German Broadcaster ProSiebenSat.1 First-Quarter Earnings Rise on Ad Gains
COLOGNE, Germany -- Germany's robust advertising market still shows no signs of recession, and better-than-expected TV ad figures helped lift German broadcasting group ProSiebenSat.1 to a strong first quarter, with revenues from continuing operations up 12.7 percent to $738 million (€562.8 million) and operating profits (EBITDA) nearly 5 percent stronger at $168 million (€128 million).
ProSiebenSat.1's $1.7 billion deal to sell its Nordic TV and radio stations to Discovery Networks, which received regulatory approval earlier this year, has left the German giant focused on its home market, where revenues from its broadcasting assets grew 4.7 percent to $578 million (€441 million) in the first quarter as ProSiebenSat.1's five TV networks took a healthy 26.6 percent of the overall TV audience in Germany and 44.3 percent of the country's gross TV ad market. Together with operations in Austria and Switzerland, the German-speaking television market accounts for just over 78 percent of ProSiebenSat.1's revenue.
The broadcast giant is showing signs of diversification, however, with strong growth in its digital and adjacent business, which boosted revenue 43.9 percent to $127 million (€96.7 million) in Q1, and its nascent content and global sales operation Red Arrow, which saw revenues in the first quarter more than double year-on-year to $33 million (€25.1 million).
ProSiebenSat.1 CEO Thomas Ebeling said revenues at the company's digital and adjacent division, which operates everything from VOD platform Maxdome to online games and e-commerce activities, have the potential to grow by $197 million (€150 million) by 2015. On the content side, Red Arrow Entertainment has landed a few notable successes, with cooking format The Taste on ABC and hidden camera comedy show Off Their Rockers, which airs on NBC in the U.S. and ITV1 in Britain, among others. The company's content and global sales division booked operating losses of $1.57 million (€1.2 million) in the first quarter, an improvement over last year's figures.
For the full year, Ebeling confirmed forecasts that ProSiebenSat.1 expects mid-single-digit percentage revenue growth and an EBITDA for continuing operations of more than $976 million (€744.8 million). He also reiterated his ambitious growth target of more than €600 million ($786 million) in additional revenues by 2015, in addition to the €150 million in new sales expected from digital and adjacent operations.
Tamsin Garrity of UBS gave ProSiebenSat.1 a buy rating following the strong first-quarter figures, but the company's stock opened soft on Tuesday, slipping 1.2 percent in early trading.
The elephant in the room is whether -- or when -- ProSiebenSat.1 will be put on the auction block. Currently controlled by private equity groups, the German broadcaster is expected to be sold off later this year, though owners KKR and Permira are keeping their cards close to the vest over the timing and potential suitors.