FINANCIAL EFFECTS OF CDON GROUP SPIN-OFF & ADJUSTMENTS TO REPORTING STRUCTURE

FINANCIAL EFFECTS OF CDON GROUP SPIN-OFF & ADJUSTMENTS TO REPORTING
STRUCTURE

Modern Times Group MTG AB (publ.) (‘MTG' or ‘the Group'), the
international entertainment broadcasting group, today announced that it
will report a SEK 1,717 million non-recurring and non-cash gain in its
financial results for the fourth quarter and full year ended 31 December
2010. The gain is due to the distribution of all of the shares in CDON
Group AB (‘CDON Group') in December 2010. The gain represents the
difference between the SEK 2,042 million market value of CDON Group
(based on the SEK 30.79 average trading price of the CDON Group share
between 15 and 17 December 2010) and the SEK 326 million book value at
which the subsidiary was held on MTG's balance sheet as at 30 November
2010. The Group's equity has been reduced by SEK 326 million as a result
of the distribution.

Following the distribution of CDON Group, MTG will report its income
from continuing and discontinued operations separately, with both the
SEK 1,717 million gain and the net profit contribution from CDON Group
for the period up to 30 November 2010 reported as ‘discontinued
operations' line items below ‘net income from continuing operations' in
the Group's fourth quarter and full year 2010 income statements. CDON
Group will not be included in any other line items in the Group's income
statements for current or comparable prior periods, and will not be
included in the Group's matrix presentation of segmental sales and EBIT
results at the end of the quarterly reports.

CDON Group will be included in the Group's cash flow statements up until
30 November 2010 but only as a separate line item within cash flow to
financing activities, and will otherwise be excluded from all other
lines of the current year and prior period cash flow statements. MTG's
previously announced subscription to 100% of CDON Group's SEK 250
million convertible bond issue will be recognised as a cash flow to
investing activities, and as a long term interest bearing receivable
asset in the Group's year-end balance sheet. For more information about
CDON Group and its historic financial reports, please visit
www.cdongroup.com (http://www.cdongroup.com/).

As a result of the demerger of the vast majority of the Group's Online
businesses and in order to reflect MTG's focus on its core and scale
broadcasting assets, the Group's results will be reported in six
business segments with effect from the fourth quarter and full year 2010
report. The six segments are: ‘Free-TV Scandinavia'; 'Pay-TV Nordic'; 
'Free-TV Emerging Markets'; 'Pay-TV Emerging Markets'; associated
company 'CTC Media'; and 'Other Businesses'. The 'Other Businesses'
segment comprises the Group's ‘Radio', ‘Online' and ‘Modern Studios'
businesses. In addition, the ‘Free-TV Emerging Markets' segment will now
be reported in two lines in the matrix - a ‘Total' line, and a line
combining the Group's free-TV operations in the ‘Baltics, Czech Republic
& Bulgaria'. MTG will continue to provide target audience viewing shares
and sales growth on a country by country basis for the emerging market
free-TV operations. 

MTG will provide additional disclosure on its Nordic pay-TV business in
its fourth quarter 2010 financial results and moving forward. The
current reporting of ‘IPTV premium subscribers' will be broadened to
include all ‘third party network premium subscribers', and now therefore
include premium subscribers on both third party IPTV (broadband) and
cable networks. The total number of third party network premium
subscribers as at 30 September 2010 was 375,000, and comprised the
previously reported 176,000 IPTV premium subscribers, as well as 199,000
cable premium subscribers. When combined with the 666,000 premium
subscribers on MTG's Viasat DTH platform, MTG therefore had 1.04 million
Nordic premium pay-TV subscribers at the end of the third quarter of
2010. 

In order to provide comparable historic information on the basis of the
above changes to the Group's reporting structure, an updated quarterly
segmental reporting matrix and a sheet of key performance indicators
with updated subscriber information are available for download from
http://mtg.se/en/Investors/Quarterly-Reports/ (http://mtg.se/en/Investor
s/Quarterly-Reports/).

 

***

For further information, please visit www.mtg.se (http://www.mtg.se/) or
contact:

Hans-Holger Albrecht, President & CEO
Tel: +46 (0) 8 562 000 50 

Investor & Analyst Enquiries:
Matthew Hooper
Tel: +44 (0) 7768 440 414
Email: investor.relations@mtg.se (investor.relations@mtg.se) 

Media Enquiries:
Bert Willborg
Tel: +44 (0) 791 2280 850
Email: bert.willborg@mtg.se (bert.willborg@mtg.se)