Germany's ProSiebenSat.1 Reports Record Results for 2012

12:46 AM PST 02/28/2013 by Scott Roxborough

Revenue jumps 7.7 percent to $3.88 billion, while profits from continuing operations are up 34 percent to $543 million.

COLOGNE, Germany -- German broadcast giant ProSiebenSat.1 on Thursday reported record financial results for 2012 thanks to a strong performance by its core German free-TV business and booming digital and production operations.

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Revenue in 2012 jumped 7.7 percent to $3.88 billion (€2.97 billion), including sales at ProSieben's TV and radio operations in Northern Europe (Sweden, Norway, Finland and Denmark), which the company agreed to sell to Discovery Communications for $1.73 billion (€1.33 billion). Even excluding that business, sales were up 7.1 percent to $3.08 billion (€2.36 billion). Profits from continuing operations soared 34 percent to $543 million (€415.1 million).

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Conceived as a pan-European operation with a network of channels akin to Bertelsmann's RTL Group, ProSieben has undergone a major strategic transformation during the past few years, selling or putting on the auction block its smaller, mostly loss-making operations in Northern and Eastern Europe to focus on the robust German market. To drive growth, the company has looked outside the traditional broadcast business, expanding its online activities and moving strongly into TV production, music and gaming.

But traditional television remains a mainstay at ProSieben. Revenue from the company's German-language TV business inched up to $2.5 billion (€1.91 billion) last year, and ProSieben's production arm, Red Arrow, has been a strong growth driver.

Red Arrow, which owns several boutique production companies worldwide (including the recently acquired New York shingle Left/Right, producers of VH1's Mob Wives), recently landed a commission with ABC for its new cooking competition format The Taste. In total, licensing fees and international sales of Red Arrow content added $125 million (€95.4 million) to ProSieben's financials last year, though operating profits slipped to $5.6 million (€4.3 million) largely because of rapid expansion and multiple acquisitions.


ProSieben's digital and adjacent division posted the strongest growth -- 38 percent -- of any of the company's operations last year, with revenue reaching $460 million (€351.2 million). The unit includes online video platform Maxdome, which recorded 490 million views in 2012, making it Germany's leading VOD platform; gaming division ProSiebenSat.1 Games, whose free-to-play online platform boasts nearly 16 million users; and various media start-up ventures in which ProSieben has taken equity stakes in exchange for advertising space on its national TV channels.

ProSieben announced another media-for-revenue deal Thursday, saying it has set up the incubator Epic Cos. with Mato Peric of online venture-capital group Rocket Internet. Peric also will oversee venture-capital activities at ProSieben as the newly appointed COO of its digital portfolio.

While the German TV giant continues to invest in small start-ups, its biggest windfall -- earnings from the sale of its Nordic broadcast operations to Discovery -- will go back into shareholders' pockets. About $654 million (€500 million) in proceeds from that transaction are earmarked for partial repayment of the company's debt, but the bulk will make for an extraordinary dividend of about €5.60 a share, nearly five times the €1.17 dividend ProSieben paid out in 2012.

The move also will be a windfall for ProSieben's majority shareholder, Lavena, a holding company controlled by private-equity groups KKR and Permira.

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