SanomaWSOY's Interim Report 1 January-31 March 2008

Friday, May 9th, 2008

During the period January-March, the net sales of the SanomaWSOY Group (HEL:SWS1V) increased by 2.9% to EUR 683.1 (663.7) million. Operating profit improved to EUR 72.7 (54.0) million.


SWelcom offers consumers entertaining experiences in television, radio, online and mobile devices. Welho is the country’s largest cable TV company and a major provider of broadband services.

The net sales of SWelcom in January-March increased by 15.1% to EUR 40.5 (35.2) million. This considerable increase in net sales was brought about in particular by the growth of Welho and the new TV and radio channels. Adjusted for changes in the Group structure, the Division’s net sales grew by 10.7%. Advertising sales accounted for 50% (56%) of SWelcom’s net sales.

Largely due to the new channels, broadcast operations increased its net sales to EUR 22.6 (20.1) million. In January-March, TV advertising in Finland grew by 6% according to TNS Gallup Adex. The combined share of the television channels of Nelonen Media of all television advertising was 29.1% (29.3%). The TV channels clearly increased their shares of viewing numbers, and in March their share of all TV viewing rose to 14.3% (11.1%). JIM, the channel launched in February 2007, has constantly increased its share of viewers, and had over one million viewers on many days early in the year.

According to the Association of Finnish Broadcasters, national radio advertising grew by 11% in January-March. Nelonen Media strengthened its market share to 11%. Radio Rock, the radio channel launched at the beginning of 2007, reached a record-breaking 850,000 listeners on a weekly basis in February. Radio Aalto has maintained its listener numbers on the previous year’s level while its average listening time has continued to increase.

Welho’s net sales increased strongly due to strong growth in pay TV, broadband subscriptions and the sale of digital set-top boxes. The 100,000-mark in Welho’s broadband subscriptions was reached in January, and in pay TV services in February. The switch-over to the era of digital TV was successful in the cable network which partly contributed to the increase in demand for pay TV services. In autumn 2007, Welho launched new, revised pay TV packages that can be augmented with individual channels. Early in the current year, Welho launched, among others, six such additional channels.

Visitors in online gaming sites are on the increase at SWelcom. The online game portal launched in August 2007, where users can play games for free and also download their own games for use by others, has become the most popular free gaming service in Finland alongside quiz portal

The operating profit of SWelcom in January-March increased by 39% to EUR 4.0 (2.9) million. This improvement was in particular brought about by improved profitability of the broadcasting operations and the positive development at Welho.

In line with its strategy, SWelcom concentrates on its core businesses television, broadband services and entertainment services to consumers. In January, SWelcom divested the operations of 2ndhead, creator of corporate digital communications and marketing solutions. The deal will have no significant impact on the Division’s earnings for 2008.

Anu Nissinen was appointed as the new President of SWelcom, effective from 25 February 2008. Tapio Kallioja, President of the Division, retired in line with his contract of employment on 31 March 2008.

SWelcom is continuing the development of its digital content and media solutions business, and invests resources in the development of its online community services.

In 2008, SWelcom’s net sales are estimated to increase and operating profit excluding major non-recurring capital gains is expected to improve clearly.

Operational Indicators                                         1-3/2008    1-3/2007
                                                               --------    --------
TV channels' share of Finnish TV advertising                      29.1%       29.3%
TV channels' daily reach                                            48%         44%
TV channels' national commercial viewing share                    29.2%       21.8%
TV channels' national viewing share                               13.9%       10.6%
Number of connected households, thousands (31 March)                320         308
Number of pay TV subscriptions, thousands (31 March)                103          69
Number of broadband internet connections, thousands (31 March)      101          90

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