MFE-Mediaforeurope N.V. (MFEB) Earnings Call Transcript & Summary

Good day, and thank you for standing by. Welcome to the Mediaset 2020 Full Year Results Web and Phone Conference Call. [Operator Instructions] For your information, this conference is being recorded today. Now I would like to hand the conference over to your speaker today, Simone Sole. Please go ahead.

Ladies and gentlemen, welcome to the 2020 full year results presentation of Mediaset. Given the full agenda, I will immediately hand over to the speakers today: Marco Giordani, CFO of Mediaset; and Matteo, Managing Director of Publitalia -- Matteo Cardani, sorry. Marco, I will hand over immediately to you. Thank you.

Good morning to everybody. Thank you, Simone, for the introduction. We are here to comment 2020 results that we evaluate very well. They are really outstanding also in respect to the, let's say, external situation, we were forced to have last year. We have prepared a slide, Page 2, that probably for us is the one that is more representative of the results we achieved in 2020. We were able to generate more than EUR 300 million cash at group level, above 2019. So notwithstanding the negative external market condition, we were able to have a better cash generation than the previous year. In terms of cost and cash costs especially, we were able to more than offset what we have lost in terms of revenue, and that's clearly the reason for which the cash flow has been so good in 2020. Another very important element of 2020, it has been the second half where we were able to have an 85% EBIT growth on 2019. All these results have been achieved with a very strong effort in terms of production facility, more than 12 million hours of in-house production has been produced -- sorry, produced in 2020. That has been achieved without forgetting tech development, and we were able to deliver more than double addressable TV campaign. That's clearly a part of the future, but we didn't stop to invest in technology and in development. Clearly, as all the markets, our OTT platform were really outstanding and over successful in 2019 for obvious reason, but we were able, in 2020, to achieve a very remarkable number in terms of monthly unique user, close to 40 million users monthly. This number has been clearly passed in the first month of 2021. So a very strong performance also in our DTC activities. And lastly, clearly, that's the reason for which we operate every day. We had a very strong increase in total viewers, 1 million more viewers versus 2019, reaching the remarkable number of 11 million viewers. And that's clearly something on which we are very proud. As you have probably seen on the press release that has been published yesterday, our intention is to reinforce our European strategy. That's something that clearly is not particularly new. We were already saying that a couple of years ago, and we want to reinforce that message because we -- after what has happened in 2020, we are more and more convinced about our choice. That has been summarized again on Page 4. 3 main pillars, clearly, on core business. We are going to face clearly tough years in terms of market development. So we have to adapt our cost structure and efficiency in line with what the advertising market will perform. So we cannot clearly grow from the very high market share we are already capturing, both in Italy and Spain, but we are going on. We will be going on in adapting our cost structure to what the advertising market will do. Without -- as I said, happened already in 2020 without forgetting technology, mainly regarding platform like OTT, DTC and all the different platforms that are clearly developing in these days, but also looking about technologies of selling advertising with more and more addressable technology in place. We are going on in selling the new tech proposition to our advertiser. As you know, we are looking for enlarge our footprint in Europe because, as frequently said in the past, we believe in consolidation. We know that there are others on the market that are more, let's say, focused on in-country consolidation. I mean we tend not to disagree about that, but we simply believe that it's not going to happen. And so cross-country consolidation, it's more achievable and more feasible to gain scale and to remain relevant in the media space in Europe. The other 2 pillars are digital and content. I mean that's clearly, again, nothing new. As far as digital is concerned, clearly, the platform would be the focus with the new DTC platform that Matteo will talk about later, already launched in Italy. Again, AdTech solution and development will be another important way of developing and monetizing all the audience that we are producing today. Data will be central, already pretty developed in our business today, but more and more central. And we would like also to be more and more present in what we call digital publishing, not excluding M&A, to increase the speed of the development. As far as content is concerned, we want to be more and more present because we're sure that that's the business that will develop. That's not clearly something we discover. But I mean, already in 2020, both in Italy and Spain, we were able to offset a little bit of the revenue decline coming off from advertising and selling content to the global platform, and that's something that we will go and doing. We believe that that's clearly not a focused strategy, but I mean, will be, in any case, a way to capture margins and profit that could help in financing the development. Another important element of the press release and the Board of Directors decision of yesterday has been, if you want a little bit a leverage for the pan-European strategy. So the redomiciliation of Mediaset in Holland. The strategic rationale is -- I believe it's clear. It is already well-known to everybody. We want to facilitate the creation of a pan-European content and entertainment group, both in linear and nonlinear space. And we believe that platform should be placed in a neutral countries from first; and secondly, also in a place where it is easier, more efficient and quicker to develop partnership and consolidation, and that's the reason for Holland. No -- nothing more than that. It's a simple the redomiciliation. It has been disclosed and approved at unanimity in the Board of Directors of Mediaset yesterday. We decided to leave any kind of litigation risk, canceling any kind of doubt or requests coming from shareholders. So the redomiciliation will be done without any special vote rights. And that's one element. And the second important element is that the governance are at the best practice level. I would say, it will be better than the best practice. And that's also the reason for which all the Board of Director of Mediaset approved the redomiciliation without any exemption. And as you know, in the Board, we have several independent directors, also elected in the list of the market association. So that's mainly all. And so I'll leave the words to Matteo. Just maybe a few words again on Page 6 to resume and to remind you the reason for which we believe that Europe is the growth strategy we would like to pursue. As I said, the first, if you want a technical issue, we don't think there is room for one company buying others. It's more a question of creating sort of neutral platform. Scale, it's the word that will drive the future in the media space, and we need scale. We, in the sense, all the media operator needs scale. In terms of governance, the only way in which we can be sure we can have opportunity to set up this platform is to be state-of-the-art in terms of governance and ESG, generally speaking. As I said, the legal framework is important. We need to grant a high degree of legal certainty and contractual and commercial relation. And Netherlands, as probably you, represent today probably the best place to be. Clearly, we have sufficient headroom to run the first step of this journey, but clearly also placing the company in a market, a little bit more European than Italy will be an asset that in the future will be useful to fund eventually possible increase of scale or possible increase of the border. And lastly, but I believe probably the most important of all, we need to attract talent. And the European challenge are certainly more attractive than local challenge. And that's also important, if you want to build something new, people is going to be certainly crucial. As I said before, I'll leave the word to Matteo that will take you through the market performance and the advertising market performance. Matteo?

Thank you. Thank you, Marco. Thank you, everybody, for your attendance. So let's comment on the 2020 results with a focus on Q4 contribution and a short outlook at 2021 early indicators. I start from the economic scenario, Chart #8, evolution of confidence index indicators. You see that the monthly evolution, both for consumers and business clearly, is, to some extent, influenced by the impact of the first, second and third COVID waves and consequent restrictions. But generally speaking, we are getting used to fluctuations, and we are not experiencing any big drop-down as in spring '20. If we take a look at the following Chart #9, the interesting thing is that this pattern is almost fully reflected in real consumption, while there is a certain degree of alignment with confidence index. We are on the road towards normalization, to some extent. And for sure, the ongoing progress on the vaccination plan will definitely help the economy. While for the time being, the consensus on the gross domestic product 2021 rate is around 4%. Next, I'm commenting the analysis of the advertising market, Chart #10. 2020 market trend improved from quarter-to-quarter in second half of the year. So the consolidated advertising market trend, H1 was minus 26.8%. Then we had the 9-month performance was around minus 20% with a flattish Q3. The year 2020 closed at minus 15.3% for the market as a whole with a Q4 low single-digit negative, minus 3.4%. So these are the main trends on the market side. TV and digital have been positive both in Q3 and Q4. And radio, even if it's still negative, was recovering in both quarters, improving the yearly progression. So these -- in Chart #10 is the market picture. Then let's move to Chart #11, and let's have a look to our performance. Our 2020 result is minus 10.5%. So we are around 5 points better than the market. And this turns into a further improvement in our market share. We moved from 38.3% to 40.3%. So this is a synthetic indicator of our market position resilience. So 200 basis points better than 2019. And the interesting thing is that we outperformed the market both in Q3 and Q4. So we were plus 4.6% in Q3 with a flattish market, and in Q4, we performed plus 3.5% with a market with a single low-digit decrease. So we are too big, not to be impacted by COVID in Q2. But let me say, as Marco stated before, that we are and we were very agile, resilience and better response in a recovery in H2. Then I move to Chart #12, where simply you have the picture of the different phases of last year advertising revenue progress. And I have already commented on the fact that the Q3 and Q4 were 2 positive quarters and 2 quarters where we performed better than the market. Okay. Let's go higher, and let's have a look to another key driver, a key factor in understanding the situation. So the sector dynamics, a key driver, because throughout all 2020, we saw the fact that there has been a strong asymmetry of COVID impact across economic sectors. As you see in this chart, that represents trend in value sales for each economic sector in 2020. This is not our dynamics. It's simply the business trend of our advertiser. You see that a large part of the economic sectors that accounts more than 70% in terms of contribution to our Mediaset advertising business experienced a positive growth, notwithstanding the COVID crisis. The other part of the economic sectors that account for a large part of gross domestic product but less than 30% in terms of contribution to our Mediaset advertising business were, for sure, more impacted by the crisis. And as you can appreciate in Chart #14, we keep this frame of analysis that we use throughout 2020, divided the economy into 3 main sectors. So resilience, restarting and restricted. And you see that our average performance, minus 10.5%, is explained with the sort of weighted average -- the weighted outcome of 3 different situations. So the resilience, I comment on Chart #15 because, here you have the dynamics. And you can appreciate the fact that resilience sectors were the fastest in recovery, and they had a brilliant, I would say, Q4, while the restarting sectors were the protagonist in Q3, mainly automotive sectors, and they had a good Q4. And the interesting thing that for us is very important also with a look to 2021 is the fact that the so-called still restricted sector. So leisure, services, hotel, restaurant, travel, all these kind of categories that suffered a lot -- that suffered a lot last year were almost close to parity in Q4, so given signals of recovery at the end of 2020. So this was the sector dynamics. And now I move to the analysis of our audience performance. And I'm commenting on Chart #16. Here, you have -- again, we are following this pattern of analysis. So let's first look at the market and then look at Mediaset performance against the market. So here you have the whole pictures of TV -- linear TV performance as a market over the past year, and it itself against the centrality of this medium throughout all 2020 months. And on average, the linear television scored plus 11% audience growth year-on-year. Interestingly, if you take a look at next Chart #17, on top of this resilience of linear television, it's interesting to notice the continuous development of consumption of TV content on digital devices, as Marco mentioned in the opening of this call. So we are heading new [ IBELs ] and audience on top of linear television. And this, I would say, notwithstanding the simultaneous development of subscription with on-demand streaming in our content as everywhere in the world. And this was the market picture. So let's take a look at our performance and commenting on Chart #18. Let's start with Mediaset linear TV that performed better than the market throughout all 2020. And you can appreciate these in terms of year-on-year performance. We scored plus 13%, where the market scored plus 11%. And if we move to the commercial target, even better. And as a result of this better market performance, you can appreciate in Chart #19, the fact that, of course, we improved our audience share by 60 basis points to 34.9%. And interestingly, on top of linear performance, we have even better digital nonlinear audience performance. Our share on digital screening in 2020, as measured by Auditel digital device is 37.9%. So let's say that we are in a good shape. I'm now running into the second part of my contribution. So this positive evidence from a Auditel digital device introduces to the next chart. In the following section, we can focus on the fact that 2020 COVID year actually restated the centrality of linear television, but at the same time, accelerated the evolution of total video consumption. We could state that our business is developing in a perspective of a layering framework. What I mean is that both in terms of audiences and revenues. Firstly, the first layer is the resilience of the baseline of linear television. On top, we have the second layer of the constant steady growth of nonlinear on digital devices. And last but not the least, the exciting and brilliant augmented opportunity of connected TV and addressable ads on first screen. And this is what I'm going to shortly illustrate in the last part of my presentation while I'm touching on our addressable strategy and adding color on Mediaset Play Infinity development. So our advertising strategy. I'm commenting on Chart #21 about the addressable TV market in Italy. So if we take a look at connectable and connected TV sets, we are facing a fast-growing trend. Over the past 12 months due to collateral effects of COVID restrictions and in the forthcoming 12 months due to the switch off plan, an important acceleration of connected TV penetration is underway. We do expect by next year to have 75% of households with at least 1 connectable TV set at home, and this driver will further accelerate the expansion of addressable TV market in Italy. Then I'm commenting on Chart #22. You see here some statistics, some growth trend in active TV devices on the first screen and in viewers on the second screens. You see that we can shortly comment that the fact that Mediaset is serving this wave and leading the edge with a continuous high double-digit growth volume in terms of rich devices, so enabled TV sets and active viewer second screens. So we are enlarging day after day the audience potential and the width and depth of available inventory. Then I move to Chart #23, and this for us is as sale-out is extremely important because we are carrying out a real process of market exaggeration, namely the continuous process of marketing the offer, enlarging the active base of clients and campaign, adopting this new opportunity on top, and this is very important, and not in substitution of linear TV campaigns. As you see, we are seeing a very large number of clients and campaigns. I can state that in terms of weighted part of our clients, at least 50% of our customer base, in weighted terms, is already -- has already adopted addressable TV as a standard lever in their plans. Then commenting on Chart #24. The interesting thing is that, as I said, we are facing an additional advertising opportunity. For the time being, it's a positive sum game with an interesting upside. Of course, we are comparing media solution and advertising delivery of different screens, different size, different rules of engagement. But the positive thing is that if we calculate common comparable metrics, so the [ other ] revenue per each single hour operation by each single individual, the advertising euro per hour is even higher on connected TVs and second screen. So to some extent, we are managing sort of a positive trading across the 3 screens. Then commenting shortly on Chart #25. As Marco stated in the opening of the call, driver for this item is, for sure, the fact that addressable advertising leads in the realm of data-driven advertising, where we manage and leverage the value of cross-screen advertising through a single data management platform, encompassing and ranging through different touch point at home, at out of home, fixed touch points, mobile and on-the-go touch points. So crossing data across any screens at home and out of home, including digital out-of-home points of introduction, we are able to activate a measure across any addressable media. So what's the opportunity for us, commenting on Chart #26. There are 3 different aspects, what we consider additional opportunities. We deliver incremental reach. We are able to attract new brands to television, thanks to scalable size of advertising campaign on addressable media. And last but not the least, we are adding new performance KPIs on top of consolidated TV effectiveness. Chart #27 gives you a snapshot what we mean when we say that we offer the opportunity to combine the best of both worlds. So it's a positive sum gain, linear and addressable broadcasting TV with its unparalleled reached and impact. Plus 3 benefits from addressable advertising. We offer incremental reach, specifically on live TV viewers. We offer effective additional frequency. And on top of this, we offer the benefit of advertising geolocalization that is a key driver for a lot of the businesses and sectors. I'm closing my part. Last 2 charts, some words about the Infinity experience, so the evolution of Mediaset Infinity. I want to state that this world of new opportunities will be further developed, thanks to Mediaset Infinity platform already in place since April 2021 and available on every screen, TV sets and digital devices. A new dynamic integrated platform that we launched with a massive communication campaign in Q2. The unique proposition of Mediaset Infinity, as you see in Chart #29, is the combination of 3 layers. Every advertising video demand entry point, followed by a pay light layer of extra services. That is the natural introduction and engagement for paid channels with vertical offers. So we consider Mediaset Infinity as a unique platform, a gateway that will facilitate the premium transition. People used to be consumers of our free-to-air content of Cuatro will be in use to become customers, to some extent, and to pay for subscription video-on-demand content. A proposition that, as I commented, this is my last chart, Chart #30. By -- this will be accelerated by and then passed on really empowered by the Champions League offer. You know that we have the rights for over-the-top online streaming of 104 matches. And this over-the-top offer is on top of the 17 matches on linear television. So we made more than 120 Champions League matches accessible by Mediaset on its platform, so free-to-air plus over-the-top Mediaset Infinity. And this is a unique total audience offer we are going to play starting from Q3 this year. So I thank you for the attention. And now I move again the leader of the call to Marco.

Thank you. Thank you, Matteo. And as traditional, we'll take you through some of the financial highlights of 2020 in giving -- trying also to give you a little bit of guidelines as far as 2021 is concerned. Starting from Page 32. I mean, clearly, the numbers are already known. I would like just to highlight the fact that we lost almost EUR 300 million in revenue in 2020 compared to 2019. Frankly speaking, a pretty large number. But as you can see, in terms of EBIT, we were able to almost offset everything and accounting only a EUR 40 million EBIT decline. As you will see further on cash, on the other hand, will be even better than the previous year. That's clearly an another very, very leading example of what we have done in 2020. We acted faster, we acted materially, and we were able to protect the cash flow and the economic performance. I was referring to cash flow. And clearly, it's easy now to move to the net financial position. We -- as it has been shown in Slide 32, financial position improved very substantially in the last -- in 2020, almost EUR 300 million lower debt, again, very remarkable. And even more remarkable if you think that in 2020, we have increased our stake in proceeds. And so in reality, the cash flow generation has been really impressive. And we were able also to increase our strategic investment during the same period of time. A few words about our financial position. At the end of 2020, the company has almost EUR 650 million undrawn revolving credit facility, mainly expiring in 2023, '25, plus additional EUR 570 million uncommitted facility. And we have increased our headroom vis-à-vis the drawn-down facility and the proportion that is now resulting is 49% versus 55% in '19. So in a sense, we have more headroom to finance our growth. Also maturity has improved in the sense that we have increased our duration of the debt from 1.9 years to more than 2.1 years at the end of 2020. So 1.9 at the end of '19, 2.1 at the end of 2020. And we have confirmed a very low cost of debt in the region of 0.8%. So we were able to reinforce the balance sheet during a so difficult year that has been the 2020. Then moving to the Italian business. Clearly, I'm not going to comment the advertising performance because I believe that the Matteo presentation has been pretty comprehensive. Let's talk a little bit about other revenue. Well ahead of our guidance, mainly driven by content business that I said something at the beginning of my presentation. We were able to develop the business further than in 2019. We have structured different organization to match what the market is requesting. And clearly, we are going on in that direction, and we want to push further in selling content and producing content, not only for our channels but also for third party. Moving to cost. As you can see, we closed 2020 with EUR 1.79 billion of cost, pretty in line with the guidance we gave. And we can show a reduction of EUR 170 million, less cost than the previous year. That's a reduction of almost 10%. And so that's clearly something which we are pretty proud of. Just a few words about the adjustment. Clearly, layoff is critical by himself. I would like to comment the other one-off. We were forced to write-down some contents produced before February 2020. As you can imagine, there were entertainment product that has been shot before COVID with audience and people in the studios, and that clearly were not really in a shape for which they could have been shown on the TV during the pandemic. And as you can see, that's something that we don't want to have any more in the future. Moving on 2021. It's going to be a pretty challenged year because our main aim is to stay in terms of cost as much as possible as close to 2020 level. That's clearly pretty challenging, I would say, but that's really our aim and our challenge for 2021. If we are able to stay at that level, that would mean to be between 6% and 8% lower in terms of cost base than 2019. And that's clearly, again, a material decrease in the cost base. And clearly, it's easy to understand for everybody that every single euro that will be collected in terms of revenue will be then converted in cash flow. As I said, 2021 is going to be a pretty challenging year. On one side, we have to capture the recovery of advertising market. We have to capture the opportunity on the cost base -- on the content base, while we need to be very smart in keeping the cost base in line with 2020. Moving below EBIT level. We clearly face a different situation than in 2019, as you can see from the financial line. That's mainly driven by the fact that in 2019, we were able to collect dividends from ProSieben, while, as you know, in 2020 ProSieben decided not to distribute any dividends. That's clearly something that has been pretty easy to understand in the financial income line, but I mean that's clearly something on which we believe we can recover easy on 2021. As I said, we are not expecting big changes in '21 in that line, associate around 15%. And as I said before, financial income close to '19 number. I will say that we were good in cash protection, and that's clearly not only understandable from the economic P&L but is also clearly reflected in the investment discipline. And as you can see in Slide 35, 2020, we were -- in 2020, we were able to reduce the investment, the total investment by almost EUR 70 million. Again, a proof of the discipline that we have put in place last year. This reduction is mainly concentrated in TV rights investment. As far as '21 is concerned, we will go on in that discipline, and we are expecting between 15% and 20% lower investment in respect to 2019. That's, again, a proof that we should be very close to '20. And so all the cash generated by the new advertising line will be then converted in cash. Page 36 is graphic proof of what I said. We lost, as we commented at the beginning in Italy, almost EUR 180 million in revenue. But reducing costs and reducing CapEx, we were able to generate more cash in 2020 than in 2019. And that's clearly also shown by the cash flow statement on Page 37. Clearly, everything is in line with the first 9-month result. We already commented in November. So frankly speaking, no big, big issue. Clearly, we are only at the beginning of 2021, so it's very difficult to give a guidance in -- for the full year. Many things would happen, could happen. We are working on several project, and so it's very hard for us to give a guidance for the full year. But what I would like to say is that our main objective is to protect the cash of the core business. As I mentioned at the beginning, we need to grow, and we need to invest. And the only way we can do it is to generate as much as possible cash flow from the core business, and that resources will be invested for the future of the company. Now I believe that we could start the Q&A session. So I will hand over the word to you, and Matteo and myself will be available to answer. Thank you.

[Operator Instructions] We're now taking our first question from the line of Julien Roch at Barclays.

Two questions for Matteo and one for Marco. The first one is, can we have some indication of April trends? As you gave us Q1, April is the first month with really easy comp, so we have an idea of the 3-year trend. That's my first question. The second one is, you've put a lot of slides about addressable TV and the opportunity there, but we have no idea of the size within your business. So my understanding is that advertisers buy GRP with you and cannot choose between your different media. But can we have an idea of your internal breakdown between -- I don't know how you want to do the breakdown, but some indication between linear TV, digital TV, radio, outdoor, whatever help you can give us on sizing the breakdown of revenue and therefore, the opportunity for the new digital stuff? And then the last question for Marco. So you were clear, you're moving to the Netherlands. There are no multiple voting rights. You're laying the ground for pan-European consolidation. But why did you go to the next step, which would be to merge the 2 Mediaset like you did last time? So what is the next step timing? Anything you can give us on your move towards pan-European consolidation would be great.

Thank you, Julien. Maybe I will start from the latter. As we tried to explain in the press release -- in the yesterday press release, we tried to execute our industrial strategy, trying to reduce as much as possible any kind of future litigation with anybody. So we try to move to the Netherlands in the cleanest ordinary way and without introducing any kind of operations that in the past has been questioned by somebody. As you probably remember, one of the questions we had in Spain was exactly regarding the merger. So we are still convinced that from the industrial point of view that, that move would have been great. And frankly speaking, the fact of not having realized the synergy we have provided and also the value that we could have generated is something that we are not happy with. But fair enough, we are looking at the future. We will try to do our best to achieve at least some of the synergies that was possible with the merger. But as I said before, we moved to Netherlands. We would like to move to the Netherlands in the more ordinary way as possible. And the merger, as I said, has been questioned in Spain with the result that some of you probably remember. So we try not to pass to the same technical [indiscernible] way. I'm not excluding that one day or the other in the future, the merger will be then be done. Clearly, I cannot say because it naturally speaking makes sense. But as I said before, we try to be as much as possible clean and looking at the future without trying to avoid any possible litigation. Matteo, maybe you can answer to the other questions.

Yes. Thanks, Marco and also to Julien Roch for questions. So first of all, before commenting on April, as you know, we have released our results for Q1. So the good news is that gross revenues are increasing by 6.1% compared to the same period in 2021. And honestly, this result is higher than expected compared to our initial expectations and should be considered very positive in comparison with the first quarter because the first quarter 2020 was 2 months not affected by COVID, January and February, and March partially impacted by COVID. While this year, January, February and March, we were under restrictions. But we have definitely a very good performance, satisfactory, for January, February and with fast acceleration on March, that contributed to the overall results. So we are satisfied also because I remember March 11 last year, the keyword I shared with you was business continuity, and this is the key driver. What we are experiencing on a day-by-day basis is that advertisers need to sustain their business through advertising in order to accelerate their way to normalization. And translating this into figures, we are April 27 today, so April is not closed. So I don't want to comment with exact numbers of April. But April again is a positive month and the gain is better than expected. So I do think that we will comment with more details in a short time because we are supposed to meet a gain on May 11 for our Q1 call. So we will comment into details in Q1 performance, and we will have a better outlook on Q2. But Q2, for sure, will be double digit, very high double-digit quarter. And let me say that, to some extent, we are proud of the fact that we are -- our track record is 3 quarters in a row, but I can say 4 quarters in a row positive despite the fact that we are still in the COVID emergency. And we are also proud about our business diversification. As you know, we are not used to comment and give a breakdown by each single line of our business. But I can simply add the 2 colors on your question with regard to diversification. We are doing well, better than market in each single segment. So addressable, digital screen, radio and so on. So we're continuously tracking our performance versus the market. And we are satisfied by the degree of the diversification added by these new lines of old business. And as far as this new segment growth in the near future, as I explained about addressable TV, we are optimistic because we are higher than -- of markets in that segment. And the more the segment grows in the next future, the more our diversification will increase. So that's for the second question.

Okay. So I understand you don't want to give a breakdown, but maybe just give us how much is traditional advertising. So if you put linear TV and linear radio together, how much of revenue was at the end of '20? So we can have an idea of the old and the new stuff, maybe one number.

I see your question, but it would be the same as giving you the breakdown of our business. So I apologize a lot, but I stay to the line we choose not to give breakdown. But as I said, the degree of diversification of our business is higher than the average degree in the market. So that is why I say that we are optimistic. And that we don't see linear TV or linear radio as a different proposition compared to nonaddressable. They are 2 sides of the same offer. So we offer radio and digital audio. We are offering linear and addressable as part of our integrated offer. Sorry, I'm not -- I cannot give you more details.

We're taking our next question from the line of Fabio Pavan at Mediobanca.

Congratulations on the results. Moving to the question. I was wondering if you have already managed to discuss with [indiscernible] about your strategy for pan-European project and if you see room for some more cooperation with respect to the past? The second question, again, on this is, if you have any comments regarding the potential interest for safety [indiscernible]. And finally, for Marco, looking at your guidance, for 2021 costs and considering what you told us on a practical approach on cost for 2020. My take is you see further room for cost optimization, contractual costs in 2021. Just to be sure I understood properly your message.

Maybe I'll start from the cost. No, what I'm saying is that further reduction versus '19. As I said, clearly, 2020 has been incredible in many sense, also in the cost base because, clearly, we were able to have a so low-cost base that, frankly, we don't want to have it anymore because part of the year, we were almost closed -- shut down. So our challenge in '21 is to stay as close as possible to '20, and that would be sort of miracles. If we are able to stay close to '20, this would mean between 6% and 8% lower than '19. And as I said, that's the remarkable challenge that we are placing in our organization. And I repeat it, it's, frankly speaking, something very challenging, both in terms of cost, but also in terms of G&A and all the other costs that are clearly something which we can cope, not so much. Then moving to the European challenge. We are going to try all the opportunities. So clearly, RTL decided to put on sale its stake. And clearly, we are participating to the process, as I believe, should be -- our duty is in the sense that -- and since it's a remarkable company, we believe that their publishing strategy, editorial strategy has been really outstanding, I would say, top-tier in Europe. So that's clear that we would like to participate. As far as the rest, we have read what RTL CEO said, they would prefer a French solution. We can understand the France is France. But I mean, that's not clearly preventing us to participate. As far as the result, clearly, what they said is not clearly giving us a lot of chance, but we are strong in reaffirming the fact that our industrial project is there. We are more and more convinced. Maybe there are other projects around. Frankly, we don't see many. We would also say that we would love to buy RAI, for instance, as other similar our companies. But frankly speaking, we don't see so much feasible. So yes, I mean, technically speaking will be great, but it's -- I believe it's time to move, and it's not time to be theoric. So if, for any reason, in Europe, there will be a change in regulation for which in-country consolidation will be feasible and possible, we will certainly try to gain scale, both at European level but also at country level. For the time being, sticking with what is possible, I mean in-country consolidation, looking at the shares, we are all -- I mean, all in terms of all European broadcaster collecting today, we see it very unlikely. So that's the reason for which we are participating to -- in this process. And we will do the same for all the opportunities that will arise in the future. In terms of probability, we simply don't know. That's something that is not preventing us to participate with all our capacity know-how and projects.

Our next question comes from the line of Stefano Gamberini at Equita SIM.

Three quick questions on my side. First of all, what was the contribution in revenues from content in sales in '20 and the potential growth that you expect in 2021? The second regarding your statement of no future litigation with anybody. So could you give us some color as regard the request of damages for premium? What is your strategy? What do you expect on this topic? And if this could be part of a negotiation with Vivendi on the other side? The third one, regarding EI Towers. Could you extract value from your stake in EI Towers? Also in this case, are there some notice about a potential extraordinary dividend we read on the press from EI Towers after the expected disposal of Tower EL. And if you give us some figures about that? On top of that, about a possible aggregation with [ Highway ]? Do you see that the political scenario is now more favorable for this step ahead or not?

So I'm trying to follow your priority. In terms of other revenue, clearly, the list of line that is compounded there, it's pretty long. I agree with you that the 2 main categories are content sales, content monetization, let's call it, in this way and, broadly speaking, distribution fee from other platform. Clearly, you see a total number, but clearly, all the categories are moving differently. And I'm trying to explain. Distribution from platform. As you probably remember, we are selling pay-TV channel to Sky. The contract signed 3 years ago, if I remember well, is going -- is due to expire in -- at the end of June this year. So clearly, in our projection for this year, we are going to face a reduction there. But as I said, we aim to recapture these lower other revenue with more content sales. So we see that as a sort of other monetization compound in which we target as much as possible the monetization of our assets, including, for instance, bandwidth and many other things. So clearly, the different category we move, as I said, we will probably face a slight decline in 2021 as far as other revenue is concerned, but we will try to keep this decrease as low as possible because, as I told you, what we are going to lose from Sky, it's -- we'll try to be recapture in terms of content monetization. As far as legal issue, frankly, I don't know. I cannot remember -- I cannot answer to your question just because legals are taking care about that. I mean we are looking about the future. If you want one day or the other, we can set up a workshop on the last 5 years. But I mean frankly speaking, today, it's a moment in which we need to act and looking at the future, what has happened in the past, fair enough, will be taken from others. We have always acted as Board of Directors in the interest of all the shareholders, and we will do that also in the future. And we believe that the interest of shareholder today -- of all the shareholders today is to grow and to gain scale. We don't think that EUR 1 or EUR 100 or whatever in terms of litigation will change our future. And so frankly speaking, I don't know, legal people will take care of it. As far as EI Towers is concerned, again, you know that we are minority shareholders. So we are not really dealing in person with all you said. We are happy with the present value of our stake and also the return that we are getting out of it. As we said in the past, clearly, we are a media company, and infrastructure investment is not certainly a top of priority in our strategy. But we believe that we can extract value out of -- yes, we can extract value out of the EI Towers' stake in many ways, frankly speaking. And selling it, will be sold only when we believe that the valorization process will be a top or when the opportunity investment we could do is getting more return in terms of financial return or also industrial returns. So what I can say now, we are happy with the present situation. We believe that we can get additional return. And as soon as we have any news on that, we will tell you. I think I have answered all of your questions, Stefano.

Okay. Can I jump again in the conversation, if I'm allowed, I guess, Simone, just to at some perspective on the second question I received from Julien Roch?

Sure, sure.

Okay. No, because my contribution is the following. So we do not comment to the actual breakdown of our different lines of business. But what we could share together is the perspective over the next 5 years or so. We do expect an acceleration, as I commented in the presentation from 2 drivers. On the one hand, the switch off by the end of 2022 in TV sets in Italy. So we do expect a major positive discontinuities in the TV sets in Italian households with a jump in connected TV sets available. And the other one, more or less with the same timing as the final release of total audience by Auditel. So if in this perspective, we consider the total video market, so not only television but total video in all its different aspects. At present, we do estimate it's a market around EUR 4.5 billion. And we do see that it is reasonable to expect that the contentable market for addressable advertising offer should be at least 10% of this size. So something around EUR 400 million, EUR 450 million in a 5-year time span. The curve, the growth curve in order to reach that objective will depend on the rate of penetration of connected TV sets in Italy. And the faster the adoption of total video, total audience metrics by the market, the higher the growth. Okay. I hope to add some color on my previous answer.

We're taking our question from the line of Andrea Randone at Intermonte. Due to lack of response, we move to the next question from Richard Eary at UBS.

Just a couple of questions from my side. Just going back to the other revenues. I mean you obviously said that you're going to try and offset the loss from the Sky contract. Can you just remind us how big the Sky contract is? That's the first question. The second question, just coming back to cost guidance. I mean you seem to infer that you want to hold it at current levels of '17, '20, and you wanted to hold the investment levels. But if we look out into 2022, beyond that, is that something that you think is sustainable despite underlying inflation in the system? So that's the second question. The third question just come back to I think Julien's question about media for Europe and, obviously, whether a new deal comes back for Espania. I mean obviously, one of the issues last year was with the exchange ratios and the conversion into basically Mediaset S.p.A. I mean for that deal to happen, do you think we need to sweeten the deal? Or do we need to change the component between cash and shares? And is that something that you would consider, particularly given low cost of debt?

Thank you, Richard. No, I mean in terms of other revenue, we are not really disclosing the single element. As I said, there are many, not only the Sky contract. We are selling bandwidth on digital [indiscernible]. Last year, we had, for instance, home shopping that we launched in -- that we sold in November. So that will be, for instance, other EUR 20 million lower other revenues that we have to offset. As I told you, there are many components of the line. As I said, the guideline is going to be lowered next year, for sure, but we will try to keep it as low as possible in respect to 2020 because content will grow and will not be one single element. There will be many elements that we'll move. I'll give you another example. In 2020, in January, so before COVID, we launched a blockbuster on theater, something that today only looks so old and past. But in any case, we got, for instance, more than EUR 30 million revenue coming from that blockbuster, that clearly will not happen anymore in 2021. So there are many things that will change. As I said, our challenge again is to be as close as possible even if I'm pretty convinced that the very outstanding level of 2020 will not be recaptured. As far as 22, no, frankly speaking, if we are able to stay close to 2020, '21, I don't see a lot of inflation in '22, clearly, if the market will grow a lot. We have also, as you can imagine, some variable costs, for instance, we need to pay taxes on revenue. So we had some variable cost. So if the top line also will grow a lot, certainly, costs will grow as well. But I mean our aim is to keep cost base where it is. And frankly, I don't see 2022 as an inflation year in terms of cost, from what I can see now. As I said, it will depend also on the top line, but I'm expecting -- it's a little bit early, I'm expecting 2022 a number that is not going to be far from where we stand today. As far as Spain is concerned, as I said, was our initial project because, I mean I don't want to repeat it, but clearly, there are synergies on the table that can be captured easily in a single organization. And on the other hand, it's not so easy to capture if you have 2 listed companies in 2 countries -- in 2 different countries. We will try to do our best. We are also -- we're already coping with our Spanish colleague in some technology area, for instance, to see whether we can choose the same solution to save money. But as you can imagine, 2 bosses thinking in a different way in the IT environment, clearly, synergies are not the same that if you have one single boss deciding for the best of 2 countries. So we will try to do our best, but synergies of a single organization will be higher than the one that we can capture with 2 organizations. Having said that and technically speaking, financially, technically speaking, as you remember, the Spanish, the Madrid, the Tribunal stopped the merge. And again, we don't want to reenter in a situation where any kind of deal will, in any case, provoke other litigation. So let's move step by step, but let's move. So first step, let's move to Netherlands. We will have the platform. We can do things already. Not the optimum, fair enough. We had some negative reaction from Tribunals. And we don't want to reenter in a situation where we are more talking about legal issue than talking about and trying to execute the industrial strategy. So for the time being, the integration -- the Spanish integration is not on our table for the reason I told you. I cannot exclude that will be forever. But for the time being, I do not expect anything in the coming months on that respect.

There are no more questions on the line. Please continue.

Okay. If there are no questions, thank you very much, everyone, for attending this conference call. And as always, if you have any further questions, please don't hesitate to give us a call. Bye-bye. Thank you. Bye.

That concludes our conference for today. Thank you for participating. You may all disconnect.