Mediaset Espana Comunicacion SA

MAD:TL5

Earnings Call Transcript 2019-Q1

[Mario Sacedo Arriola, Head of Investor Relations]

Welcome to First Quarter 2019 Results Presentation of Mediaset España Comunicación. This is Mario Sacedo, Head of Investor Relations. Let me introduce to all of you to today's speakers. The presentation will be hosted by Massimo Musolino, General Operations Manager. After presentation, we will open a Q&A session hosted by Massimo Musolino; Quico Alum, Publiespaña's General Manager; and Javier Uría, the Group Chief Financial Officer. They will answer all your questions. Massimo, you have the floor.

[Massimo Musolino]

Hi, good morning, everyone, and welcome to Mediaset España's First Quarter 2019 Results Presentation. Today, we will review the main aspects of both the operational and financial figures that we released to the market yesterday evening. I would like to quickly go over them and then move on to the Q&A session, where you will have the opportunity to delve deeper into additional explanations or information which you may consider relevant. On Slide 2, we have the highlights of first 3 months of 2019, where we experienced a similar trend to previous quarters. Market conditions remained challenging with the well-known tactical approach from the advertisers. As we will elaborate later, Mediaset España's commercial policy drove good results with a stable top line versus last year. It's our aim to increase the number of revenue sources as a way of benefiting from the opportunity coming from a growing audiovisual market. On the other hand, the active cost management allowed us to improve our adjusted EBITDA margin to over 31%. Cash generation remained strong in the period, increasing by 9.1% to EUR 79 million. The share buyback plan that was approved in January progressed as expected. And at the end of March, it had nearly reached EUR 50 million, and as of today, EUR 78 million. Finally, with the dividend distributed at the end of April and the share buyback, Mediaset España offers its shareholders one of the highest remuneration policies on the Spanish stock exchange. On Slide #3, you have a brief summary of the main aspects of the first quarter of this year. On the right-hand side of the slide, you can see how our leadership in audience was confirmed once again with 27.9% in total individuals from January to March, which is the same figure as the previous years. Total net revenues reached EUR 226.1 million while EBITDA for the quarter stood at EUR 70.3 million with an EBITDA margin over 31%. According to Infoadex, the audiovisual market increased by 2.1% in the quarter to EUR 660 million. And Mediaset España market share was 33.2%. The TV advertising market declined by 0.9% with Mediaset España reaching a market share of 42.8% in the quarter, maintaining last year's level, the figure, roughly sense, around 40 basis points more than our main competitor. Finally, earnings by share went up by 2.2% to EUR 0.17. On Slide #4, you have a breakdown of the gross advertising revenues evolution in the first quarter versus the same period last year. Mediaset España media revenues in the period amounted to EUR 219.5 million. The figure, as you can see in the chart, remained stable versus last year in the context where likely smaller revenues from TV were compensated by digital income, which posted a 57.2% growth, both organic and not organic, partly due to the acquisition of ElDesmarque. On the right-hand side of the slide, you can see how third-party advertising revenues declined by less than EUR 1 million as in the previous quarters. The expiry of the commercial agreement with the partner channels and the lower third-party revenues from Netsonic explain the reduction in income. But it also possibly affected the operating cost performance due to the lower cost of sales. Moving now to Slide 5. We have the evolution of our TV advertising revenues during the quarter. We posted a 5.2% GRP volume decline in the period due to the weaker TV consumption. In terms of prices, we saw a 4.7% growth, allowing us to offset the volume decline. As a result, TV advertising revenues in the period declined by 0.8% compared to last year's figure, reaching EUR 213 million. As Infoadex reported, total TV advertising market declined by 0.9% with the Mediaset España's TV revenues performing slightly better than the average. Talking about the increasing digital presence in our business, let me share a few words with you on Slide 6 about the acquisition of 60% share capital from ElDesmarque, which we announced at the beginning of March. The company is a regional website sports platform with a remarkable network of journalists, who produce more than 400 new stories daily. The acquisition will allow us to increase Mediaset España's digital presence, especially in the variable target of men aged between 25 and 44 years old. In March, including ElDesmarque's number in the consolidation period, Mediaset España exceeded 15.3 million unique users, up 52.6% compared to March 2018 and obtained its best historical result. Regarding the 57.2 percentage points growth in Mediaset España digital revenues, 15 percent points come from ElDesmarque and the remaining 22 points were from pure organic growth. Even though ElDesmarque figures are small, we expect to receive a positive EBITDA contribution in 2019. This acquisition is another step towards Mediaset España's transformation from a pure broadcaster to an audiovisual player. On Slide 7, we are moving now into some financial figures. Total costs for the period amounted to EUR 155.7 million, representing savings of 4.1% compared to the same period last year. The savings have been made mainly in the areas of our programming grid, both in TV rights consumption and programs and cost of sales due to the lower third-party revenues in the period. The 14.8% increase in personnel costs is explained by the full consolidation of the ElDesmarque, which wasn't included in the consolidation perimeter last year, and the line-by-line consolidation of the 2 companies, Supersport and Megamedia, which were accounted for minority stakes before. On a like-for-like basis, the personnel cost increase would have been 3.1% to EUR 26.5 million. In terms of results, the adjusted EBITDA of the period increased by 4.6% to EUR 70.3 million. This figure implied a 183 basis points margin improvement to 51.1%. Once again, Mediaset España improved the audience and the profitability with 0 cost inflation in the business. And concluding this presentation, I would like to give you an outlook for the rest of the year on Slide 8. You have here the targets we set for 2019 in the full year results presentation. In operational terms, we maintain our key target of leading both audience and advertising market share in Spain. We consider this achievement to be a requirement for moving our main target, which is as you perfectly know, to achieve the highest profitability over Spanish media players and best in the class in the European universe. After the remarkable 2018 performance in terms of operating expenses, we confirm our cost guidance has a 0 cost inflation effect on our business, which should appreciate the total amount in the range of EUR 720 million for the year. Of course, we are keeping an eye on the market in order to adapt the cost structure and our programming grid to the changing advertising market condition. Regarding non-TV activities, our first movie of the year, Lo dejo cuando quiera, is the highest-grossing movie at the box office among Spanish movies with taking of more than EUR 8 million and increasing towards the EUR 9 million. We also announced at our Annual Shareholder Meeting that Mediaset España won a contract in a joint venture with Telefónica for the next 3 years to produce Real Madrid DTT channels. Mediterráneo is progressing well. We have closed various contracts with some of the larger OTTs, such as Amazon, Netflix. And we also have sold other contents to both Paramount and NBC. And now let's move into the Q&A section.

[Mario Sacedo Arriola, Head of Investor Relations]

Thank you, Massimo. This is the end of our presentation. We are now ready to take all your questions. Operator, please, let's proceed to open the Q&A session.

[Operator]

[Operator Instructions] The first question is coming from the line of Julien Roch from Barclays.

[Julien Roch, MD & European Media Analyst]

My first question is on advertising, if you could give us some color on April, May, June trends for TV. That's number one. Number two, you confirm your cost guidance of EUR 720 million, but you said you are keeping an eye on the market in order to adapt the programming grid. So could you give us some parameters on what advertising needs to do for you to stay at EUR 720 million? And at what level of advertising decline you go to EUR 710 million or EUR 700 million? That's my second question. And then the third one is your audience over the first 4 months is down 0.3 points to 27.9% for all viewers. Atresmedia and TVE are down as well, FORTA is flat. So it's other that's winning. Can you explain what's going on in terms of audience? Is it pay channels? Yes, so explanation on audience change. Those are my 3 questions.

[Quico Alum, General Manager of Publiespaña]

Okay. About the market condition in the second quarter, it's true that we have some policy headwinds remain into the Easter week. We knew that Easter week was in April but also the impact of the general election that we didn't know in advance when we made the forecast in January and February. In May, this problem is -- I mean, we have one -- our problem with one sector that this year the automotive sector, that this sector has declined more than we expected [indiscernible] in May, what we are taking into account that we are not closed in our present campaigns for very beginning of [indiscernible]. And we'd like to advance some figures for May. But we prefer to be prudent. But what we can say about May, again we have good news from food, beauty and retail. [indiscernible] the automotive sector, that is the key for this second quarter. If the last-minute campaigns are confirmed, then we have to wait for that, for the last-minute campaigns for the last 10 days of May that are really, really important for us. We think that May is going to be [indiscernible] and automotive is going to be tailing off [indiscernible]. But we will have to advance that. We can't advance in the field, but -- because we don't have these kind of figures. We are working week-by-week. And we have to hope for the last 10 days of May. The first 20 days of May is going up. We don't have any problems with that. But automotive sector is the key for now in May and also for June. And for that, we prefer to be prudent about our target in May. And we have to [indiscernible] here in May because, as you know, in the market, we are [indiscernible] demands now [indiscernible] and now some campaigns week-by-week. And that is the one that we have to advance in figures about May. Then I cannot -- but I mean the good news here in the second quarter is food, beauty and retail is going well. And 2 sectors, mainly automotive and also the rigs, we have some problems with them. And we hope that they are going -- coming back to the market and they're going to show their promise in these kind of sectors. And this is going to mark the destination of the investment in the second quarter.

[Massimo Musolino]

In terms of cost guidance, we think that it's too early to change the cost guidance we gave you only a couple of months ago. We are, at the end of the day, at the beginning of the second quarter, which as you may know is really important in terms of revenues for us. So we have prepared as usual some programming grid for this second quarter. It's clear that our main objective is to maintain a high profitability. So every time we think there is a, let's say, some problem in our top line, which we try to balance it with some cost savings. It's also -- it's possible, depending on the results of the -- of our programming grid just for the second quarter. In the first quarter, we had very good results with our reality show. So we decided to program it 3 nights in primetime and not also to -- as it was for the cast at the beginning, this -- let's say, this issue enabled us to save some money in the primetime programs. For the rest of the year, we have a really good programming grid. And if the advertising market will be in line with our expectations, we will, let's say, confirm our cost guidance. This is -- our target is the margin. So if we see a reduction in terms of revenue, we will always try to do something in our cost basis to balance this. In term of audience, I don't understand very well your question because we are really happy with the audience share we have achieved in the first 4 months of this year. Why we are very happy? Because more or less, we are repeating the same audience share than last year with a lower cost of programming grid. The difference between our main channel, Telecinco, and main channel of our competitor is the highest over the last year. Just to give you some information, the difference between the channel Telecinco with respect to the channel Antena 3 in March was 2.2 points, in April, 2.4 points. So this is probably the highest difference between the 2 main channels in Spain in the last year. Also in terms of group, we are more or less at the same level of last year. So we don't see any problem honestly in our audience share.

[Quico Alum, General Manager of Publiespaña]

As noted in our strategy programming, our main months is going to be May and June because we think that there is the market in May and June. And our best performance, the first figures of the first 10 days of May, we're doing very well in May and in June because we think that the market is going to be May and June. After that, we have the best programming grid in these 2 months.

[Julien Roch, MD & European Media Analyst]

Okay. If I could -- apology but ask the same 3 questions again, so Quico, interpreting your answer is April is very bad. Is minus 15% about the right number? And May, it's too early to tell us, but should be around flat. So that's me asking the first question again. On cost, I understand your answer, your target is margin. Well, you said the most important is profitability. If revenue declined, you'll do something. Is your target, is that a margin as a percentage? Or is it absolute level of EBITDA? So asking the second question again. And then on the third question, I understand you're happy with the audience. It's more or less flat. It's down a bit. It's the biggest gap with Atresmedia, fine. But your audience is down a bit. Atresmedia is down a bit. TVE is down a lot. So all the historical players are down. And it's other players that are winning a lot of share in the first 4 months and I want to understand why.

[Massimo Musolino]

Sorry, I start for the last question. The only difference we see with respect to last year is there is a little increase in the audience share of the pay-TV channel due to the fact that this year, all the Champions League matches are on pay-TV. And last year, there was 1 weekly match in Atres -- in Antena 3. And so the audience share of the pay-TV channel in the platform has increased 0.5 point, from 8% to 8.5%. This is the only difference we see in terms of audience.

[Julien Roch, MD & European Media Analyst]

Okay. Very clear on that.

[Francisco Javier Uría Iglesias, Chief Financial Officer]

On point number two, Julien, it's very clear that we measure our EBITDA margin in terms of absolute value and not in terms of a percent.

[Julien Roch, MD & European Media Analyst]

So you said absolute, not percentage.

[Francisco Javier Uría Iglesias, Chief Financial Officer]

Exactly. We try to maximize the margin in terms of euros, in terms of money, not in terms of a percent, which is a tricky kind of a measure, right? So we try to maximize it in terms of euros.

[Quico Alum, General Manager of Publiespaña]

And in terms of market, we estimate that the first 4 months of the year, the market was down by almost 5%, maybe not 5% but almost 5%. That means that April was down by, I don't know, 15%, 14%, 3 factors: to the Easter week, the general elections and the underperformance of the sector autos. In May, I didn't say anything. I didn't say flat, not flat because I don't have enough information to confirm that figure. Because we are working week-by-week and we have to complete the last campaigns of the last 10 days of May. That's really important for us. In general, we have good news from food, beauty and retail and have some doubts from automotives and rigs. We have to complete these campaigns and we have to wait for that. I would like to be more precise about this number. But I have to be prudent making that because maybe you can misunderstand me. And then I prefer to be prudent about that.

[Julien Roch, MD & European Media Analyst]

No, that's very clear. That is very clear.

[Operator]

Next question is coming from the line of Chris Johnen from HSBC.

[Christopher Johnen, Analyst]

First, maybe we can talk a bit about of the consolidation impacts. So first on the advertising side, maybe can we get the impact from ElDesmarque on the advertising side in the first quarter so that we have an idea of how advertising did organically? And then I thought you consolidated or you moved about 50% and now consolidating 2 incremental studios. Maybe we can also get an organic figure or an absolute contribution figure from those so that we have an idea on how the other line did? And then third question on Mediaset. So what's the latest on the collaborative efforts with your parent? Is there anything with respect to projects or -- I mean how progress has been? And is there an update you can give us?

[Quico Alum, General Manager of Publiespaña]

Yes. ElDesmarque is a business that at the moment we're hoping we'll be able to help them to grow. In the first quarter of this year, our current growth in retail business was about 20% initial objective of the year. And now ElDesmarque will help us to consolidate and to grow and to implement that figure. We cannot provide at this moment the income from ElDesmarque. But of course, we are going to improve that 20% of increment on the year. And ElDesmarque is going to help us in the strategy's goal.

[Massimo Musolino]

The second question was about our relationship and collaboration with our parent company. So it's the same one voice, no changes. We continue to be aligned on the main issues. We share experiences and speak on different arguments, like technology, especially ad tech and OTT technology. There is no news, nothing different than in the past.

[Christopher Johnen, Analyst]

Okay. And then on the production assets, what happened there in terms of consolidation effects? So I'm talking about -- I mean I saw you increase your stakes in Megamedia and Supersport. And that's been driving the personnel costs. So maybe we can get the scope effects here.

[Massimo Musolino]

This is a part of the project that we call Mediterráneo, which is a project which joins all our participated companies under the same brand with the objective of optimizing and increasing distribution revenues in Spain and abroad. So [ Supersport ] is a company who produces all our sport events. And then they also produce programs for other programs -- for other channels. [ Supersport ], together with a company owned by Telefónica, won the contract to produce for the next 3 years the DTT channel of Real Madrid. Megamedia is a factory in which there are all the productions of our digital websites in the OTT platform. We had until the end of last year a 50% stake in this company. And from the beginning of this year, we increased to 60%. This is why now we consolidate them line-by-line. General speaking, all the Mediterráneo projects has the objective to attain some important objectives for us. First of all, it's a way of diversification of revenues, also a way to optimize our operating costs. Then it's a way also to reinforce our brand as a content generator. Through Mediterráneo this year, we have sold contents to all the OTT platforms. And very important to know that we have done this in different models. For example, we have sold fiction that we have produced for [Audio Gap] all other cases, we produce fiction for the OTT -- in exclusivity for the OTT platforms. And then there is also another case, we produce a fiction, OTT platform is the first to broadcast it in 6, 12 months after we will broadcast it. It's on free-to-air. So this is a way to try to diversify our revenues to gain market share in the audiovisual market, which is something different than in the past.

[Christopher Johnen, Analyst]

And is there -- I mean the other revenues were down 16%. Is there -- just to get an idea of how much revenue came in on top as you now consolidate those businesses, is there like an organic declining figure you can give us or an absolute revenue number?

[Francisco Javier Uría Iglesias, Chief Financial Officer]

Basically, this decline will be, like you say, 16%, in terms of a percent. But in terms of euros, it's a very small amount, it's less than EUR 1 million and basically has to do with the cancellation of one of the agency contracts that we have up until the end of last year, right? So it's something that happened this quarter. But with this -- but with -- we hope that, that is going to be -- that is going to go.

[Massimo Musolino]

Another thing basically, if you look at the quarter figures, you only see the part of sales that have -- with the confidence of the figures. We can sell now a fiction and then we will account for that revenues only when the fiction has been fully produced and sold. So there is, I think, a time difference between the moment in which we close the agreement and sell the product and then the moment in which we account it for.

[Christopher Johnen, Analyst]

Okay. So if I'm understanding you correctly, then there was no revenue contribution. The personnel cost came up because you had to take them on the books. But there was 0 revenue contribution in Q1. Is that right?

[Francisco Javier Uría Iglesias, Chief Financial Officer]

Yes.

[Operator]

[indiscernible] coming from the line of [indiscernible] from the line of Annick Maas.

[Annick Tonie Maas, Analyst]

My first question, it's 2 questions, which are somewhat related. So your in-house-produced content represented 52% of broadcast hours, which is slightly less than before. Do you think that's the maximum achievable? And I guess the related question is that then going forward, if you look at your cost savings, do you expect those rather being from the operating cost side rather than the programming grid? The second one is on viewing. Viewing has -- the decline has again accelerated quite significantly this year. Do you expect this trend to continue this year, worsen, improve? And what drives whatever your response is? And then finally, in terms of pricing, I think you said previously that pricing should support the ad revenues by low to mid-single-digit this year. Is that still a number that you feel comfortable with after being a few months into this year?

[Massimo Musolino]

In terms of which between in-house program and third-party rights, if you look channel-by-channel, we still have the Telecinco strategy, 100% -- 98% in our programs. So there is no margin increase in our programs. But what we are doing from up here is to increase the in-house program in Cuatro. The final target is to reach a similar percentage than Telecinco. So quarter-by-quarter, we are replacing third-party rights with the programs in Cuatro. Then we can expect that year-by-year, the -- our percentage at the group level of in-house program will increase. The -- sorry, the...

[Mario Sacedo Arriola, Head of Investor Relations]

The second question, if I'm not wrong, was related with viewing timing in Q1. Is that correct, Annick?

[Annick Tonie Maas, Analyst]

Yes, exactly.

[Mario Sacedo Arriola, Head of Investor Relations]

Yes, well -- sorry, Annick. This is pretty good that we know well in advance how was the performance of the viewing timing in the market in Q1. In our case, what we found, same with a lot of you, is that apart from the performance of the whole market, our main channel, Telecinco, had a good performance and we are satisfied because we have an increase in viewing time in our main channel.

[Annick Tonie Maas, Analyst]

Great. And there was one on price interest. So just -- so the third one was just on pricing. I think you said previously that you think pricing could support TV ad revenues by low to mid-single digits this year. Now we are a few months into the year, do you still feel comfortable that pricing could support the ad revenues or not?

[Quico Alum, General Manager of Publiespaña]

Around the pricing, our policy, because we think we can do, we are going to change, following the strong price increase in the first quarter, around 5%, 4.7%. Our aim is to maintain this price increase, which is 3%, 4%, 5%. The impact of the Easter week is around 0.5 points. And of course, we have to discount the negative impact on the broadcast last year. But in terms of goal to increase -- to maintain our policy around 3%, 4%, I think there's room for that and there is an opportunity to do that. I mean we are not talking about crazy numbers. We think we can do that. We did in the first quarter. And we went to the market and we got price increase in April and in May. And we have to wait for that because, as you know, it's a really sensitive first year, it can rain in middle of the quarter. That is our goal. So you know that and the companies know that. And we think that we can go ahead with that goal.

[Operator]

The next question is coming from the line of Omar Sheikh from Morgan Stanley.

[Omar Farooq Sheikh, Equity Analyst]

Just a couple of questions, please. First of all, I want to ask about your investments in over-the-top platforms. I mean if you look around the rest of your peers in Europe, you'll see investments in France, in Germany, U.K. You guys aren't investing in at your own direct-to-consumer over-the-top offering. I'm just wondering why you think the Spanish market might be different from any of the other markets that you see around you. That's the first thing -- first question. And then second one was on Disney. So Disney+ is going to launch in Europe in Q1. I'm just wondering if you could let us know how much, if any, content you buy from them and if you see any impact on your, say, kids channels next year from the launch of that in Spain.

[Massimo Musolino]

Sorry. Could you repeat the first question because we are not sure we have understood the...

[Omar Farooq Sheikh, Equity Analyst]

Yes. No, sir. I'm thinking about the over-the-top platforms that are being launched in Europe. So ProSieben announced the Joyn platform yesterday. In France, you're going to see the SALTO platform potentially launch later this year. And in the U.K., you're going to have BritBox. So there are no plans as far as we can see it for a direct-to-consumer over-the-top operating in Spain. I'm wondering why you think the Spanish market is any different from Germany, France and the U.K. in terms of the need to invest in this type of platform. That was the question.

[Massimo Musolino]

No, but we don't think that we are different. We also are investing in our OTT platform. Our platform, MiTele, is continuous, evolving. There is an update every couple of months. Now we are investing, preparing a new release that we will call MiTele ON, which is -- which will be on air at the end of summer, at the beginning of September with a clear difference than with the current one. What we don't say is we don't say -- what we do is that we don't say how much we are investing. But if you look at our CapEx, we invest constantly. Then in terms of digital content, we are also investing in them. And one of the reasons why we increased our stake in Megamedia is that Megamedia is one of the main producer of digital content in this country. This is part of the project. So honestly, I don't know much in the other country they are investing, but this is an important part to our CapEx and our cost is exactly the digital content producers.

[Francisco Javier Uría Iglesias, Chief Financial Officer]

Yes, on the second point, whether Disney is going to have an impact on us, we really don't buy a whole lot of stuff from them. As a matter of fact, we buy very little. So the fact that they're going to come with a new platform is not going to have any impact on us.

[Omar Farooq Sheikh, Equity Analyst]

Javier, just to follow up on that, so are you saying that it will have no impact on your kids channels in terms of audience share or anything like that?

[Quico Alum, General Manager of Publiespaña]

Our kids channel, there is not any product from Disney nowadays. All the product is from partners and some cartoons, some from the other producers but not from Disney. Boing is the competitor of Disney. And we don't have any product from Disney at this moment in Boing. I have to check that, I think that.

[Massimo Musolino]

But I'm sure there are because Boing, our kids channel, is a joint venture between Turner and us. And we compete directly with the Disney Channel, so...

[Quico Alum, General Manager of Publiespaña]

That's right. And then for that, there is no relation.

[Francisco Javier Uría Iglesias, Chief Financial Officer]

And also we don't have any output deals or volume deals with them. So it doesn't mean we don't buy anything from them. We buy something, but we don't have a whole lot of volume deals or output deals that could influence our purchasing.

[Massimo Musolino]

And then just to say everything -- anything, if you look at our CapEx and third-party rights, we are reducing it year-by-year for the reason that I was trying to explain before that we are shifting in Cuatro from in-house -- from third-party rights to in-house programs. So in the past, we can see -- in the future, we can see that we will have lower third-party rights and more in-house program production.

[Operator]

The next question is coming from the line of Fernando Cordero from Santander.

[Fernando Cordero Barreira, Equity Analyst]

The first one is relating with your commercial strategy. And in that sense, we have seen during the first quarter that your inventory has been reduced or you have occupied more than [indiscernible] more seconds, 4.6%, if I'm not wrong. And I would like to understand what is your current level of inventory or occupation in order to understand also what could be the timing in the second quarter, if there is any upside in occupation versus here in the second quarter. The second question is related with the antitrust body scrutiny on the sector. There has been a lot of noise in the recent weeks. And I just would like to see if you can give us some color or insights on how the process is going on and what could be the potential outcomes and your stance on that. And my third question is related with -- sorry, for coming again to this issue, on the TV consumption patterns. I would like to understand because I'm taking into account your comment that the consumption in your core channel continues to be good. It seems that consequently the secondary channels are the responsible of the lower TV consumption at least in your case. And I would like to understand if there is any kind of relationship between lower OpEx allocated into the secondary channels with this TV consumption declining pattern more clear in your secondary channels, if this is the case.

[Massimo Musolino]

Look, I'll start from the CNMC. As you probably all know, we have received Sunday a notification from the regulator, the National Commission on Markets and Competition, which rules out the possibility of reaching an agreement with us on the file opened in February 2018, where they claim the potential behavior against the regulation in our commercial practice. The entire process for me has been pretty strange before the inspection began and the following investigation. Before the inspection began, the top board member of the authority publicly stated that he was uncomfortable that these here are the number of big players were relatively reduced. My feeling is that there was, let's say, a lack of objectivity, like the process. At this point, we are waiting for the final resolution. Probably in the next days or week, we will see it. It's clear that if the resolution is negative, we'll be fined. The company confirms we will immediately appeal this before the competent bodies. We are determined to proceed in the best way to protect the interest of our company, employees, customers and shareholders, of course. We are fully convinced about our way of proceeding. We have fully respected the law. So we will appeal any resolution that doesn't recognize it. We trust in justice. And we still believe that the professional and objective analysis by the regulatory board members will conclude that Mediaset España fully complied the law. So this is the situation. We are calm because of I insist that we are sure that we haven't done anything wrong. So we wait.

[Quico Alum, General Manager of Publiespaña]

Okay. The first question around the inventory, Fernando, is that in May, we don't have -- we have our -- occupation is around 90%, 95% in primetime, then we don't have any room for increments. 95% is almost the top that we can reach. But in the second half of June, yes, we have some opportunities because when we broadcasted the World Cup, in this case, you don't occupy everything. You have almost some inventory left. Then we have some kind of opportunities in the second half of June in terms of incremental inventory [indiscernible] and in the second half of April.

[Massimo Musolino]

And for the third question, you should consider that the main channel, our main channel, also our competitor's main channel, has a kind of program or programming grid totally different than thematic or pay TV or OTT platform. They are based on the light programs, in-house programs. So let's say there is a clear difference between Telecinco or Cuatro or [indiscernible] with respect to a channel or a pay-TV or OTT channel. The other -- the smaller channel we have and other players, too, are at the end of the day interlapping channels. So they compete directly with pay-TV channel, OTT channel. So this is why the consumption of Telecinco is higher than the consumption -- the TV consumption of others' more channel. The fact that we invest more in Telecinco and Cuatro with respect to other smaller is that we have no money to prepare 7 programming grids at the same level. So we decided to invest the majority of our budget in the main 2 channels and the generic one. And then we provide the content at a lower cost to the other channels. On top of it, I would like to add that there is no reason at this stage to make -- to amass more audience because there is a balance between the audience we have and the revenues. Probably, in a TV advertising market share of over EUR 4 billion, we will invest more. But at this moment, I think that there is the right balance between OpEx audience and the revenues.

[Quico Alum, General Manager of Publiespaña]

And one thing on consumption. It is more than a gunfight here in the consumption. As you know in Spain, with the light programs, the Supervivientes or our magazines, the consumption is increasing in this time. And then now in this way, we are changing our brand in Cuatro, trying to make a magazine-type light programs because I think there is opportunity to fight against the consumption. And we can't increment our consumption. [indiscernible] have to change little-by-little our brand reach and make more light programs. That is the key because we don't want to fight against that really small channel, the pay channels, because they have a different programming with our Cuatro and Telecinco.

[Operator]

[Operator Instructions] The next question is coming from the line of Laurie Davison from Deutsche Bank.

[Laurence Davison, Research Analyst]

Just on the CNMC investigation. The press reports are indicating ritzy fines of up to EUR 100 million on that. Now I know that you've previously had other investigations come to march or assessments have been very small. But you do seem willing to go to court this time. Is there anything you can say on the potential size of the risk on fines? Second question is just a follow-up on your SVOD, ad VOD OTT strategy. I completely understand your increasing spend on that area. But if we just look at your CapEx, it's only up about EUR 15 million, 1-5, year-on-year. You don't seem to be spending in the same way. We've got ProSieben out today talking about EUR 100 million for their first year cost just spread across them and Discovery. ITV are throwing EUR 40 million there, SVOD in year 1. So your spending nowhere near as much as peers. When you're thinking about next 3 to 4 years, is there anything in your cost road map for expanding SVOD? Should we assume that any kind of spend is incremental?

[Massimo Musolino]

Well, about the CNMC size of the potential fine, the law say -- this is the law. The law say that it can be from 0% to 10% on the total revenues of the company. This is the law. Of course, it depends on the level of the -- how much responsible are of the potential problem. I insist we are sure that we haven't done anything. So if you ask me what I expect, I say 0 because of we haven't done anything from one side. From another side, I insist that we trust in justice. So for me, I should be 0. But we have to wait. We have to wait.

[Francisco Javier Uría Iglesias, Chief Financial Officer]

On the second point in terms of the OTT cost, of course, we don't invest money in terms of a vacuum, not because you want to get your revenues but because of what other peers in other countries are doing. We're doing best now what we think is right in order to get the revenues so to be able to capture all those Internet revenues that we see out there in the market. So we think that this is the right investment at this time in light of the revenue opportunities that we see in the market. This is right now. In terms of years to come, over the next years, we will do the same analysis. Of course, we will invest the amount of money that we think is right in order to be able to get the revenues and to get the right margin. The fact that other peers are investing more on this in other countries should not be a benchmark because we operate in the market where we're in right now. And we want to get the most out of it right now in this market with the highest possible margins. And in the future, we will do the same analysis and repeat the same exercise.

[Mario Sacedo Arriola, Head of Investor Relations]

Okay. Thank you, everybody, for the questions. I guess this is the last one. And now it's time to close the conference call. Thank you very much for attending our presentation. If you have any further questions, please don't hesitate to call -- to contact the Investor Relations department. Thank you.

[Massimo Musolino]

Thank you.

[Francisco Javier Uría Iglesias, Chief Financial Officer]

Thanks.

[Massimo Musolino]

Bye-bye.