ProSieben undergoes major restructure
EmptyCOLOGNE, Germany -- ProSiebenSat.1, Europe's No. 2 broadcaster, presented solid first-half figures Wednesday as it unveiled a major restructuring of the company following its $4.5 billion takeover by pan-European TV group SBS Broadcasting last month.
CEO Guillaume de Posch also outlined a major restructuring, which will see the Munich-based media giant consolidate and centralize the acquisition, production and marketing operations of its 50-odd free and pay TV channels.
ProSiebenSat.1 has set up a new division -- Group Content -- to oversee acquisition and production activities.
Group Content Acquisitions, which will be run by German TV head Jan Frouman, will be responsible for buying international films and series for the entire group. ProSieben acquisitions head Rudiger Boess will assist Frouman in running the division.
Production activities will be centralized in the new Group Content Production division, to be run by Gabor Kereszty, managing director of SBS' Hungary channel TV 2. Based in Munich, the production division will focus on developing series and formats with cross-border appeal. De Posch said a key aspect of the production operations will be setting up facilities to allow back-to-back productions in several languages of a single hit format.
The acquisition of SBS, which was entirely financed by debt, has led to speculation that ProSieben might have overextended itself. But CFO Lothar Lanz moved to reassure investors that the company is in a solid position and not threatened by the current global credit crisis.
First-half revenue at ProSiebenSat.1 hit €1.05 billion ($1.4 billion), a 3.6% year-over-year increase. Profit jumped 11.9% to €127.8 million ($171 million).
Including SBS on a pro forma basis, total revenue at ProSiebenSat.1 increased 5.1% to €1.58 billion ($2.13 billion). SBS figures will be fully consolidated for the first time in the third quarter.
The results, while largely unchanged from 2006, were slightly ahead of analysts' predictions, pushing ProSieben shares higher.
The firm also reiterated its guidance of 2%-3% market growth in German advertising for the full year. It expects a weaker third but a stronger fourth quarter.
"ProSiebenSat.1 has been oversold relative to the market and its peers over the past month, creating an excellent buying opportunity for the medium term," analyst Daniel Kerven of UBS said.
"Last I checked, we were set to invest €1.6 billion ($2.2 billion) in programming (both acquisitions and production) this year," De Posch said in a conference call Wednesday. "That's more than we invested in 2006 and about half of our total revenue. So you can see that content remains our main focus."
De Posch is also counting on content to revive sickly German channel Sat.1. Revenue at the Berlin-based network fell 9% to €210 million ($283 million), and pretax profit dropped 13% to €56 million ($75.6 million) in the second quarter.
To counter this, Sat.1 has launched a programming offensive, greenlighting 40 new pilots for the fall season, the highest number in its history. While Sat.1 has renewed licensing deals with U.S. series including "Navy CIS" and "Criminal Minds," de Posch said 60% of Sat.1's programming budget would be dedicated to homemade series and shows.
Lanz said 80% of ProSiebenSat.1's net debt of €3.4 billion ($4.5 billion) has been hedged into fixed interest rates. The two term loans taken on to finance the SBS deal have rates of 1.75% and 1.875%, Lanz added.
ProSieben also is continuing to expand. The group acquired Vienna-based commercial channel Plus TV this month and plans to relaunch it as an Austrian-wide network. The group will launch in September a new free-TV channel in Norway called FEM, which will target female viewers ages 20-35.
In a separate announcement, ProSieben said it has acquired a majority stake in wer-weiss-was.de, a German-language Internet advice site similar to Advice.com The site is one of the leading German information portals, with 300,000 registered users.
As part of the restructuring, ProSiebenSat.1 announced a raft of new appointments:
-- Zoltan Vardy will replace Gabor Kereszty as managing director of Hungary channel TV 2 managing director. Vardy was head of acquisitions at TV 2 and VP of sales for SBS.
-- SBS Finance/Accounting head Quinton Holland will run Group Controlling activities at ProSiebenSat.1, reporting to company CFO Lothar Lanz.
-- Eric van Stade was named head of television operations in the Netherlands, replacing Patrick Tillieux, who was earlier named COO of ProSiebenSat.1.
-- Peter Christmann adds the responsibilities of the newly created international sales division to his job as head of sales and marketing at ProSiebenSat.1.
-- Michael Krautwald takes over Christmann's position as head of ProSieben's German ad sales division SevenOne Media.
-- Andrea Malgara, head of marketing at SevenOne Media, takes on extra duties of international marketing for the group.
-- Bart Becks will head up the new media and innovation international division, responsible for the development and international implementation of new-media operations. He will report to Marcus Englert, board member in charge of new media at ProSiebenSat.1.