Despite revenue gain, pickup slows ProSieben

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COLOGNE, Germany -- Shares in pan-European broadcaster ProSiebenSat.1 took a nosedive Tuesday after the German group said that pretax profits slipped by more than $200 million last year to 248.8 million euros ($378 million).

The profit slump was largely the result of ProSieben's acquisition of SBS Broadcasting last year, a move that has saddled the company with $5 billion in new debt but, the company hopes, will turn ProSieben from a German giant to a truly European powerhouse.

To that goal, ProSieben CEO Guillaume de Posch unveiled plans Tuesday to build on ProSieben's core free TV market by launching new European channels.

ProSieben stock dropped 6.4%, to 13.08 euro ($19.89). Its profit after minority interests was just 89.4 million euros ($136 million) compared with 240.7 million euros a year ago. Adding the SBS group boosted ProSieben's revenue 29% last year to 2.7 billion euros ($4.1 billion).

De Posch said that absorbing the SBS network will lead to about 40 million euros ($61 million) in savings this year. By 2010, ProSieben is forecasting 80 million euros-90 million euros in savings.

De Posch argued that while the SBS deal added a substantial debt burden, ProSieben still has "plenty of headroom" and cash to invest in programming and businesses.

ProSiebenSat.1 owns 26 free TV and 24 pay TV channels in 13 European countries. In Germany, ProSieben is the largest single commercial broadcaster -- its channels command about a third of the German audience.

While De Posch declined to give concrete revenue and profit targets for 2008, he said that ProSiebenSat.1 is sticking to its midterm forecast of boosting operating profit margins from 24% last year to 25%-30%.

ProSieben also is promising to free up more cash for investment in acquisitions and in-house production.

Such Hollywood movies and series as "NCIS" and "Numbers" helped ProSieben's long-suffering Berlin network Sat.1 to grab an 11% market share in February, its best performance since fall 2006.
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