Digital-Focused Strategy Pays Dividends for Germany's ProSiebenSat.1

Married at First Sight Still - H 2014
A+E Networks

Married at First Sight Still - H 2014

The broadcast giant expects revenues to jump more than 10 percent this year as it shifts investment to online businesses to generate growth.

German broadcaster ProSiebenSat.1 posted stronger-than-expected second quarter earnings Thursday thanks in no small part to its spate of digital acquisitions.

Second-quarter net profit, after tax and minority interests, jumped 16 percent to $151 million (€136 million), while recurring EBITDA for the quarter hit $283 million (€254 million), a 7 percent jump from this time last year.

Sales at the group, which operates two of Germany's largest commercial broadcast networks carrying such hits as Germany's Next Top Model and Navy CIS. But the company's real motor of growth has come from outside the traditional television advertising business. Recent deals include the $234 million (€210 million) acquisition of online price comparison portal Verivox and last year's $270 million deal for online travel service eTraveli, acquisitions that take the company far away from its core business of commercial TV.

ProSieben has also rapidly expanded its international production business, buying up numerous independent shingles, most recently taking a majority stake in 44 Blue Productions, whose credits include Wahlburgers, Nightwatch and Lockup.

Red Arrow, ProSieben's international production and sales arm, now controls nine U.S-based production outfits, including Kinetic Content (Married at First Sight), Fabrik Entertainment (Bosch) and Half Yard Productions (Say Yes to the Dress).

So far this year, 44 percent of ProSiebenSat.1's revenue has come from outside the TV advertising business, compared to 35 percent last year. The Munich-based group expects that share to increase to 50 percent by the end of next year.

ProSiebenSat.1 CEO Thomas Ebeling said the company's “successful diversification and M&A strategy is “increasingly paying off” and he reconfirmed growth predictions, saying group revenues would rise by more than 10 percent this year, despite the expected negative impact following the Brexit vote by the U.K. to leave the European Union.