UPDATE 4-Viaplay shares plunge 60% as outlook worsens, replaces CEO

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Says rising cost of living dents demand

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Cuts short-term outlook, withdraws long-term guidance

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Replaces chief executive

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Shares hit record low

(Adds context in 6th and 9th paragraphs, analyst in 10th paragraph, updates share price)

By Terje Solsvik and Anirudh Saligrama

OSLO, June 5 (Reuters) - Shares of Swedish streaming company Viaplay Group fell by 60% on Monday to a record low after warning of a weakening business environment as rising living costs dent demand, and announced it was replacing its chief executive.

The group, which competes with Netflix Inc and Walt Disney Co's Disney+, lowered its short-term organic sales growth projections for 2023 to 16%-17.5% from its previous forecast of 24%-26%.

Viaplay also said cost cuts were taking longer than planned, and predicted an operating loss of between 250 million and 300 million Swedish crowns ($23.0 million-$27.6 million) in the second quarter.

Jorgen Madsen Lindemann, a former CEO of gaming and esports group MTG, Viaplay's previous parent company, will take the helm with immediate effect, replacing Anders Jensen, Viaplay said in a statement.

Jensen said in the statement that "in the light of current challenges, the company is best served if I step down, and I have therefore decided to do so."

Operating in 33 markets, including direct-to-consumer offers in the United States and Canada, and partnerships in Canada, Austria and Germany, Viaplay had set out to grow rapidly with a mix of entertainment productions and premium sports rights.

But on Monday, it said it was withdrawing its longer-term financial guidance and expects to provide an update on its medium-term outlook when it releases second-quarter results on July 20.

Viaplay said the rising cost of living had led to lower demand in Nordic and international streaming, lower wholesale subscription sales, and a sharp and rapid deterioration in Scandinavian TV and radio advertising markets. It added that foreign exchange headwinds have increased.

Monday's statement stands in contrast to comments from the company on April 25, when it said it had started the year "in line with our guidance", pointing at the time to a strong momentum despite economic uncertainty.

While Viaplay also issued a profit warning last year, the size and scope of the latest downgrade still came as a shock, analysts at Jefferies said in a note to clients.

Among Viaplay's Nordic subscription offers are football rights such as the English Premier League and car racing, including Formula 1.

It expects second-quarter sales of between 4.5 billion Swedish crowns and 4.6 billion Swedish crowns. It also expects to have 7.7 million subscribers at the end of the second quarter which compares with 7.6 million for the first quarter.

Viaplay's shares fell 58.6% by 0831 GMT to 93.40 Swedish crowns. ($1 = 10.8616 Swedish crowns) (Reporting by Kanjyik Ghosh and Anirudh Saligrama in Bengaluru; Terje Solsvik in Oslo; Editing by Edwina Gibbs and Sharon Singleton)