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

Good day, and thank you for standing by. Welcome to the MFE MEDIAFOREUROPE 2023 Full Year Results Conference Call and Webcast. [Operator Instructions] Please note that today's conference is being recorded. I would now like to turn the conference over to your speaker, Sara Bersan.

Good morning, ladies and gentlemen, and welcome to the full year 2023 results presentation. Today, the presentation will be hosted by Marco Giordani, Group CFO; and Matteo Cardani, Managing Director of Publitalia. Now I'll hand over immediately to Matteo for the audience and advertising outlook. Matteo, please go ahead.

Thank you, Sara. Good morning, everybody. Thank you for attending our results presentation. We will go over the fiscal year '23 numbers with a short review of ongoing indicators for our current trading. So let's start with a review of the overall economic situation. Thanks to the reduction in inflation, we stood at plus 5.7% at year-end '23, but that in the last quarter of the year and in the first few months of '24 is falling down below 1%. We can report a positive evolution in the confidence index for both businesses and consumers, which grew month-by-month in Q4 '23, as you can see in Chart #3, and that explains the good performance in Q4 last year. This situation is reflected in the average stability of service and goods consumption, as you can see in Chart #4, with services growing by 4.2% and goods down by only 1.8%. With regard to gross domestic product, as you know, both conjunctural and trend variation for Italy were positive in Q4 '23 with a full year having a better trend than the euro area for both Italy and Spain. And even gross domestic product forecasts are also positive for '24 for both countries; Italy plus 0.7% and Spain plus 1.7% versus euro area at an average of plus 0.8%. So moving on from the macroeconomic indicators to the advertising market, both Italy and Spain have registered a positive evolution of revenues in '23. Regarding the Italian advertising market, if you take a look at Chart #5, you can see the total market registered a growth of plus 2.4% year-on-year, benefiting from the growth of media such as radio and out-of-home and television showing a good resilience mainly if we compare the TV trends in other main European countries. On the right-hand side, importantly, the graph shows the progression of the MFE advertising revenues on a yearly basis between 2019 indexed at 100 in 2023 against the total market, excluding MFE. In '23, MFE reached its highest level since 2019, while the rest of the market is still 10 points -- 10 index points away, maintaining the same distance as the end of '22. If we move to Chart #6, you can appreciate the contribution -- the sectors contribution to the growth of the market. And you can see that the main highlight is the automotive sector by itself. It accounts for 1.7 points of contribution to growth. In the following chart, #7, you see our performance in '23. So plus 2.1% year-on-year, so better than the company's expectations, and recorded the best Q4 results of the last 5 years. Our company achieved these results, thanks to 2 main drivers, so let's say, demand and supply. Demand means balanced dynamics among economic sectors, and the supply means the strength of our offer on first screens and digital screens. So if we take a look at sector dynamics over the last 5 years, before pandemic and last year, we divided the economic sectors in 3 groups. There are sectors that benefited from the pandemic, continued to grow afterwards, such as retail, home care and household equipments. Sectors that remained stable in the 5-year period such as pharma, personal care and toiletries. And then you can appreciate those sectors that are recovering from the declines suffered during the pandemic, but still have room for growth to return to the 2019 level; grocery, food, telcos, and most of all, automotive, which grew by 25% in '23, reflecting the growth in vehicle registration around plus 20% in the last year, but the sector is still away from 2019 level of registrations and advertising. So that's why I say we are quite confident that there is still room for growth also considering the fact that there will be in the forthcoming months some incentives for car purchases. I'll skip to Chart #10 now, commenting our offer. In the second part of '23, there has been a marked change in our offer with new TV presenters and a confirmation of the successful formats, both in daytime and the prime time. So thanks to our offer of the journalists in automatic channel, each of them with a very distinctive positioning, the company last year outperformed its main competitor in various targets, including individuals and commercial targets, both in the 24 hours and in prime time, also benefiting from the growth of digital screens or connected TV, mobile and desktop. So you can appreciate in this chart that on commercial target, we are above our competitor by 10 points. Then if we move to Chart #11, you can appreciate the strength of digital screens, both by total audience, a growth of plus 1.1% versus 2019. So adding 2.7% to the traditional audience trend performance. We are -- I do really think that this is a key chart because differently from the main trend in other countries, the combination of the resilience in linear audience and a growth in total audience deliver a positive sum game. A positive sum game that you can also appreciate in Slide #12 where the combination of the connected TV and second screen that keeps heading viewers with a younger profile complementary to the linear TV audience, most of all, with the additional benefit of a higher CPM compared to linear TV. And Chart #13, we state the fact that we have a positive, let's say, trading up in the combination of the free screens with regard to monetization. So you can see the pricing upside opportunity on addressable advertising that is characterized by a higher revenue per hour compared to the linear offer. Of course, this positive trend is strongly supported by our business digital key figures that you can appreciate in Chart #14 where you see that -- you can see the number of our total streaming hours on a yearly basis. So we reached almost 650 million hours of streaming hours on a year basis with an increase of plus 35%. And most of all, you could appreciate the fact that the consumption by logged-in users represent 84% of the total streaming hours, and that's really appreciated by the market because they are profiled users. And even the number of monthly viewers' active devices is growing to reach 6.6 million users on an average monthly basis in the last year. So all the fundamentals of our business, as you can appreciate, are in a very good health. So let's now move to Spain, so the advertising performance in Spain last year. The linear TV advertising market in Spain was down minus 2.4%. But we could appreciate the fact that as in Italy, however, the total advertising market is performing better in Spain than in other European countries. Spain last year was around plus 3.7%. Regarding our performance that you see in Chart #15, we were down minus 2.2%, so better than the linear TV trend that was minus 2.4%. And this good performance, that means -- can be explained by the sectors trend. We replicated the same sectors analysis we carried out for Italy. So you see that there are a lot of similarities among the 2 countries with an important part of growing sectors such as retail, household equipment and home care. The same 3 stable sectors, personal care, pharma and travel. And you have more or less the same recovering sector, so telcos, groceries, food, finance, and most of all, as in Italy, automotive. Last but not the least, with regard to Spain in Chart #17, you see our solid leadership on commercial target. We are a leader on commercial target with a 28% share. So this was quickly the review of the fiscal year '23 performance. And I remark the fact that the fundamentals of our business are in a very good health and this situation extend to Q1 this year. In the first part of the current financial year, the Group advertising sales performance supported by very good broadcasting results show a significant growth of plus 6% compared to the same period last year. In Italy, the growth in advertising revenues was plus 5% compared to the same period '23. And so we are consolidating the extremely positive trend that characterized the second part of '23. There are also signs of improvement in Spain with sales in the quarter growing strongly, plus 8% compared to the same period in '23. So in both geographical areas, positive trends are also being recorded for the current month of April. And so just the final comments on our outlook and the first part of the year. So as we stated in our press release, the first few months of '24 had a very good start for the advertising market. And I want to remind the fact that for the first time in 4 years, Q1 maintained a positive inertia of Q4. And so closed with a single-digit growth with a trend better than fiscal year '23, a very good growth around plus 5%. However, and this is very important to share with you, we do think that it's possible that the weight of the 4 quarters will be distributed differently. The weight of Q4 advertising investment, which in recent years has been very high, maybe lower instead of the weight of Q1 that was very important. So we could be in front of a balance between Q4 and Q1 in advertising expenditure allocation. Furthermore, we should also take into account that Q2 and Q3 where there will be the European Football Championships and the Olympic Games, which will be broadcasted by Rai. And from autumn '24, we will no longer own the rights for the Champions League. And so all these factors will lead to the coming quarters closing expectation with a lower trend than the first quarter. Spain, with regard to Spain, Mediaset Espana had a very good performance in the first 2 months of the year with double-digit growth and recovering the decrease in '23 and reaching above the level of '22. March has been affected by Easter week that is quite important in Spain. But as I said, overall, Q1 saw a growth of plus 8% and we are in the middle of month of April, and again, we are facing a positive trend recorded also for the current month. So I thank you for your attention, and I'll pass to Marco for the financials. Thank you.

Thank you, Matteo, and good morning, everybody, also on my side. I will take you through the full year '23 results presentation, starting with an overview of the Group results. At Page 19, you can see the main highlights. The Group achieved a result above our expectation, the one we had at the beginning of 2023. During the year, we went through the integration process with Spain that has contributed certainly to efficiency, thanks to the sharing of back practice, a new project and also leveraging on innovation. With the level of total revenue that is, as you can see, very close to last year, so to the previous year, we have improved profitability and we have achieved an EBITDA that was 23% higher than 2022. So pretty remarkable performance. As I said, the total revenue reached EUR 2,810 million due to a better than expected top-line results in Italy that offset the forecasted decline in Spain. 2 main drivers explain the slight decline in Spain. One was the unfavorable other revenue lines, we are going to explain that in the coming page, and an expected lower advertising collection pretty aligned with the advertising market we had in 2023, as Matteo was explaining before. As far as Group net profit, excluding the accounting effect of the consolidation of ProSieben, the result was positive for EUR 270 million, higher by 32.8% -- sorry, EUR 32.8 million versus 2022, almost 18% higher than the previous year. This level of net profit exclude 3 additional elements. Certainly, the almost cancellation of the dividend coming from ProSieben. In 2022, we cashed in EUR 42 million; in '23, just EUR 3 million. And a negative effect of the equity consolidation of our stake in ProSieben for about EUR 11.3 million. That new consolidation started from the 1st of July, 2023. And this negative contribution is coming from the result of the one-off impairment of programming assets of about EUR 250 million and a provision for onerous contracts for almost EUR 90 million that ProSieben recorded in the financial year 2023 that clearly impacted the reported Group key figures. [Technical Difficulty] the solid operating performance has allowed the company to largely offset the downside or the net result level coming from the above-mentioned discontinuities. As far as the Group financial position, and excluding the liability of IFRS 16, as you can see, we were around EUR 738 million debt that was in line with the previous year. Moving in the geographical area and trying to assess the performance of the 2 countries. And Matteo has already explained the advertising [Technical Difficulty] I'm not going to comment again. As far as Italy is concerned, the other revenue line was EUR 280 million in 2023, 2.4% better than the previous year. At the EBIT level, in Italy, we registered an outstanding result, showing a cost base fully under control. And the adjusted EBIT figure was EUR 183 million in Italy, as I said, almost 2x higher than the previous year. So double than 2022. Total adjusted cost was EUR 1,795 million. We were managing the cost base with a great efficient approach and the result in 2023 is a sharp decline of total cost of around 2.9% year-on-year. In an absolute number, we are talking about EUR 54 million cost reduction, again, taking in consideration the difficult economic backdrop characterized by a sharp rise in inflation. Moving to Spain. Again, I'm not going to comment the advertising line, but the other revenue line, on the other hand, resulted of EUR 86.1 million. We accounted EUR 17 million, 1-7, of other revenues less than last year. Again, that was mainly due to the fact that in the third quarter 2022, Mediaset Espana has a premier release of Tadeo Jones #3, one of the most successful saga in Spain. And clearly, in 2023, that was not again on the screen. In 2024, we are expecting to come back to a similar level than the previous year. In terms of cost in Spain, they were EUR 671 million, declining again compared to the previous year and accounting for an adjusted EBIT of EUR 161.5 million. Again, then moving to Page 21, we can go a little bit deeper in the guidance for 2024. The first element I would like to comment is that MFE will start from the 1st of January, 2024 to consolidate 100% of Mediamond. Mediamond was a joint venture between Mediaset and Mondadori dedicated to the digital advertising collection. Previously, the joint venture was 50-50, as I said, that was accounted at equity level. And as we bought 100% of the company at the end of last year, from the 1st of January, 2024, we are going to consolidate line-by-line 100% of this company. The accounting effect of it will be pretty important in terms of effect, so I'm trying to guide you through it. Following the acquisition of 100%, we are going to consolidate almost EUR 70 million of incremental revenue and almost EUR 70 million of incremental cost. And clearly, with a small positive contribution of the EBIT line, but to give you a broad sense of the impact of the consolidation, you have to account EUR 70 million more revenue and EUR 70 million more costs. Part of the revenue, the EUR 70 million revenue, are clearly related to the digital collection of Mediaset sites. And so in terms of line, 80% of the incremental revenue will go in the other revenue lines and 20% on the advertising collection line. Thanks to that, for the other revenue, for 2024, we can confirm the guidance, as anticipated in the latest conference call, to remain flattish compared to 2023, increasing, as we said, EUR 50 million coming from the consolidation of Mediamond. So in total, the guidance for the other revenue line is going to be EUR 430 million. As far as the rest, clearly, you have to remind that in -- you will have other revenue line movement that are the ones that are related to sale of content, cinema production, subscription of OTT services and other revenues that are not related to advertising collection. As we said, we generated EUR 345 million of adjusted EBITDA in 2023. As I said before, 23% higher than '22, so a pretty remarkable performance. As already said, cost management in 2023 was very strong with total cost declining by EUR 56 million compared to the previous year, minus 2.2%. This great performance, as we said in the last -- in the latest conference call, was also due to the integration process with Spain that we have already described. In 2024, we are guiding the total cost line in the range of EUR 2,560 million with plus and minus 30, clearly linked to the trend of advertising collections, some variable costs clearly are related to that. In specific, EUR 1,870 million in Italy with a range of plus and minus 20 and EUR 690 million in Spain, minus 10. This means that also in 2024 we will be able to achieve an incredible result despite the inflation that is still pretty high and the relative increase of cost of labor and we will be able to maintain the total amount of total cost flattish compared to 2023. Clearly, again, I'm repeating, excluding the consolidation of Mediamond that will be clearly non-comparable 2023. The progress achieved in the consolidation process is going on. So some other efficiency will come through the P&L also in 2024. And innovation and new platform will be put in place during the year, increasing the level of flexibility in managing the cost base. To recap, there will be some consolidating effect coming from Mediamond, again, from the effectiveness of our sales force. This is pretty important because it will give to Publitalia Group an additional, let's say, trends in the advertising market. But as we said, we will have some comparable numbers in 2024 compared to 2023 that we have to remind. So EUR 70 million additional revenue and EUR 70 million almost of additional costs with a small positive contribution to the EBIT line. In any case, the cost base will be in Italy EUR 1,870 million, again, with a range of plus and minus 20. And again, I'm confirming the EUR 690 million in Spain in the range of plus and minus 10 for Spain. Moving down to the P&L. And so talking about below the EBIT line, the financial charges in 2023 were negative for EUR 26.5 million in line with our expectation. That's clearly -- it's also taking into account the increase of the interest rates on the market, because as we said, the level of the financial position didn't move a lot compared to 2022. Clearly, as you can see, we have great differences in value compared to 2022, because in this line, in 2022, we recorded the more than EUR 40 million dividend, specifically EUR 42.3 million coming from ProSieben. And clearly, in 2023, the dividend was only EUR 3.1 million, so a pretty large differences. Regarding associates, this line was positive for EUR 3.9 million in 2023. This is the line where the EUR 11.3 million accounting effect -- negative accounting effect coming from ProSieben is recorded. That frankly was not expected, but I mean, that's something that we are accounting automatically coming from what ProSieben is reporting. Minority lines for EUR 70.5 million -- sorry, EUR 7.5 million. That's a line that will change during 2024 because in 2023 we had still the first quarter with Mediaset Espana not consolidated 100%, while clearly in the first quarter 2024, that will be 100% consolidated. Again, I'm repeating that the Group net profit excluding ProSieben effect was in 2023 EUR 217.5 million. In terms of guidance, we can guide the financial charges around EUR 25 million also in 2024. And in the associates line, we confirm the guidance of around 15, 1-5, excluding the impact of MFE's stake in ProSieben, as we mentioned. Moving then to CapEx. In 2023, the total amount was EUR 466 million, TV rights were EUR 383 million and technical and immaterial investments were EUR 83.3 million. Regarding TV rights, nothing really new in the performance. If you remember, this gap compared to 2022 was recorded in the first part of the year when Spain decided to reach the program in grid and to increase, let's say, the investment to help the performance, that actually happened. Regarding technical and immaterial, we had EUR 38.7 million of non-recurring investment that has been related to the renewal of lease contracts that, as you know, are accounted for IFRS 16 even if they are not really financial investments, but they are leases of offices and studios. As far as 2024 guidance, we confirm the guidance we gave. And so despite the reopening of the cinema, so the increase of investment in that area, we can guide that the total CapEx for 2024 at around EUR 420 million, of which EUR 270 million in Italy and EUR 140 million in Spain, lowering the level of CapEx by 10% compared to the previous year. Moving to the cash flow statement, Page 23. I mean, we generated a cash flow from operating activities of around EUR 745 million. Free cash flow was almost EUR 280 million. In the equity investment line, you can find the EUR 71.7 million outflow coming from the completion of the mergers with Mediaset Espana and the cash out of EUR 74.3 million due to the increase of our stake in ProSieben. In the incoming dividend line, you can see the sharp reduction of the dividend distributed by ProSieben that, as I said before, was EUR 42 million in 2022 and was only EUR 3 million in 2023. As far as the year-end, we achieved the guidance we gave as far as the Group adjusted net debt to EBITDA ratio of around 1x. That has been achieved already taking into account the dividend distribution of around EUR 150 million. And the cash out we already mentioned related to the merger of Mediaset Espana, and again, despite the mix of around EUR 40 million ProSieben dividend. This means that the free cash flow generation of MFE was remarkable because it was able to cover both shareholder remuneration through dividends and also investment in development as Mediaset Espana and ProSieben investment was last year. Stepping to the end of the presentation, just a few remarks regarding dividend on Page 24. The Board of Directors has approved to us, to the AGM, a distribution of EUR 140 million in 2024. That's pretty important numbers. If you combine the last 4 years, we are going to distribute almost EUR 750 million that is corresponding more or less to 50% of the current MFE market cap, so a pretty large. And then obviously we want the yield for our shareholders that in percentage terms can be evaluated of almost 8% for the MFE Category B shares and more than 11% as far as the MFE Category A shares. Then clearly, a few words for what is on the newspaper in the last -- that has been on the newspaper in the last 20 days. So our motion to the ProSieben AGM, I am on Page 25, I'll try to summarize a little bit this pretty, let's say, pretty important page. Our position has not really changed as far as the ProSieben investment. We started the investment in 2019. So it's already 5 years. For us, it's a long-term investment and we are clearly very focused on the performance of these investments. We would like just to underline the fact that we are pretty scared about the level of debt of the company, that has increased a lot. Clearly, I mean, you have some number in the charge. And this increase has been -- this increase happened even in a period in which the dividend distribution has been cut almost to zero. And that's clearly scaring because also what the company guided at the beginning of the year frankly was showing a possible increase of this leverage also in 2024. We see the company going on in operating as a conglomerate portfolio. And that's another reason for which we saw a pretty low valuation in terms of price. Again, maybe some clarification. MFE has not proposed a spin-off, as ProSieben said and as many journalists reported. MFE has proposed to analyze and prepare a spin-off. So the decision on the next AGM will not be on the spin-off, but will be on the preparation. If in the AGM the motion will be approved, the ProSieben manager will have to come back to the 2025 AGM with a proposal of spin-off. So nothing will happen this year. We are just asking to analyze and prepare an additional option for shareholders. Again, so no imminent spin-off, but just preparation. We have asked a refresh of the current Supervisory Board composition. That's because we believe it's important to maintain a pretty high M&A expertise within the Supervisory Board because that's what it's necessary to accelerate the change and also to execute the strategy that the company has stated more than 1 year ago. And I mean, clearly, we would like to give -- we can -- would like to give a message to the management to act quickly also to avoid further loss of value in the interest of all shareholders. All our motions are not, let's say, refraining the management to do what they want. They can sell, they can invest. I mean, they can do whatever they want. The split preparation work is something that has been foreseen in the German law. And I mean, it's not limiting the management to do anything. They can do whatever they want. Frankly, we are really very happy about our announcement 20 years ago because the share price has reacted positively, almost plus 20% since the 20th of March with a large, let's say, outperformance versus the peers. So showing that the market is interested to MFE proposal. And we are also very happy about our motion also because we heard last week that the management is now more committed in selling Flaconi and Verivox. That's again, very -- we are very supportive of it. So the sooner they can execute that sales, the more we will be happy and the more I think the share price can be upwards. Maybe just a few comments also on the recent rumors on takeover possible or, let's say, called by ProSieben management, if you want. I would like just to say, I mean, the 3 months view-up in January was EUR 5.5 and we didn't launch any tender offer. And that's probably the best, let's say, example that we are not interested in launching anything thereof there because the share price, as we said, is more close to EUR 8 and to EUR 5.5. And the reason for that is because, as we said, the debt level is too high. So that's clearly something we think would take additional risk on the share price in the future. And the other reason is that because we are not convinced at all of the business value of the non-core assets. So the fact that the company will start selling them will probably also clarify this value. In any case, as I said, 20 days from the announcement, we are very happy about our motion. We think it's in the best interest of all shareholders. And we think that the share price has reacted for, let's say, following that route. So clearly, the interest of all shareholders are in that direction. And we hope that the company will certainly follow, let's say, all shareholder indication coming out from the next AGM. I have completed my presentation, and now we can open the Q&A section.

[Operator Instructions] We are now going to proceed with our first question, and the question is coming from the line of Pierre Andrea Randone from Intermonte.

Congratulations for the results. I have 3 questions, if I may. The first one is for Matteo and it's just a comment on this good start. If you can comment on what are the main drivers behind this positive advertising performance. The second question again for Matteo. I mean, in Italy, since 9 of April, Amazon Prime has introduced advertising to all subscribers. Are you seeing any impact from this change? And the third question is more for Marco I think and it's about a comment you can provide us with on ProSieben preliminary first quarter results?

I'll take probably -- I'll start from the latter. I mean, it's very difficult to comment the limited set of information we received. They are not audited and we don't know -- we don't have any access to any additional information. So cosmetically, they look good, even partially expected. You know better than me that the first quarter 2023 has been very bad with the advertising market at minus 11%. So rebound frankly was expected, at least from our side. And the other, let's say, non-comparable effect is the fact that the company should have experienced a pretty lighter cost structure because they have reduced at the year-end 2023 the value of their life. And so certainly some positive effect in terms of accounting that impairment should have generated. In any case, just a broad comment on that. We don't look at adjusted EBITDA. It's frankly a KPI that we don't understand. We look at cash. And also, because clearly, the latest financial reporting of the company has been so much affected by adjustments that frankly we cannot follow that route. So we need to wait for the full set of number where we will certainly look with more detail at the cash generation. Cash flow performance, it's important for all shareholders and I believe is giving also the better -- the best comprehension of the operating performance of the entertainment and non-core activities. In any case, I mean, if I look at the stock performance of the day after the announcement, that was almost flat, slightly negative. I believe that also the financial market knew already about the comparable, let's say, comparison between the 2024 and '23 quarter. And so probably, I mean, also the market is willing to wait more detailed number in terms of cash to assess the real performance of the company. Matteo, maybe you can answer to the first 2 questions.

Yes. Thanks, Marco, and thanks, Andrea, for the good -- the 2 questions. So I'll start from a comment on the good start in Q1. As I said, the new fact is that over the past 4 years, we were -- we got used to a pattern where all the advertising investments were, let's say, very focused on Q4. So the performance of each year was built on an outstanding Q4 performance that was immediately counterbalanced by a weak Q1 performance, I'm talking about the market as a whole. While this year, I do think, thanks also to the stable macroeconomic situation, of course, we are all concerned about the Middle East situation. So better to be cautious anyway. But there is a stable macroeconomic situation in both countries, Italy and Spain. And for sure, as you have seen from our analysis, the automotive sector is a key driver in this, let's say, positive underlying baseline trend of the market. This is on the demand side, so a good demand dynamics. On the offer side, we are happy because I do think that there are 2 main drivers. We do believe in our job. We are broadcasters. And if you are focused on the quality of your content, if you are focus on your core business, there is no trade-off between linear and digital. A good content proposition is winning in linear and extending also in the digital on-demand consumption. And that's the simple recipe that's working. And on top of that, the cross-media proposition. So what's really working very well is the fact that actually we are offering 7 different media from linear to digital. And we have the majority of our revenues that is based on clients buying more than 3 media out of the 7 in our offer. And this cross-media offer is working very well and is strengthening the relationship with our clients. And that drives me to the second answer. So what to say about the new Amazon advertising offer. We are looking at it with the interest and no concern at all. We have already the past experience with Netflix. So a lot of the talk of the town, a lot of interest by the market 1.5 years ago. But actually, the amount of inventory Netflix was able to offer to the market was a limited amount, very qualitative. And our insight is that they are offering at a good price, a good CPM, equal or even higher than the other CPM of the Italian broadcasters. And we do expect Amazon offer could follow the same pattern. So our view of the connected TV ecosystem is that it is enriching on the upper hand of the ecosystem. So Amazon, Netflix and then Disney+. But it's not a stress because they are limited in quantity and this is also an opportunity in terms of value because they are offering good content, good profile, and moreover, higher CPM, and that helps maintaining our good, let's say, trading up in revenue per hour monetization on connected TV and digital screens. So I hope to have answered fully the 2 questions.

We are now going to proceed with our next question, and the question is coming from the line of Julien Roch from Barclays.

Yes. Matteo, on Page 14, thank you very much for giving us streaming hours for the first time. But could we get total hours, so linear and streaming, so we can have a complete picture? I mean, you have the data, as you said, that again was up 1.1%. So if we could get total hours that would be great. Then Page 25 on ProSieben. So very clear that you want something to happen, either split or selling assets and you're giving management the flexibility. But why did you ask to change the current authorized capital, which according to ProSieben, would restrict the ability to raise capital flexibly?. So I want to hear your view rather than their view. And then also, you've asked to amend the Article of Incorporation, which according to ProSieben, removed the need for supervisory approval for certain transactions. That's their view. So I want to hear your view. So that's 2 things on ProSieben. And then thirdly, 2 numbers question. Your cost guidance, is it with or without restructuring in 2024? And if it excludes restructuring, how much restructuring do you expect versus the EUR 43 million in '23? And how much did you pay for Mediamond?

I'll answer also to the first question. I mean, the numbers of Infinity, so the one that has been reported for the first time, then I believe that in the next conference call, we can give additional information on the performance of, let's say, the OTT, the MFE OTT. It's more or less 20% coming from linear viewing through streaming. So 80% is non-linear. That's more or less a stable percentage growing with the growth of the user base. But I mean, the big increase on the other hand, went from non-linear because we have introduced many exclusive rights in the Infinity. And so that was the main reason for the big growth in terms of hours -- streaming hours.

So Marco, on that, I think I wasn't clear in my question. What I wanted is the total viewing hours for Mediaset Italy, which should be billions, right, because the broadcasters of Italy...

Sorry. I thought that the question was regarding, let's say, what has been seen, let's say, through -- I would say that this consumption is roughly 3% of the total. It's very growing, but it's very small. Everywhere, it's more or less the same. So the amount of our spend on Internet is still low-single-digits as other broadcasters are usually saying, low-single-digits. So 3% last year. Growing, but still very low. And the other is clearly the broadcasting hours, so either through satellite or to digital direct. So then moving to the split. I mean, towards ProSieben, that's anticipated this issue of the debt. Frankly, I'm repeating, we are not asking for the split. We don't know how the ProSieben split will be done with the debt allocated to one activity or the other. This is the own work that the management should perform in the next 12 months. So we don't know because we don't have inside information. We are looking at the company outside in. The only thing we can see is that the conglomerate, let's say, portfolio is clearly depressing the value of the share price. So doing something to eliminate the holding discount is something has to be done in the way the management want. And Article 83 is a specific law in the German Court. Clearly, we don't have [indiscernible] in Italy or Spain, but I mean in Germany it's present. Clearly, shareholders cannot ask for the split because clearly it's the management who is managing the company. The only thing that in Germany the shareholders can do is asking for the preparation. It is what we have done. Certainly, we were surprised by knowing that the EBITDA of non-core assets was not supporting the same leverage than the rest, because I mean, that's -- it's a comment. It's frankly technically and professionally we can understand either the EBITDA is not real or is due to decline, I don't know. I mean, that's something we don't understand. But I mean, again, this is not the day, it's not the AGM in which we have to decide whether the allocation of that is correct or not because that eventually will be next year. So probably in 1 year's time, we will read on the official report of the company that the split is not worthwhile. Fair enough, we will vote against, but we need the work to be done. And certainly, we will also understand why the non-core EBITDA is not supporting that. So that's -- but again, it's not now. I mean, it's not an issue of now. We will learn more about the dissynergies, because again, we are not deciding the split now, but it is next year. Then as far as the other motion, I mean, very frankly, during -- are you okay? I'll go through a...

No, no, I'm good.

Okay. So now moving to the other motion. We have asked 2 other motions. I mean, the first one is related to increase of capital. In 2021, the shareholders, including us, approved an authorization to the management to increase capital, including the possibility to increase capital with exclusion of preemption rights. So we were approving in 2021, let's say, we have decided that we could have been diluted clearly versus other shareholders, giving this authorization to management. At that time, the share price was at EUR 16, 1-6. When we announced the motion, the share price was at EUR 6. So we said maybe shareholders are not so willing now to be diluted at EUR 6. And so we just said, go on with your authorization to increase capital, but please do not dilute us, us meaning shareholders, at EUR 6. And if you want to dilute us at EUR 6, please come back to the AGM and ask the authorization. So we are not against the dilution without, let's say, any kind of information. If they want to, I don't know, have new shareholders or if they want to merge or whatever they want to do, if they come then to the AGM and they will prove that this deal will create value also for us, we will give our authorization. We just said, we don't want to be diluted automatically without having nothing to say at EUR 6. So that was the motion regarding the freedom. But I mean, the company is free to increase capital as they want. The only thing is that they can do it without asking us anything if it is with preemption rights. If it is without, they have to come back to the AGM and asking us the approval. The second motion was regarding reserved matter. So we think that the company's status quo is pretty scaring, as we said, regarding debt. So we have asked to include in the bylaw the fact that investment for more than EUR 50 million, 5-0, should be approved not only by the Management Board, but also by the Supervisory Board. So in that respect, it's just a sort of guarantee we would like to have as shareholder with the company as united. So the decisions taken for, let's say, M&A or for material investments are shared by the 2 bodies. And clearly, that's very important to be sure that the entire company is focused on the fact that the company target is creating value for our shareholders. Then the last, let's say, motion we presented was regarding, let's say, the audit committee, let's say, performance. Frankly, we are not happy about the Jochen Schweizer, let's say, kind of analysis. Clearly, we understand that some mistake would have been done, I mean, whatever. So we were not happy about the transparency with which audit committee has carried forward the investigation that we read on the financial statement last year started 12 months ago. And frankly, we don't know anything about after 12 months, and this honestly is not really so acceptable. Then more, let's say, ordinary question regarding the target or the guidance for the cost, they are excluding any restructuring costs. If I miss something, Julien, tell me, I mean.

No, that was great. So yes, just 2 follow-ups. So the cost guidance is excluding restructuring. So what kind of level of restructuring do you expect in '24? Is it EUR 43 million?

For the time being, frankly, very small one, EUR 5 million, EUR 6 million.

All right. And then my last one was how much you paid for Mediamond?

EUR 1 million. EUR 1.4 million. 1-point-something. So very material as well, equal to the network.

We are now going to proceed with our next question, and the question is coming from the line of Milo Silvestre from Equita.

The first one concern guidance, for '24 advertising guidance. And here, I would like to understand if you can give us some color or some numbers about advertising guidance? The second one concern M&A capital structure. If you can provide a sort of maximum leverage you believe is sustainable for M&A deals? And whether you use EBITDA pre or post the rights amortization in the calculation of deleverage? The third one concerns free cash flow. If you can elaborate on why free cash flow declined by 20%, more or less, while at the same time, the EBIT adjusted grew significantly? The last question concerns the EI Towers and Rai Way this year. And I could ask if you can provide some update about the situation?

As Matteo probably has a limited time, if he is still on the line, maybe you can elaborate on advertising then I will get to the rest.

Yes, I'm still on the line for a few minutes. Do you want me to answer first the question on advertising trend? Okay, it's an interesting question. The point is that the good start of the market, to some extent, surprised all the professional operators in the market, I mean media agencies mainly. So they haven't yet reviewed their forecast for the full year. The initial forecast was a very low-single-digit, but I want you to remark again the point from our perspective. So we do think that there could be a balance between Q4 and Q1. So we think that it's quite reasonable to expect a good Q4, but not so good as the previous 4 years. And we have to take into account that Q2 and Q3, we are facing the European Football Championship, the Olympics. And moreover, for us, the miss of the Champions League in autumn '24. So all these 3 factors taken into account drive us to not to consider the start of the Q1 as a mathematical projection for the full year. So it's quite reasonable to stay below the Q1 start for the whole year, but we don't know how much, honestly. Probably in Q1 call, in a month's time, I could add more color on that.

Okay. I'll try to answer to my question. And if I forgot something, please tell me. I mean, first of all, on the cash flow. I mean, that's the typical effect when you have a so strong last quarter. Clearly, we are not cashing in yet at the year-end the revenue of the last quarter, while clearly on the EBITDA that are already accounted. So as you will see in the first quarter, let's say, result cash will be clearly much more higher than the previous year for the same reason. Then I'll answer the easy, the El Towers question. I believe that Stefano told you to ask me. But I mean, no, I mean, that's the same question of the last conference call or the last 10 conference calls. I mean, we read about positive or optimistic movement. Again, we are expecting fact. For the time being, nothing has really happened apart from the articles. So you know our position and there is nothing new on that side. Then moving to leverage. I mean, again, we are not thinking about anything. So we are just here to talk about technically and theoretically, if you want. We think that the correct KPIs should be EBITDA deducted by TV rights investment. So that's the real, let's say, cash element if you compare when you look at that. I mean, in our view, acquisition in European broadcasting area could support even 3.5x, 4x EBITDA. Why? Because we see a lot of synergies. So the deleverage after the acquisition, let's say, already after 12 months could be very fast. So that's theoretically what we believe. So in terms of number, frankly -- I mean, you can calculate, but I mean, it can be additional EUR 1 billion, EUR 1.5 billion easily because you should stay after the acquisition, as I said, in the 3.5x area. Then again, as I said, deleverage will happen very fast. So I don't know if I answered my questions, to your question.

Yes. A quick follow-up, if I may. Can you elaborate more on the synergies and what kind of synergies do you think you can achieve in such a fast amount of time?

The only thing that -- I mean, clearly, we will need probably more time than Matteo has because he has a flight to take. No, that's a joke. But I mean, we can only say what we have experienced in Spain. I mean, synergies are relevant and they are not only cost synergies. The cost synergies are clearly limited to the non-content part. So clearly, the full cost base is not huge, but they are relevant in the area of non-content. But the larger and the faster benefit is coming from revenue, because -- I mean, on digital you can understand, on the technical aspect you can -- I mean, there are very, very relevant synergies coming from a European approach in terms of selling advertising. In any case, I don't think it's the right moment to discuss because we are not buying anything. We are not considering buying anything. And the only thing we can say is that the Spanish experience has been -- has proven that the synergies are very fast to be achieved and it is certainly better to be larger than smaller.

Okay. Thank you very much, guys. Investor Relations department will be available for any kind of questions you may have. Thank you very much for your time. Have a great day. Bye.

Ladies and gentlemen, this concludes today's conference call. Thank you all for participating. You may now disconnect your lines. Thank you.