

Earnings Call Transcript 2018-Q1

[Luca Antonio Giammatteo, Former Head of Investor Relations Division]

Good morning, everybody, and welcome to the First Quarter 2018 Results Representation of Mediaset España Comunicación. I'm Luca Giammatteo, Head of Investor Relations. Let me introduce you to today's speakers. The presentation will be hosted by Massimo Musolino, General Operational Manager. The presentation will be followed up by the Q&A session with Massimo Musolino; Quico Alum, Publiespaña General Manager; and Javier Uría, the Group's CFO. Massimo will start the presentation. Massimo?

[Massimo Musolino]

Hi, good morning. Welcome to our result presentation. We released our first quarter 2018 results this morning before the market opened. I would like to go over the key points now and then move on to Q&A session.This quarter we have reconfirmed our leadership in audience and advertising. Infoadex figures on the evolution of the Spanish advertising market are still pending. Our internal estimates give Mediaset España a share of the TV advertising market in the range 43.1% and 43.5%. This number if confirmed should allow our group to revalidate like last year the leadership in the market at the end of the first quarter.Let's look at Page 2. In terms of financial, this quarter was clearly marked by the impact of the Easter week. Our total net revenues were almost EUR 230 million with an adjusted EBITDA margin in excess of EUR 67 million. This is a remarkable result achieved in an environment affected by the time difference of the holiday period in 2018 compared to the previous year. We reached a margin over total net revenues of 29.3%, a number which is close to 30% and is in line with the levels achieved in the recent years.Net profit for the quarter was EUR 53.2 million. EPS is EUR 0.16, a number which is similar to the one attained last year. The net cash position at the end of the period was in excess of EUR 200 million, a number which covers the next dividend payment in full. Yesterday the shareholders meeting approved the proposed dividend payment for a total amount of EUR 197.5 million which is equal to a 100% payout of the 2017 net profit. The dividend will be paid on May 30.On Page 3 we have the TV consumption figures for the first few months of 2018. Every now and then we read that TV viewership is collapsing, that nobody spends time watching TV anymore, but the number you can see are telling us actually the opposite. In the first few months of 2018 we are seeing an increase in the number of viewers and in the consumption of TV. It's true that the comp for January and February is not homogeneous due to a different calculation system but for March and April are full comparable and are showing an increase in TV consumption.Furthermore, viewership is growing among young viewers, proving that if you broadcast the correct kind of content there is no digital threat or change in [ viewers ]. Regarding consumption we're seeing that the only real threat is the weather. Our rainy days consumption is higher than on sunny ones.Moving on Page 4 you can see that 2018 audience share results to-date. As a group this year we have a very good audience share performance, maintaining as a group very stable results in 24 hours audience both in individual target and commercial target. We are getting very good news from our primetime programs which are overtaking 2017 results.Mediaset España leads with 28.7%, more than 2 points ahead our second player. By channel Telecinco wins again, recording an audience of 13.5% which is 1 point lead over the second channel. As you can see on the right-hand side of the page, our trend is really positive. We started slowly in January and we are accelerating while the others stay flat. On top of that Telecinco is increasing its share in primetime compared to last year's numbers.As you know, this year, the second quarter is very important for us in order to set the trend for the year both in terms of revenues and cost. The reason lies in the broadcasting of the football World Cup in Russia which will last 1 month starting in mid-June.On Page 5 we recompile some information about the event. For the first time in the Spanish history a commercial free TV group is broadcasting the entire tournament. Mediaset España will broadcast 64 matches of the competition. [indiscernible] Telecinco, Cuatro and Be Mad will be hosting the broadcasting on TV while our OTT platform MiTele will distribute the matches online. We calculate that we will broadcast some 140 hours of programs on television between matches and other related programs. We will have many events produced around the World Cup including the launching of a brand new song produced by a Spanish DJ which will accompany the Spanish national team during the event.Apart from the World Cup this year we will be launching a new venture, which as you can see on Page 6, hybrid broadband television, HbbTV, is the new broadcasting standard adopted by the European community, the so-called addressable TV which is going to be tested in Spain in the very near future.We recently announced an alliance with the state TV broadcaster TVE and Atresmedia in order to develop and launch a platform with a unique standard of transmission to distribute the partner's contents. Partnership is open to all the Spanish broadcaster with the aim of sharing the investment to develop the platform as well as creating the referential platform for Spanish viewers. This alliance is based on 2 phases, the first one is the launching of the HbbTV platform by the end of June 2018. The following step will be to launch an OTT platform which we expect to be ready by the end of the year. This is the first broad alliance amongst Spanish broadcasters and can be considered as a milestone on the road over the adoption of new technologies under a common standard. This will help the distribution of our content on any kind of device and specifically in the digital environment in order to provide the best viewing experience to the Spanish population.Turning to Page 7 we have the movie activity. This year our movie production company has prepared 4 releases one of which is El cuaderno de Sara released at the beginning of February. This movie is topping the Spanish ranking and has reached the breakeven point. This is the 12th movie in a row that we are optimizing the legal obligation to produce movies. The business model set for Telecinco Cinema is giving good results. As you can see on the right-hand side of the chart 7 out of 10 of the most successful Spanish movie in history were produced by our group. The most recent one to enter in the list is Perfectos desconocidos, the movie released back in December 2017. The other 3 movies to be launched this year areYucatán, a comedy directed by Daniel Monzón, the director of [indiscernible] El Niño and Cell 2011 (sic) [ Cell 211 ] also produced by Telecinco Cinema, Ola de crímenes is a black comedy with a very good cast, and finally Superlópez, a famous Spanish comic.At the same time we will launch [ Sans ] the documentary of one of the most successful leading Spanish singer which will be launched tonight in Málaga.On Page 8, we highlight our main Internet figures. ComScore has only released to-date the audited figures for the month of January and February. We are still pending March numbers. As you can see, we repeat our lead in number of video viewed as well as in terms of time spent by any viewer on our platform. We have a strong engagement rate among our viewers which is a premium factor compared to other players. Not only do we have a secure platform with content which are fulfilling all the legal requirements where the advertisers can safely place the spots but we also give advertisers a platform with high consumption rate both in terms of number of people and time spent by each viewer.Moving now to Page 9 we have the evolution of our volumes and price during the first quarter of the year. As mentioned at the beginning of this presentation, the evolution of the advertising market was affected by the Easter week. I would like to remind you that last year Easter was in April. At the top of this page you have the quarterly evolution of our market share compared with the previous year. As per internal estimations, in the first quarter Mediaset España should have confirmed their leadership with a figure that should be between 43.1% and 43.5%. The delay that was accumulated in March due to the Easter week would be recuperated in the second quarter.Turning to Page 10, let's have a look at our profitability which is as usual our prime objective. As you know, being the most profitable media group in Spain, one of the most in Europe is always the main target for us. Our first quarter 2018 EBITDA margin was EUR 67.2 million, a 29.3% margin over total net revenues. Net profit, on the right-hand side of the chart, stood at EUR 53.2 million. Earning per share stood at EUR 0.16 in the first quarter. All figures were affected by the impact of Easter week in the period but through the strengths of our business model these figures are in line with the most recent numbers released by our group. We can estimate that in homogenous condition we could achieve a similar margin to last year.Finally our cash conversion capability. As you can see on the last page, 11, of the presentation we convert our operational margin into cash at the rate of 100%. This is what I like to call the perfect free cash flow an amount equal to the operational margin. On the right-hand side of the chart we have the shareholders' remuneration over the last 2 years. Yesterday, as I said before, the shareholders' meeting approved the distribution of the dividend on the 2017 net profit. On May 1st we will pay EUR 197.5 million, a EUR 0.16 EPS to our shareholders. Including this payment in the last 3 years we will have a total of EUR 752 million between dividends and buybacks. As is customary for our company, all the cash we generate which was not needed for the ordinary management of the business was given back to the shareholders.And now for some final remarks, quickly summarizing the main points of the period. We can say that the first quarter of 2018 despite the impact from Easter week which we expect [indiscernible] has been positive. At the end of March our group was leader in audience share in the Italian prime time and commercial target. Telecinco is the first channel in the same [indiscernible]. TV advertising revenues in January-February have grown, driven by increasing prices, March has been affected by Easter. So we will have to wait until the end of April to have the clear picture of the situation.According to our estimates which we expect will be validated by Infoadex we have confirmed our first position in the advertising market over our main competitor. We were leaders in audience in advertising. We achieved this spending more or less the same as last year. Our costs are steady and in line with our budget. The Internet and digital area have also shown excellent results with advertising revenues growing more than 20%. Once again, the area of cinema has had a very positive result confirming and reinforcing our position as content producer not only in internet and TV.The margins are high and probably some of the best in Europe at the end of the first quarter. Free cash flow conversion from EBITDA is higher than 100%. Our net results and EPS is one of the highest in the recent years. All that said, we can confirm that we are out of the starting blocks [indiscernible] and we have made a great start to achieving the annual target we said at the beginning of the year. At the end of positive first quarter we are leader in audience, advertising and profitability. And we are now ready to take your questions.

[Luca Antonio Giammatteo, Former Head of Investor Relations Division]

Thank you very much, Massimo. This is the end of the presentation. Let's open, turn to the Q&A session.

[Operator]

[Operator Instructions] The first question comes from Annick Maas from Liberum.

[Annick Tonie Maas, Former Analyst]

My first question is on the advertising market. Could you please give us an indication of what you are seeing in April as well as May potentially? My second one is on pricing over a longer term. So where are prices now versus previous session levels, please? And then the last one is on the TV consumption chart that you are showing. So what -- how do you explain this big consumption jump that you are showing on Slide number 3, please?

[Unknown Executive]

As we anticipated during the last year results conference call, January and February, January and February had a slightly positive evolution, March affected by the Easter week was somewhat more than expected mainly due to the fact that certain [indiscernible] campaigns to April [indiscernible]. The result of these 2 trends should give a decline in the range of 4.5% in the first quarter 2018. This decline of this quarter is fully attributable to the month of March. About April and May, on the other side April is showing a positive trend. We will still have to [indiscernible] the final negotiation but our view over the month is really positive. And as we also said in the last conference call, this year, this year 2018 will be marked by the second Q when we will be broadcasting the football World Cup in Russia. Our estimation, our perception is that we'll have a positive second quarter as well as positive evolution in the first half of this year and we recovering the negative impact of the March more specifically we think more than compensate for the negative impact in March in the second quarter. I cannot give any figure about a single month, April and May, but we think that the second quarter will be positive and we'll recover from March. And the first half of the year we will be also positive.

[Massimo Musolino]

About consumptions, I think there are 3 important factor that [indiscernible] with respect to last year. It's clear, as I said in my presentation, the January-February are not homogenous with last year because, as you may know, from March last year we are accounting for the gap in the consumption of TV. So let me concentrate to March and April because these 2 months are homogenous. First of all, we have always said this, weather is very important for the TV consumption and all the months of March and the first 2 weeks of April the weather in Spain has been rainy. So, sure, this is an impact -- this factor has had a positive impact on the TV consumption. Secondly, there is another factor we consider important. So the quality of programming grid can affect the TV consumption. And honestly the quality and the quantity of good programs in free-to-air TV not only broadcasted by Mediaset but also by our competitors. Just to give you an idea, in March, in April there are on air The Voice Kid, Survival, 2 matches of the Spanish national team, 3 or 4 matches of Champion League. So the quality of the programming grid of the free-to-air in Spain has been really high, and this is of course has affected the consumption during the period.

[Unknown Executive]

[Indiscernible] declined what we have seen in the first quarter will be fully recovered in April and in May because they -- I mean the reason is very clear, is the Easter impact and also the good evaluation of the month of March. Remember that March was very strong and prices were up strongly in last year. [Indiscernible] for further increments in prices, we can say, yes, I mean, [indiscernible] our goal for this year is increase by a mid-single digit. Of course the World Cup is going to help us in this issue. But we think that we can recover -- we have to recover prices because there is still room for that.

[Operator]

The next question comes from Laurie Davison from Deutsche Bank.

[Laurence Davison, Research Analyst]

This is Laurie here from Deutsche. Just to go back to this viewing panel issue, the data from Atres this morning stripping out the viewing panel change suggest that linear viewing is 240 minutes for the first quarter even including the bad weather in March you were just highlighting, that compares to 247 minutes of linear viewing last year. So that feels as though the linear viewing declines are continuing. Is that what you are trying to state with your comments around the programming schedule and the weather inflating March, April that actually linear viewing is still declining? That's my first question.

[Unknown Executive]

Laurie, actually it's on the contrary. Linear viewership is growing. Linear viewership in April, for example, is 242 minutes compared to 230 minutes last year. So it's about 12 minutes more. Non-linear viewership is 2 minutes -- in April is 2 minutes ahead. And for March as well you have the figures there, its 256 against 238 in spite of Easter in the month of March which should have declined linear viewership, but within the contrary we have more people watching TV and [indiscernible] contrary viewership is growing apart from the gaps so that much more was focusing on March and April because there there's no -- there is a homogenous comparison so gaps were already included last year and there is 18 minutes increase in March and 14 minutes increasing in April. So we were trying to dismiss all this negativity on the fact that people are not watching television anymore, actually in the contrary, in Spain, when we broadcast good content, as Massimo mentioned, on the grid, people stay on linear television.

[Laurence Davison, Research Analyst]

But the data from Atres this morning shows over the first 4 months, because you were flagging the bad weather benefited viewing in March and April. Over the first 4 months viewing is still down for linear on a like-for-like basis.

[Unknown Executive]

I mean, I have the chart of Atresmedia in front of me. I think it's just one -- they're showing one minute less. We should see what they are really including in the chart. But, I mean, it's -- the numbers we are seeing, I mean, are the ones, official numbers, we are not -- those are numbers coming from the machine from [Indiscernible], so.

[Laurence Davison, Research Analyst]

Got you. Okay, okay, the --

[Unknown Executive]

The other question?

[Laurence Davison, Research Analyst]

Yes, the second question was just over the comments around the second quarter outlook. You were saying that you still think that the first half can be up on the basis of the second quarter, was that a comment for the market or was that a comment for yourselves? And do you still agree or do you agree with the Atres view that the market can be up 2% to 3% for the full year?

[Unknown Executive]

About the second quarter is about our expectation from us and from the market, is -- I mean it's logical that in the second quarter we have the [indiscernible] Cup and then we are going to grow more than the market in our case in Mediaset. About the full year, we don't like to give any number about this year because it's really difficult even quarter-by-quarter. But we think that the -- we think -- we expect and we plan that the market is going to grow [indiscernible] 2018 and mainly for the second quarter and for that we are confident with the market. I don't know if it's going to be 2%, 3%, 4%, I don't know, I don't know that because I mean it's just a really difficult assumption. But I feel in the second quarter we think that the market is going to grow and of course we are going to grow more than the market because we have the [Indiscernible] Cup. And even we can say that from July because [Indiscernible] half of June and the first half of July, then for us it's a really upgrade with that. I mean one the World Cup maybe means not 1 point of advertising share, a little less, 0.7, 0.8. Of course it depends on the Spanish team, what it's going to do. But we are confident this is one quarter and April is performance really well, I don't have exactly the figure because I don't know what is doing our main competitors and the other competitors, but for us it's been a really good month, April.

[Laurence Davison, Research Analyst]

Okay. So can you just give us the -- well, what do you think the market was in the first 4 months including April and -- sorry, and were you saying you think the market will be positive for the first half as well as yourselves being ahead of the market? Just to understand fully.

[Unknown Executive]

Okay, I told you that we cannot release any figures about April. If you know the first 3 months and I give you the 4 months maybe you are going to reach April. And if you don't mind I prefer not to repeat [indiscernible] that information because we're in the middle of a negotiation from April and May and some campaigns are really connected with May and for that we have to be prudent in that aspect, no, because we are just in the middle of negotiations and we have to worry. I mean because this information is really sensitive, no -- sensible, sorry, for the market. But I am positive, I am positive for the second quarter, that is what I told you. But I do not like -- I don't want to give any information about just a single, on a specific month.

[Laurence Davison, Research Analyst]

So sorry just to be absolutely clear here, you do think the first half can be positive for the market or that is a comment only related to Mediaset España?

[Unknown Executive]

First half we think, we expect that it's going to be positive for the market. And of course we have the [indiscernible] then for us is going to be more positive than from the market [indiscernible].

[Laurence Davison, Research Analyst]

Understood.

[Operator]

The next question comes from Ivón Leal.

[Ivón Leal, Research Analyst]

Maybe just couple of questions. Quico, coming back to what you said on prices, just to be very precise, I think you are basically blaming the decrease in prices was led by March so how prices performed in the month of January and February?

[Quico Alum, General Manager of Publiespaña]

I mean, in the -- if we exclude the impact of the Easter week and also we try, that it's not easy to eliminate the impact of the March as a whole month because largely our market was really strong. [Indiscernible] impact, the price has grown around 1%, 2% in that period that we can say that. Of course in April we don't have Easter week and all the other targets are back to the TV, mainly beverages, that is a really important sector for us and even automotive and telecom. Then for that April is going to a really good month for us. But in the first month, in the first quarter if we eliminate all this negative impact we can say that the prices has risen by 1%, 2%.

[Ivón Leal, Research Analyst]

In order to strip off what are the effects on pricing because -- maybe I was too optimistic, I was expecting prices maybe on the consumption environment in Spain given the consumption maybe a bit more pricing power. Is there any mix effect impacting positively or negative on the prices? And the second thing is advertisers which are not ready to get more price increases or there is maybe a bit more competition between you and Atresmedia in order to get maybe the most important campaigns?

[Unknown Executive]

The competition between us and Atres is really hard, I mean it's really -- I mean, it's a really big competition between Atres and Mediaset, and it's like that. I mean, the market is market, and for that we are trying I mean to offer to the advertisers the best we can. I mean in one client, other clients [indiscernible] competition is really, really strong. About the price, I mean we think that the -- today the Spanish TV, the price of the Spanish free TV is still really cheap if we compare with digital or we compare with another countries or -- and if we compare with 6 or 5 years ago, then we think that we have still room for further price increase, we think that. I mean, of course the client don't want to increase their prices but the TV is really, really import in this moment in terms of coverage and the speed of the coverage. Then for that I think there is still room. Of course we need, like in April we need really more big market because when the market is down it's really difficult to increase prices but when the market is up by 2%, 3%, 4% then it's really -- I mean is more [indiscernible] to increase our prices, that is that. I mean, and the consumption is better for the TV and is better for prices because it increases the coverage of the campaigns.

[Ivón Leal, Research Analyst]

Okay, maybe the final one is is TV more impacted by the Easter than all the media? And I say that because on Atresmedia presentation on the estimate is the overall market is falling by 3.0%, so it does look like all the media like Internet and radio are not at much heat by these 2 impact, is that usual or?

[Unknown Executive]

Sorry, can you repeat the question?

[Luca Antonio Giammatteo, Former Head of Investor Relations Division]

Can you repeat the question, Ivón, please.

[Ivón Leal, Research Analyst]

Yes, the question is when I look at the market TV in the first quarter has made 4.7% down versus conventional advertising minus 3.0%, okay, so it looks like that gap is widening. So I don't know whether TV is more impacted than all the media by Easter or not?

[Unknown Executive]

Yes. In this case the [indiscernible] is few. The Easter week affect more to the TV campaigns than for example to digital campaigns, that is completely true. The Easter week is really, is not all the year the same but it depends on the middle of the month versus the end of the month, it's in March or it's in April, it's changed the impact of the Easter week, but it's true from TV the -- for TV market the Easter week is very, very important. And for example the digital market no, not so important. I don't know radio and newspaper. I think for newspapers it's also really important. And for radio, I don't know, I don't know obviously, I have never saw radio. But for TV it's really important and not for digital. We have digital, we are selling digital and we can say that we are increasing our revenues in digital area by more than 20%. And the Easter week has effect really, really low in this case.

[Operator]

The next question comes from Julien Roch from Barclays.

[Julien Roch, MD & European Media Analyst]

I just wanted to know whether you have confirmed your full year course guidance. So that's my first question. And then coming back on you HbbTV initiative which should allow you to do targeted advertising, I was wondering where you get the data from to be able to segment the audience in relation with GDPR because it seems to me that you need third party data to be able to do targeted advertising and therefore GDPR is quite important.

[Unknown Executive]

Yes, your first point, everything has been confirmed, we don't have any reason to believe that this number is going to be changed, so you have seen the numbers at the end of the first quarter are in line, very much in line with the same numbers of last year. Therefore we stick to the guidance we -- that we gave last month or 2 months ago and therefore nothing changes.

[Unknown Executive]

Okay, all the data, we are already working seriously in this area to try to gather all the data but we have to be cautious with that because you know the new law is coming at the end of May and then we have a knowledge store but we are working really seriously in that and also have to keep an eye on the new law. It is also important that the collection of the data is directly related to the penetration of this smart TVs and today it's really small in Spain. Then, yes, 3 million TVs, we have 5 million, not more than that. We think that there is going to be a real increment in the penetration of the smart TV with their World Cup. Then at the end of the World Cup we will have to see how is the TV, the [indiscernible] of the TV in the house, in the homes in Spain. But we are not collecting the data. We have create or launch a new team with new guys especially working that, but for the moment we don't have any cluster in this moment. We have to wait for that but -- because the impact [indiscernible] maybe the first impact of that we are going to see that in -- at the beginning of next year, 2019.

[Julien Roch, MD & European Media Analyst]

But the -- you're not going to get a lot of information from smart TV because people go into a shop or buy a smart TV online and then just put it on the wall and connect it to the Internet, so that doesn't give you any information. So if you look at the couple of people that are advanced in targeted advertising like Comcast and Sky, they are buying most of the data they are using for targeted advertising from third party like Experian and people like that. So your data team that you just created, what status are they with conversation with people like Experian or Kantar, basically people providing consumer information in Spain. What do you think could be the impact of GDPR? Will you be able to get enough data from consumers that you can do properly targeted advertising on television?

[Unknown Executive]

Yes, I think so. We have to wait for that. As you have said, we are taking about not the TV market [indiscernible] digital market not TV market [indiscernible] will be able to collect information [indiscernible] with the law. We have to wait for the new law. And we will [ examinate ] really carefully what the new law is saying because we have to change some things and the impact of the law is going to be clear in the way of collecting data and for that I mean -- I think we are going to be able to go collect the data [indiscernible], yes.

[Operator]

The next question comes from Fernando Cordero from Banco Santander.

[Fernando Cordero Barreira, Equity Analyst]

Hello, just one question on my side. Talking about again on the TV market performers during the first quarter, particularly on the segment performance, I am again looking to the fast-consuming [indiscernible] and so on. In that sense some of them have been the worst performers in the quarter. I would just would like to know if you are foreseeing again any kind of [indiscernible] behavior or the trends that we have seen [indiscernible] the average of the market may continue in the coming quarters.

[Unknown Executive]

Okay. For the second quarter what we are seeing is that all those sectors connected with [indiscernible] is connected with the stronger sector, in this case we are talking about beverage, we are talking about automotive and we are talking about gaming. I think they are going to be an excellent sector. [indiscernible] we were talking about the consumption in TV and the increase of the [indiscernible]. Also in some sectors like beverage the [indiscernible] is a really important part for them, then we hope [indiscernible] beverage, beers and the other kind of drinks. And also automotives is really, I mean they want to [indiscernible] World Cup and they are going to start before. And also the insurance sector is going to be really [indiscernible] but they are going to invest lot of money in the second quarter. In the other half we have the general consumption sectors like food, retail and health and beauty, then we don't expect any change. I think they are going to be [indiscernible] to increase our retail to be flat, but we don't expect any real significant change in the sector.

[Fernando Cordero Barreira, Equity Analyst]

Yes, and a follow-up if I may. Yes, related with the previous question on hybrid TV standards, I just would like to know what are your views, I am thinking more in the mid-term. On the potential impact in prices, it is true that the flexibility on advertising could be [indiscernible] digital, but if you are able to identify the clusters why they are easily under the hybrid TV landscape at which extent that can be translated into higher prices of the advertising product.

[Unknown Executive]

Yes, one important thing is, if we are able, I will think so, to make some really specific clusters, really build cluster from the market, the pricing of this kind of cluster we are not talking about TV [indiscernible] we are talking about [ CPM ] and digital war, not just TV war because we're not talking about coverage we're talking about segmentation. And then the price that we are going to apply is going to be the price of digital CPM that naturally as you know they are higher than the TV prices. We don't have [indiscernible] prices in this moment, we have [indiscernible] clusters, how we are going -- how well we are going to be able to make some really good cluster for the market and then we can answer that question. But the first important thing is we are talking about digital area, not TV area, and the CPM is really more expensive or less cheap than the TV.

[Operator]

The next question comes from Chris Johnen from HSBC.

[Christopher Johnen, Analyst]

Just one actually, it would be great if you could talk a little bit about your optimal level of OpEx, I mean, obviously you have done quite a good job cutting costs over the past 6, 7 years. But over the same period I mean there has been no increase in personnel costs, or very little. I also understand that you would like to do more internal content which for your times can be cheaper, but I'm kind of wondering where do we -- where do you expect OpEx to go because I mean ultimately cost can't go down to 0, right? So where do you see, I mean have we gone most of the way of the cost savings or most of the performance going forward have to come from the top line, how do you see your OpEx?

[Unknown Executive]

Costs, yes, [indiscernible] so we had an optimal amount of costs which is going to be the same every single year. We always had a metric which is what kind of a cost line or what kind of a cost base we should have in terms of the conditions of the market. Now you will have seen in the last years with an upside market the main difference between one year and the next has been whether or not we had a sport event. And also internally within the year in some quarters as volatility of the market was there even with so much room for reducing our costs because we were getting ready for market which was more positive. So that said, what we do at the end of the year probably is one of the only metrics in which we do give a guidance at the beginning of the year because it's something that we can't control. And we do have this control because we have an internal production base and therefore we get in a position to adapt our cost base to the realities of the market. For this year you know that we had given a guidance of EUR 770 million which is pretty much what we had last year for normalized market, the positive and normal market that we were expecting and we still do expect for this year, plus the impact of the World Cup. And this is an exercise that we will continue to do next year. At the beginning of the year we will see what kind of a market we are facing, then we will [indiscernible] like we have done in the last couple of years some expenses on digital, new hires, new technology and so on. And the important thing on cost though at least is that we do not have inflation in the sense of increase that comes from the blue, comes out of the blue because the new entrants of the market or because your main competitors is doing something. We do not have that kind of a factor. And when we do give a guidance has to do with our estimate of costs. I can also tell you that [indiscernible] there is an inflation clause. So everything that our cost base moves one way or the other is based on what we estimate the advertising market is going to be. And finally something very important is not the main cost reduction it's something, and as you say that is we have done a very significant exercise in the last years, but it's not the main objective, the main objective is not reduce costs, the main objective is to optimize our business model, profits, margins and free cash flow generation. And costs to achieve these goals and of course is every year is different and the terms and the conditions of the market.

[Christopher Johnen, Analyst]

Maybe one small follow-up on the addressable part, if possible, are you working together in the European re-alliance on this one or how are you think about the tech? Are you planning to leverage some of the other guy's technology or maybe even Sky?

[Unknown Executive]

[Indiscernible] the agreement is more fully TV, Mediaset and Atresmedia. So we don't -- we cannot rule out in the future [indiscernible].

[Operator]

The next question comes from Stefano Gamberini from Equita Group.

[Stefano Gamberini, Analyst]

Just one question regarding shareholder remuneration. You said that all the cash in excess will be returned to the shareholders when you can decide about a new measure and if you still prefer a buyback rather than an extraordinary dividend?

[Unknown Executive]

You look at the cash that we have at the end of the quarter and I think that is an exercise that you can do every single year and it goes on to the same thing. We have a cash EUR 204 million something like that at the end of March which is basically 100% of the dividend that we are going to pay on May the 3rd. And, like I said, last year it was pretty much the same. So we have a clock after the dividend has been distributed. Our clock in terms of cash will go down to 0. We will start accumulating cash again. Now depending on the conditions of the market, all the free cash flow that we generate and needs, financial needs, acquisition of content and so on we will keep an eye on what's going on the rest of the year and if we see again that there is room to do a buyback we will do it. Bearing in mind the buyback, in order to do it like is the same case in the last 2 or 3 occasions that we have done it you have to do it for a certain size. Last year we found out that on top of the dividend there was room for something like EUR 100 million, we just went ahead with it. But we will keep an eye and if -- the last thing we want to do is to keep cash in the company, which is not -- which we're not going to need. So it's an exercise that we do on an ongoing basis. If that cash is of a certain magnitude then we'll think about maybe distributing, but is it's something that of course will come in due time and as the year goes by.

[Operator]

The next question comes from Nuno Matias from Haitong Bank.

[Nuno Matias, BESI Analyst]

Just going back to the advertising market and try to understand a little bit the dynamics of this first 3 months. So I understood from your words that there was some kind of a delay in advertisers in wanting to put their campaigns. Also linking that with the 1%, 2% price increase you mentioned excluding March. So just trying to understand. I know you don't want to comment much on April and May figures, but if this delay on the campaigns does give you some more bargaining power in terms of prices for this next few months, in other words basically if you think that the price wise those price increases in April and May will be higher than the 1%, 2% you mentioned.

[Unknown Executive]

Will be higher, yes, in May and June, in April, May and June the price will be higher than that, the increase in prices we have done in January and February, yes. I can say yes, yes and yes, yes.

[Operator]

Ladies and gentlemen, there are no further questions in the conference call. I now give back the floor to the company. Thank you.

[Luca Antonio Giammatteo, Former Head of Investor Relations Division]

It's now time to close the conference call. Thank you very much for attending the presentation. Should you have any further questions don't hesitate with the Investor Relation Department. Bye.

[Unknown Executive]

Bye-bye. Thank you very much.