'Turnaround has started' at Premiere

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COLOGNE, Germany -- Despite stiff local competition and the loss of major soccer rights, German pay TV player Premiere turned a profit in the third quarter.

By slashing operating costs and holding down subscriber churn, Premiere kept quarterly revenue fairly steady at €269.5 million ($344 million), down 1.1% year-over-year. It also turned a slim profit of €5.4 million ($6.9 million), though that was just a fraction of the €48.7 million booked a year ago.

"After the miserable figures last quarter, we were spared a further disaster this time around," one Frankfurt trader said. "The numbers are better than expected across the board."

Tuesday's numbers are the first since the launch of pay TV competitor Arena, which beat Premiere for pay TV rights to Germany's top Bundesliga soccer league, a move that led many to predict the company's demise.

"Premiere is back in the black," Premiere CEO Georg Kofler said. "The wave of churn many observers expected to hit Premiere did not happen, but quite the opposite. ... The Premiere engine is once again on its way to running smoothly. The turnaround has started."

But in a conference call Tuesday, Kofler said there wasn't room in the German market for several pay TV operators. He predicted Germany would go the way of such markets as Italy and the U.K., which have seen consolidation.

"In the next 12 to 24 months, we expect a further fragmentation of the pay TV market (in Germany) before the consolidation process begins," Kofler said. Premiere would be the force "actively pushing" consolidation, he added.

While Premiere subscriptions sunk 2% in the latest quarter to 3.4 million, Kofler said "around 100,000" customers that had dropped service signed up again after a new pricing system was launched.

Premiere shares closed up 6.8% on Tuesday at €13.25 ($16.96).
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