Mediaset Espana Comunicacion SA

MAD:TL5

Earnings Call Transcript 2020-Q2

[Mario Sacedo Arriola, Head of Investor Relations]

Good evening, everybody. Welcome to 2020 first half results presentation of Mediaset España Comunicación. I'm Mario Sacedo, Head of Investor Relations. Let me introduce you to today's speakers. The presentation will be hosted by Massimo Musolino, General Operations Manager. After the presentation, we will open a Q&A session hosted by Massimo Musolino, Quico Alum, Publiespaña's General Manager; and Javier Uria, the CFO of the group. They will answer all your questions. Massimo, you have the floor.

[Massimo Musolino]

Good evening, everybody. Thank you for connecting to Mediaset España first half result presentation. We will now take a look at the main aspects of the operational and financial figures released to the market just now and some of the most relevant events in the period. At the end of my presentation, there will be a Q&A session where you may ask any questions that you have. First of all, on Slide 2, let's have a look at the main highlights for the business so far this year. 2020 is probably one of the most difficult year in our recent history. And for this reason, the management of our capabilities is even more important than ever considering the unprecedented debt and the scope of the COVID outbreak. Our business model was tested in Q2. And as you can see from the number presented, the model resilience allowed us to have a positive result in the period when the TV advertising market declined by more than 50%. The net profit of EUR 21.1 million achieved in the second quarter, in the COVID quarter, is a result of careful management of the company. Just to give you an idea, this is roughly the same amount of profit reported by our main competitor in the same market and conditions for the 16-month period for January to June. The reinforced financial capability, thanks to the cash flow generation and the unused credit lines, will allow us to comfortably ride out the COVID crisis and be ready to tackle different investment opportunities as the case may be. In operating terms, our objective is to enhance the sale of content, which is currently EUR 29.6 million to national and international players, maintaining our independent position in the value creation chain. The first half of the year was proof for this with revenues gaining traction against the previous year, achieving EUR 61.1 million. We are proud that in this difficult time, still we are the only Spanish media group with an AENOR COVID-19 certification as a result of the best practices and measures taken to protect our staff and operations during the outbreak. On Slide 3, we have the Mediaset main figures for the period. On the right-hand side of the slide, you can see that our audience leadership as a group was reinforced with a remarkable 28.7% in total individuals, a gap of 2.7 percentage points compared to our main competitors. According to Infoadex, the TV advertising market declined by 31.8% to EUR 712 million in the period, with Mediaset España reaching EUR 308 million, which is equivalent to a market share of 43.3%, which implies an improvement of 15 basis points over the same period last year. This figure allowed us to increase the gap with our main competitor to more than 240 basis points, which is the largest average in the 6 months period without any sport event scheduled. We have seen 2 different trends in the first 6 months of the year. Firstly, up until mid-March, market evolution could be considered as normal. And then there was a strong deterioration due to COVID-19. If we look at the second quarter, the evolution of the TV advertising market saw a decline of 50%. This has had a negative impact on margin in spite of the huge effort made in terms of costs in order to compensate the income decline. What is important is that Mediaset has closed this terrible second quarter with a positive result, therefore, confirming the quality of its business model. Looking at the financials on the left-hand side of the page. You can see that our total net revenues reached EUR 375.1 million, mainly driven by strong performance of other revenues, which partially offset the decline in advertising revenues. EBITDA for the period stood at EUR 99.6 million, largely over 25%, while net profit for the period was EUR 70 million or EUR 0.22 per share. Finally, cash flow generation in the period remained strong at EUR 87.4 million with a high-margin conversion. On Slide 4, you have the TV consumption figures from January to June, which saw an improvement of 25 minutes per viewer to 257 minutes in the first half of the year. Please let me remind you that the above figures do not include television viewed on devices such as tablets, phones, computers, et cetera. If you take a closer look at the numbers, you can see how the trend was reinforced once the lockdown period for the COVID-19 crisis officially began second half of March, proving that TV is still a reference for news and entertainment. The figures reached in the second quarter of the year will have the highest number ever recorded and prove our TV sets are still central to families in their homes. Looking at the performance of the different channels, Telecinco's consumption grew by 10.1%, while our main competitor, Antena 3, grew by only 1.4%. The same performance can be seen in the other general channels where Cuatro saw an increase in consumption of 20%. Moving on to Slide 5. You can see how our TV advertising revenues evolved during the period. We posted a 22.8% GRP's volume decline, while in terms of price, we saw a reduction of 11.2%. As Infoadex reported, Mediaset España's TV advertising revenues amounted to EUR 308 million, EUR 17 million more than the other group, equivalent to 5.7%. This gap of EUR 17 million in TV advertising revenues is the widest ever reached in the first half of the year without any sport events. The chart on Slide 6 give you a visual explanation of how the company has been adjusting its operations in the new reality of the audiovisual market. Other revenues in the period went up by 103.2% to EUR 61.0 million (sic) [ EUR 61.1 million ], equivalent to 16.3% of the total other revenues generated in the period. On the right side of the slide, you can see how sale of content is today close to 50% of the other revenues figures. This activity is improving year after year, as proved the huge increase in 2020, amounting EUR 29.6 million from January to June, which multiplied by more than 4x the figure reached for the same period of last year. This excellent performance is the result of Mediterraneo Audiovisual's content sale activity, which, for example, reaching an agreement with Netflix and Amazon Prime, selling them 6 of our most popular fictional series and documentaries. The sublicensing of the Copa del Rey football rights as well as content service provided for third parties have also helped to increase this revenue line. We didn't sign any exclusivity agreement with telco company or OTT platform. Mediaset España remains an independent player, which gives us enough flexibility and capacity to address all market opportunities in this growing business. Mitele Plus has also contributed to this revenue line, thanks to more than 163,000 subscribers at the end of June. On Slide #7, you can see our traditional bullet points of Mediaset España digital activity. During the first half of the year, Mediaset has achieved a monthly average of 18.5 million unique users, a growth of 27.5% compared to the same period last year. In terms of video consumption, the group reached a monthly average of 417 million video streams, an increase of 8.4% compared to last year's figure. The latest projects, El Desmarque and Nius sites, also those already mentioned, due to the notable results during the period. El Desmarque has managed to double its audience compared to last year with a monthly average of 4.9 million unique users. Nius reached a monthly average of 2.9 million unique users in less than a year. Our objective now is to reinforce these new lines of business. We are now proud to announce the signing of the acquisition of 51% of BE A LION, new name of the well-known company Animal Makers. BE A LION creates, produces and distributes content and advertising initiatives for brands and agencies on platforms such as YouTube and social network, maximizing the impact and the reach of traditional campaigns. BE A LION is the clear leader in managing advertising campaigns on YouTube in the Spanish market, having been selected as the best branded content producer by 2019 edition of branded scope. Together, Mediaset and BE A LION will face an ambitious project that will allow us to enlarge our reach down through new and innovative products and become the clear leader in video advertising, branding content and the benchmark. BE A LION will contribute annual net revenues above EUR 50 million and a healthy EBITDA margin. The transaction has been structured in a way that Mediaset may reach 100% stake over a number of years. It's important to highlight the return of the Spanish and Champion Leagues after all sport competition was stopped due to the COVID-19. The matches have been successful, offered live and on-demand for Mitele Plus subscribers. Also, last May, Mediaset España reinforced its global digital business, integrating all CincoMAS content into a new Mitele Plus Internacional platform where the user can access Mediaset content from any country in the world, allowing the user who reside outside of Spanish territory to contract them. As a result of all our initiatives, Mediaset España digital revenues in the first half of the year only fell by a small 3.3%, outperforming the whole market evolution, which according to Infoadex, posted a decline of almost 20 percentage points. Moving on to the financial review on Slide 8. You can see how we adapted our operational cost to the advertising market reality in Q2. At the bottom of the slide, there is the statement provided in the last result presentation, where if you remember, we gave a guidance of operating cost savings from April to July between EUR 50 million and EUR 55 million. This target was largely achieved, thanks to the 51% reduction posted in Q2. As a result, on the right side of the slide, there is initial explanation of the OpEx performance and result for the year, where we managed a 13.8% reduction. This stronger effort allow us to feel positive about our flexibility in cost management in the new advertising market conditions. On Slide 9, there is a quick review of the evolution of financial resources in this difficult period that we are experiencing. Mediaset España priority is to enhance the group's financial position so that we are prepared to ride out even the most adverse business conditions, preserving the existing cash and trying to maximize the free cash flow generation under these unprecedented business condition created by the COVID pandemic. This has been a key objective, whilst at the same time, we have been able to undertake the additional investment of 4.25% in ProSieben Sat during the first half of this year. As at the end of June, Mediaset España has EUR 300 million in credit line available, ensuring a solid financial base. This number is EUR 45 million higher than that reported at the end of last year, corresponding to the 2 new credit line negotiated and approved during the period, ensuring the maximum availability of financial resources in preparation for a pandemic duration, the scope of which was not known at the time. As a result, total net resources at June increased by EUR 73 million in the period to a total of EUR 298 million, thanks to a robust free cash flow generation and the new lines of credit signed, despite investment in the acquisition of the ProSieben stake. On Slide 10, you can see a summary of our corporate events since the beginning of the year. As you know, the MFE project was at standstill as a result of the interim measures adopted by Madrid commercial court in the autumn last year. Finally, at the end of July, the court resolved to dismiss the request made by Mediaset España to lift the interim measures regarding the corporate resolution approved at our last AGM. In light of this resolution, at the beginning of August, it was decided to withdraw the tripartite merger project between Mediaset España, Mediaset S.p.A. and Mediaset N.V. in view of the impossibility to complete the transaction before the deadline provided by Dutch law on the 2nd of October 2020. In any case, the pan-European consolidation process remains active, and Mediaset España will report to the market as soon as a new decision is taken regarding the relaunching of the industrial project represented by MFE, Media For Europe. On Slide 11, you can see some of the initiatives that Mediaset has implemented as a few -- and a few of the steps taken in its action plan due to the COVID-19 crisis, the clear target of which has always been the safety of our employees and suppliers. I'm not going to go into details as there are many, but let me summarize a few of them. We implemented regular COVID testing for all staff, temperature cameras, et cetera, et cetera. 65% of our staff are working from home, and we made changes to our facilities in order to maintain social distancing. Most of the measures adopted will be maintained in the incoming months. We have built and approved a return to work road map for the coming months. In October, if the pandemic situation allows, people will start a progressive and smooth return to the facilities. Concluding this presentation, I would like to provide an outlook for 2020 on Slide 12. Our main goal in this challenging environment is to maintain our leadership in terms of profitability, audience and advertising market share. At this point, this target is on track. We are also ready to face the post-summer season with a solid programming grid, which should reinforce our strong position. In terms of costs, in the first half of the year, we proved our flexibility to adapt business condition to the new COVID reality. Our goal is to maintain this approach in the coming quarters. Over the past few months, we have learned how the advertising market is linked to the evolution of the pandemic. While in April and May, the toughest part of the crisis, the advertising market collapsed. In July and August when the impact of the COVID was weaker, the advertising market quickly recovered. It's clear that the market decline in the second quarter is not structural and that it is dependent on the evolution of the pandemic. This is why we are not providing any cost guidance because the total amount is going to depend on the pandemic's evolution and the potential ups and down on the advertising market. At this point, our commitment is very clear. We have shown our capabilities in terms of our flexible cost management plans. And if required, we will do it again and take the correct steps to ensure our profitability even if the market deteriorates again due to worsening health care conditions. The acquisition of BE A LION is part to our digital development process and just one of the projects we are currently facing. And finally, of course, what we consider more of an obligation rather than a target, in such tough times, maintaining a strong financial position is required in order to operate comfortably. As I said before, in the last few months, we learned how the advertising market evolution is strongly linked with the evolution of the pandemic. Then taking into account that none of us can see into the future, we made the decision to confirm our strong financial capability in order to maintain normalized operation and also to take the potential corporate opportunities that arise. 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, and now we are ready to take all your questions. Operator, please proceed to open the Q&A session.

[Operator]

[Operator Instructions] Our first question comes from the line from Julien Roch from Barclays.

[Julien Roch, MD & European Media Analyst]

My first question is on current trading. Can you tell us how July and August went and initial sort on September? The second question is on cost. I understand you don't want to give a full year guidance on cost, but I mean you saved EUR 45 million in the first half. Revenue should be a bit better in the second half. So would you have less cost saving in the second half? Or maybe you can give us an indication of the drop-through in terms of percentage. So if revenue is down x million in the second half, then costs will be down EUR 1 million, so kind of a viable cost target. That's my second question. And then my third question is the update on the deal with Mediaset because you said you'd get back to us once you know what you're going to do. But is your overall intention still to merge Spain and Italy with potentially a different structure, but still a merger? Or is the European project now something different? These are my 3 questions.

[Quico Alum, General Manager of Publiespaña]

Okay. As Massimo had said, and I think everybody knew, there is a strong link between the advertising market and the evolution of the pandemic. What happened in May, the toughest and the worst point of the crisis, the advertising market collapsed. In July and August, the impact of COVID was weaker and the advertising markets performed in a more normalized way. There is a clear conclusion to be drawn from this period in the sense that the big market declines are not structural because the health care situation improved and advertising returned to the market. Now once we accept this strong correlation, in September, we are going to face a period where nobody knows how the COVID situation is going to evolve. But we think if the things remain as they are today, there is no reason for thinking that there will be a different market evolution to July and August. While if we see a health care deterioration, new local lockdowns and so on, it show you that the market performance would worsen. So that is really very difficult now to anticipate any figure for September. We expect that the health care situation is not going to be worse, and we hope that. But we cannot anticipate any figure for September because really, we don't know. Today, I guess, all of us, we are in the same situation, and the visibility is nobody knows what is going to happen in the next weeks. But we are confident because we think that July and August, they have -- or we have a normal situation. Maybe the -- it's actually a very small market. But maybe the market, we were flat or slightly decrease until we see July and August. And September, we have to wait.

[Francisco Javier Uría Iglesias, CFO & Director of Economic]

On costs, Julien, you know that, normally, we will give a guidance early in the year. But of course, this is when you -- when we have a normal situation then we -- what we have to face now, what we have to face this year is not anything that could be called normal. If we had given a guidance at the beginning of this year, we will have needed to change it because, as you know, we have to save some EUR 50 million to EUR 55 million only in the second quarter. And if we look at the numbers of the first half, we have savings of EUR 46 million. What we can say is that we are going to consolidate these savings. So those are already there, and we're going to keep them. And looking to the second half of the year, we can see that the bottom of the floor will be having the same number that we had last year. But obviously, that is assuming that the market is going to be such that does not justify having further savings. Of course, as Massimo said before, we're going to keep an eye on the market. And depending on what the advertising market is doing and how it is performing, we will do something and we will adapt just the same way as we have done in the first half. So like I said, the floor is going to be what we have saved already in the first half, which is already consolidated. And in the second, we could have some savings, of course, and we will fight for them if the market is such that makes it necessary to adapt our cost base to this new reality.

[Massimo Musolino]

About the MFE project. Our intention to follow a consolidated pan-European media project remains the same, remains intact. And we will consider possible alternatives that guarantee the industrial advantages and ensure a solid and well-defined corporate governance. In this regard, and confirming the industrial validity of the MFE, Media For Europe plan, as Vivendi itself recognized, the company is engaged in the study of creating an alternative plan to design a new transaction, the conclusion so which will not likely happen in the immediate future. We need to take our time to prepare this new project and so it's so early to say if it will be a merger or not. In any case, any decision to revisit the project has to take into consideration the COVID-19 situation, particularly because as we are talking about an international consolidation, which involves more than one country, the different evolution of the pandemic in any one of those country has to be carefully considered as it will affect very relevant aspects of the business such as, for example, the relative evaluation of the company, determination of the exchange rates, the volatility of the stock markets. Consequently, we can -- what we can say now is that we don't expect to make a move here in the short term. Although, as I mentioned before, our vision regarding the need for European consolidation remains unchanged.

[Julien Roch, MD & European Media Analyst]

If I could follow up on your answer on costs. Now I understand it completely depends on revenue in the second half, and you say that the minimum is the same cost as in the first half. And if market is weak, we will do more. So let's say revenue is down 5% in the second half, how much more cost savings can we expect in the second half, EUR 10 million, EUR 20 million?

[Francisco Javier Uría Iglesias, CFO & Director of Economic]

Well, we don't have a matrix really that tells you by how much the market has to fall down in order to save some costs. I mean we don't have that in the world, but if the market was going to go down by 5%, of course, we will intervene in our lineup, and the result will be having less costs. But it is not an automatic thing. But if it's a 5% decline, obviously, we're not going to stand still and keep the same costs as we have last year. And if it will be -- whether that is worth EUR 15 million or EUR 5 million or whatever, is not something that there -- is as clear as that, but in any case, of course, we will do something if the market falls down.

[Operator]

We will now take the next question from the line from Nick Maas from BNP Paribas.

[Annick Tonie Maas, Analyst]

I think that's me. It's Annick. So I have 3 questions as well. I think -- but I might have misunderstood. You said that July and August is a normalized trend. So does that mean July and August is flat year-on-year in terms of TV advertising trends? My second one is just -- I see that the share of in-house-produced content on your channels has risen quite significantly over the first half. Is that something that is sustainable as we go into next year or like a non-COVID world? And then could you maybe give us an indication of when you think the delayed advertising money is coming through? So those campaigns that were due to happen in Q2, have they already come through over the summer? Or are they only expected to come through in September or later this year?

[Mario Sacedo Arriola, Head of Investor Relations]

Annick, sorry. The quality of the line was not extremely good, and we didn't get very well the second question. Can you repeat, please?

[Annick Tonie Maas, Analyst]

So I said that the share of in-house-produced content on your own channels has risen a lot in the first half this year. And I was wondering if that is something that is sustainable if you look into next year or like a normalized world again. Is that sustainable? Or do we expect the share of your own produced content to go down again on your own channels as you need to save less costs?

[Mario Sacedo Arriola, Head of Investor Relations]

Okay. It's clear now. Thank you.

[Quico Alum, General Manager of Publiespaña]

Okay. In July, we think that the market, according to our estimation, has been flat. In August, it's a very small market in August. I mean we were talking about a 65 million viewers market, TV market. We think that the market maybe has been slightly negative, but we don't have clear this number because don't forget or keep in mind that this year, in August, we have the champion -- we have -- Movistar had the champion league. Then we don't know the amount of money that they have made with that champion league. For that, to make sure August is complicated for us. But I think it has been maybe slightly negative between -- July and August, between is slightly negative and flat, it's something like that.

[Massimo Musolino]

In terms of the share of in-house program, we will expect to third-party sites in Telecinco and Cuatro, of course, the breakdown period couldn't be a reference because all programming grid has been changed in terms of the quality of the programs that we have forecasted. Clearly, it's our intention to increase the number of hours in the Cuatro in our program. So probably not at the same amount we have now, but you should consider that next year, we will have the Euro cup event. So they will change again our programming, really. Summarizing, I think that the current level is pretty normal. We can have 2, 3 points less or more, but without any substantial changes, we'll expect to the current situation.

[Annick Tonie Maas, Analyst]

And just on -- so do you think the advertising revenues that were delayed in Q2, are they -- have they been rebooked into Q3, Q4?

[Quico Alum, General Manager of Publiespaña]

I would like to answer that question, but I don't have the information. The thing that we know or that we know from the advertising is whether they are willing to launch new campaigns and to go on TV. But the health care situation is going to say what is going to happen. In a normal situation, we think that they are going to put money on the table, to put money on TV, but we don't know. But we see that maybe in August, I mean, the market was almost flat. That we hope that in September, the COVID situation is not going to change a lot. And then we are going to have, again, a good market. Because don't forget that in the last quarter, we have Black Friday and Christmas period that are all really, really important for us. And then we hope that the -- we expect that the advertisers are going to spend, to invest the money on TV. But first, we have to see what is going to happen with the COVID situation in Spain.

[Operator]

The next question comes from the line from Fernando Cordero from Santander.

[Fernando Cordero Barreira, Equity Analyst]

Can you hear me?

[Mario Sacedo Arriola, Head of Investor Relations]

Yes, Fernando.

[Fernando Cordero Barreira, Equity Analyst]

Okay. Perfect. I have 4 questions. The first one is related or is a follow-up on the cost outlook for the second half. And I just would like to understand which is the impact coming from Mitele. Mitele in second half last year had the cost of the premiums for content, namely the football. And considering that that content seems to be not in the offering of Mitele in the second half 2020, I would like to understand what would be the impact in costs coming from that. My second question is related with investment in BE A LION. I just would like to understand if that investment has been accounted into the first half or should be accounted in the third quarter. And just to let's say, to review the investment that you have made for the 51%, just trying to check if it was -- if I understood well, EUR 15 million, 1-5. And my third question is related with the shareholder remuneration. You have said, Massimo, that any update on the, let's say, European audiovisual project could not be announced in the very short term. Could or should we expect any kind of shareholder remuneration announcement given that the update on the, let's say, corporate news flow will not be done in the short term? Should we expect any shareholder remuneration for this year 2020? And my last question is related with the market share and the behavior of the advertisers. Since the beginning of the year and driven by the CNMC ruling, you are having a different commercial policy than your main competitor. And in that sense, do you continue to maintain the discounts in your commercial offering? I would like to understand at which extent those discounts are already or have impacted in the market share or have make easier your commercial activity at least versus your main competitor?

[Francisco Javier Uría Iglesias, CFO & Director of Economic]

I will start with points 1 and 2. In terms of point 1, we had the Mitele Plus last year. Of course, we have the football season starting in August and first week of September. And this year, we had some football because it was delayed from last season. But when we look at the cost outlook for this year versus last year, we will have probably less of Mitele Plus because of the number of matches as we don't have the next season. But don't forget that we have -- we will have seen an increase in our other income line. Something which has been very significant in the first half is going to continue in the second half of this year. And obviously, that's going to impact on costs as well, right? Because this trend that we have in this other income line in the first half is going to continue, maybe not at the same pace, not exactly at the same pace, but it's going to be in line with what we had in the first half. And of course, we're going to have costs related to that. And that's for your first point. The second point is that this new investment does not have any impact on the first half accounts because it's something that is going to be signed already in the third quarter. So no impact in the numbers up until the 30th of June.

[Quico Alum, General Manager of Publiespaña]

Okay. About the over commission with the alliances, first, let me say one thing, the over commission is -- can say, it's the tradition compete for the biggest possible investment from advertising. And therefore, we are compete mainly with the digital natives, with digital investments, and we are not compete with the over commission with Antena 3. We have competed with the rest of the media. Removing the over commission puts TV in a clear disadvantage with digital media. Don't forget that the biggest native digitals business who were previously very reluctant on ruling to be commissioned now are now doing so. Then I mean there is not a fight against Antena 3 and Mediaset. It's a fight against media, unit media these days, general investment of their -- in marketing. Then at the end of this year, we have to analyze, hey, what's going to happen with the market very carefully in order to see which is the best strategy to follow in the future because we don't have now -- we don't have to remove the over commission. Maybe you have to pay the over commission in another way. But we are not obliged from the CNMC [Foreign Language] to remove the over commission. Then for that, we have to wait. And if we are going to take advantage with Antena 3, I will note it again, the over commission is to fight for investments in other media, not Antena 3 because their recognition Antena 3 and Mediaset was very similar. Then is -- we have to wait until the end of the year and see what's going to happen with the TV share, not with Mediaset market share, with the TV market share.

[Massimo Musolino]

Regarding the shareholder remuneration. Now that MFE project has been discontinued, therefore, the proposed dividend distribution and share buyback are also gone. Regarding Mediaset España, as I have mentioned before, the idea of launching a new pan-European project remains unchanged. And consequently, we would like not to jump into decisions regarding cash distribution without knowing the time of this project. Finally, considering the uncertainties due to the pandemic, and I think that in line with the principle of prudence and what most companies in various sectors have been doing, it makes sense not to proceed with a cash distribution for now. However, when the smoke clears and we have more visibility with regards to our business strategy, we will reconsider this issue and we will inform you.

[Fernando Cordero Barreira, Equity Analyst]

Just a follow-up, just to confirm the investment that you are going to make in the BE A LION.

[Francisco Javier Uría Iglesias, CFO & Director of Economic]

Yes. Sorry, what's that, Fernando? What's the point? When?

[Fernando Cordero Barreira, Equity Analyst]

Not when. How much?

[Francisco Javier Uría Iglesias, CFO & Director of Economic]

Sorry. No, it's EUR 15 million. Sorry.

[Fernando Cordero Barreira, Equity Analyst]

Exactly, 1-5. Okay.

[Francisco Javier Uría Iglesias, CFO & Director of Economic]

You want to know whether it was 15 or 50, right? Because it's 15, 1-5, EUR 15 million.

[Operator]

The next question comes from the line from Iñigo Egusquiza from Kepler.

[Iñigo Egusquiza, Analyst]

Two follow-ups from my side, if I may. Just a quick one on Mitele Plus. Of the 163,000 subscribers, could you tell us how many of them are football subscribers? That's the first question. And on the shareholder remuneration, I mean, from what you mentioned, the idea of the company would be not to distribute any cash in terms of dividends or buybacks until we have better visibility on COVID-19 and on the future pan-European project. That's the answer.

[Massimo Musolino]

Yes. Answering to the second question. Yes, it is. We -- in the short term, we don't see any cash distribution. Regarding Mitele, the number of subscribers linked to the football packaging, they are -- they were, at this point, we said they were 100,000. Let's consider that all these subscribers are -- were also subscriber of Mitele Plus. So the fact that they canceled, delayed their subscription to the football doesn't mind -- doesn't mean that they cancel the distribution to Mitele. We expect to retain an important part of this 100,000 into our Mitele Plus OTT.

[Operator]

The next question comes from the line from Fernando Abril from Alantra.

[Fernando Abril-Martorell]

All my questions have already been answered. Just a quick follow-up on the content sales business. I only would like to know what is the average margin of this business. I think you've already mentioned that this is quite a volatile business and you expect further content sales in H2. I just wanted to know what is the average margin of this business.

[Francisco Javier Uría Iglesias, CFO & Director of Economic]

This is a business, which has been -- this has been growing very, very steadily. As you know, we're growing half -- seeing that it has increased by 300 -- more than 300% in the first half versus last year. For the second half, we expect that on the back of this sale of content, our other income line, which was EUR 60 million in the first half is not double, but it could get to a number, I would say, a floor of EUR 100 million is something that could be considered as our reasonable estimate right now. This is a -- of which, as you know, of this EUR 61 million that we have in the first half, some EUR 25 million are sale of content. And like I said, this is a business that is going to continue more or less at the same pace. It's not exactly the same, but a very similar one in the second half of this year. Margin-wise, it is good. I mean I'm not going to tell you exactly what the margin is. But we're talking about -- we're talking about very good margin, about a good margin, right? And of course, it depends -- and let me tell you, because it depends how you sell this content. You have different forms here. You can sell the content and you have an exclusive rights. It means that, that platform can be the first one to broadcast or they can do it at the same time or they can do an after view. So it's very difficult to talk about an average margin because, of course, the more you're giving exclusive right to these people, the higher the margin. But in any case, the average of this 3 forms of selling is a very good one. It's quite a hefty margin.

[Operator]

The next question comes from the line from Nizla Naizer from Deutsche Bank.

[Nizla Naizer, Research Analyst]

Great. I just have 3 questions, if I may. The first one is on Mitele Plus. Could you remind us again what your strategy is here in terms of the type of content you're offering? And what's the quantum of investments you expect to do over the next couple of years into Mitele Plus to ensure that you've got a strong sort of foothold when it comes to, I guess, an SVOD platform? Secondly, could you remind us, given your low leverage -- and you mentioned that maybe shareholder remuneration would not be sort of considered at this point. But in terms of inorganic growth opportunities, how do you look at maybe a target leverage that you could be comfortable with? And any inorganic growth opportunities that's already in your horizon? I guess you can even consider the ProSieben stake in there. How you're thinking around that would be great. And lastly, just a confirmation on the other revenue line. So could we expect the same volume of revenue in H1 to also repeat in H2? Or could it be greater? Just some color there just to clarify would be great.

[Massimo Musolino]

About Mitele Plus, the purpose of Mitele Plus to provide additional exclusive content and experience to our loyal audience base, allowing us to monetize beyond advertising. In terms of content, and like other OTTs, our main focus is entertainment and reality, providing exclusive products related to our main TV shows as well as originals like Solo. Solo is a new project, probably, you don't know it. It's a new project that we are going to launch in the next week. It's a reality show. We have built a small house in our campus. And we -- one famous person will live there in the small house alone for several days. This will be retransmitted on Mitele Plus an exclusive. And there will be several links with our programs, TV programs. This is just an example. Just because at the end of the day, our capability to create successful entertainment is one of our point of strength. So we have to benefit from this capability. We have to try to provide content to -- exclusive content to our OTT platform. On top of this, we are -- our subscribers can benefit from being able to access all our content without -- no advertising, previews on new TV shows as well as experiences offered through Mitele club, such as attending TV programs, studios, meeting top actors or TV hosts. This is our last project, having access to exclusively co-merch offers. How much we're going to invest in this? Honestly, difficult to say. Depends also from our capability to recover income from this activity. In any case, I don't think that we can expect a large amount of investment in the -- at least in the short term, at least in a short time. We made a great investment in football last year, but it was -- we explained this as the quickest way to launch the new platform. Now Mitele Plus is known by everybody in Spain. It works very well. We have been able to test the base function from internalties [Foreign Language]

[Francisco Javier Uría Iglesias, CFO & Director of Economic]

Working well.

[Massimo Musolino]

This is working well, so we have no problem. So let's say, the most important investment we did last year. Now we have to be able to maintain a reasonable amount of subscriber at the right cost. And this is the goal we have for Mitele Plus.

[Francisco Javier Uría Iglesias, CFO & Director of Economic]

If we talk about leverage, we don't have an optimal kind of number in mind. We have 0 leverage now, which I think is a remarkable number because we have acquired 9.75% stake in ProSieben. So we do not -- it doesn't work that we have a leverage number in mind, and then we just work on that basis. It's rather just the opposite. I mean we see there is a business opportunity. Normally, we're going to be talking about this BE A LION kind of stuff, which is what we think is more workable because it's a small company. It's not a big investment, but it fits very well into our digital strategy. So we do not think in terms of we want to get -- set a number, leverage, EBITDA plus, times, whatever. We think in terms of investment opportunities, and we're always cautious. And we do have a track record, as you know. We always -- we used to have a negative leverage. We do have 0 leverage now. So we're not going to go over the top. We're going to look at investment opportunities, and we're never going to leverage the company to the extent or the same extent, which it doesn't make sense. It will be just the opposite. In terms of what I said about the other income going forward, I just mentioned that the number of EUR 100 million, which is not a guidance. It's just a number that we have in mind and that it takes into account, first of all, that the movie activity for the remainder of the year is a bit of a question mark because, of course, all the cinema activity is halted now. So we don't know whether we're going to have new releases or not, but we know at the same time that the sale of content, what we have in the pipeline is of a certain magnitude. So this EUR 100 million should not be taken as a guidance, but as an order of magnitude, the one that we have in our head. And it could be more or it could be less. But it's probably more a floor than anything else.

[Massimo Musolino]

It's a goal.

[Francisco Javier Uría Iglesias, CFO & Director of Economic]

It's a goal based on the deals that we have on the table right now.

[Operator]

The next question comes from the line from Richard Eary from UBS.

[Richard Eary]

I think just to be clear, I just wanted to go back to the other revenue line. So you were saying that full year revenues this year should be a minimum of EUR 100 million versus the EUR 70 million that you booked last year. Could you give us a breakdown within that, within content and other? And within the other, is it possible to break down what is the Mitele Plus' contribution from that as well?

[Francisco Javier Uría Iglesias, CFO & Director of Economic]

Again, this EUR 100 million number is a -- is something that we expect that it could happen based, of course, on the business that we have for the second half of this year. This number compares with the EUR 61 million that we have at the end of June, and it compares with EUR 70 million that we had last year. Now from the EUR 70 million that we had last year to the, let's say, EUR 100 million that we have for this year, movies are going to be, all the things being equal, should -- if it's not 0, it will be a small amount because the situation now, there's no call to have new launches, right? And so the main difference between the EUR 70 million of last year, net of the movie numbers and the EUR 100 million that we have for this year, basically will come from the sale of content. Like I say, it is accounting for close to 50% of the number at the end of the first half. And we do not have any reason to believe that that 48% number at the end of the first half is not going to be the same percent that we're likely to see at the end of the year.

[Richard Eary]

That's helpful. Can I just ask a follow-up? As we step into '21, could you talk us through the run rate in terms of negotiations and projects that you are with OTT players on that content to see whether the '20 is a normal year or whether this is start of an inflection trend that we can get used to as we go into '21?

[Francisco Javier Uría Iglesias, CFO & Director of Economic]

It's difficult because sale of content depends on your own making of content, right? You make the content, and then once you have the content, at the same time or before you have it, you get in touch with the platforms. Now as you know, the making of content this year has been interrupted because of the pandemic. And therefore, any outlook for next year will depend on at which pace we're going to go back to making content again on a more normalized basis, right?

[Richard Eary]

So the step-up in this year is based on production that's already been produced and is not reliant on new production coming through. It's just sale of basically inventory to additional parties.

[Francisco Javier Uría Iglesias, CFO & Director of Economic]

I think you have all kinds of forms here. You can sell something when you make it or you make it before -- because you know that you can sell it, somebody's interested in something that you are making. And of course, the fact that you have somebody is like an incentive for you to do it. You can sell something that you have already produced. So that's why in order to work out numbers for the next year as we don't know exactly when we're going to get back to a normal situation, it is very difficult to predict. It's very difficult to predict. First, we'll have to see what happens with the business of producing a series and content in general. And once we get to that normalized stage, we'll be in a position to kind of gauge what could be the number for this sale of content.

[Richard Eary]

Just one follow-up, just on the margin side. You said it's a good margin, but can I probe a little bit deep and just say that if I look at the studio margins that are presented by the other European broadcasters with studio arms, typically, they are probably low double-digit margins. Is that how we should think about the content distribution margins? Or are these higher margins because it's just library sales and it's reselling existing content?

[Francisco Javier Uría Iglesias, CFO & Director of Economic]

The thing here is that you're not selling a commodity. You're selling a specific product. So when you have this particular series or this particular product, there will be interest on that particular product, which at the end of the day, also will depend on what kind of an agreement you strike in terms of -- I give you an exclusive right or you going to do it at the same time. So we're talking about averages. But we're not talking about a benchmark here because every single product will have its own life, the interest a little different, and the type of rights you're going to sell are also different. So it's very -- it doesn't -- there is not such a thing as a benchmark, right?

[Mario Sacedo Arriola, Head of Investor Relations]

Okay. Thank you, Richard. It's now time to close this conference call. I guess we covered all your questions. Thank you very much for attending to our presentation. And obviously, if you have any further questions, please don't hesitate to contact with Investor Relations department.

[Massimo Musolino]

Thank you. Bye-bye.

[Operator]

That does conclude the conference for today. Thank you all for participating. You may now disconnect.