ProSiebenSat.1 Targets Growth in Revenue From Outside German Free TV

1:07 AM PST 08/02/2012 by Scott Roxborough

European broadcaster boosts sales but profits slip in first half.

COLOGNE, Germany - Broadcaster ProSiebenSat.1 is hoping to break its dependence on the German free TV market as it looks to further expand across Europe and into international TV production and program sales.

The German-based group posted decent quarterly figures Thursday, showing revenues up 4.5 percent to $890 million (€723.3 million) and a net profit of $105 million (€85 million), down from €132 million in Q2 2011 but that was without the company's print and TV operations in Belgium and the Netherlands, which ProSiebenSat.1 sold off last year. Factoring that out, Q2 profits were steady year-on-year.

For the first half, revenue was up strongly to $1.67 billion (€1.36 billion) with net profits of $170 million (€138 million).

ProSiebenSat.1's European footprint, which includes 29 channels across 10 countries, is concentrated heavily in the North, outside the territories worst-hit by the Euro crisis.  The bulk of ProSiebenSat.1's business - equivalent to 65.1 percent of revenues - again came from the German free TV market, which has continued to grow, with bulk ad revenues increasing 4.4 percent to $6.5 billion (€5.3 billion) in the first half, according to figures from Nielsen Media Research. The company's channels and digital operations accounted for more than 42 percent of the total TV ad market in Germany, a 2 percent year-on-year increase.

German TV is the world's biggest market for U.S. films and TV series and ProSiebenSat.1 is the territory's top buyer. On Thursday the group extended its licensing deal with Paramount Pictures, securing free-TV rights across German-speaking Europe to upcoming features including J.J. Abrams' Star Trek sequel and Marc Foster's zombie-themed World War Z starring Brad Pitt as well as numerous library titles. ProSiebenSat.1 has similar package deals with Sony, Warner Bros, Disney, 20th Century Fox and CBS as well as with major European players including Constantin Film and Studiocanal.

On the digital tale, ProSiebenSat.1 inked a multi-year deal with French broadcaster TF1, which will see ProSieben place its portfolio of free-to-play online games on TF1's gaming portal MyTF1.

German remains ProSiebenSat.1's core business but miid-term, the European TV giant is looking beyond Germany. By 2015, ProSiebenSat.1 says it wants half of its revenues to come from outside the German market. In addition to expansion in Scandinavia and Eastern Europe - the group launched new channels in Norway and Hungary this year - the main focus is on production. Subsidiary Red Arrow Entertainment has been rapidly expanding its global network of production firms, this year acquiring U.K. firms CPL, Endor and Nerd TV as well as Israeli-based July August Productions. Red Arrow already controls several boutique shingles, including L.A.-based Fuse Entertainment, producer of USA Network's Burn Notice.

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