Earnings Dip at German TV Giant ProSiebenSat.1

Courtesy of CBS
'Young Sheldon'

The company, which operates several TV channels in Germany, is trying to shift its programming away from U.S. series and films and its business model towards digital and online.

German commercial broadcaster ProSiebenSat.1 has had a lousy year.

The television giant, which operates several free-to-air and pay TV channels in Germany, and controls production group Red Arrow Studios, reported its 2018 year-end figures on Thursday, showing a drop in both earnings and revenue. Group revenue fell 2 percent to $4.5 billion (€4 billion), while adjusted net income slipped to $612 million (€541 million), down 2 percent from 2017.

Increasing competition from online streaming platforms and a shift in audience behavior — away from the U.S. series and films that have long been a mainstay at ProSiebenSat.1's channels to more local programming — have hit the group hard. ProSiebenSat.1 CEO Max Conze has announced a strategic overhaul aimed at transforming the old media giant into a digital-first company. The broadcast giant is looking to renegotiate terms for its volume or output deals with four Hollywood studios as it tries to shift away from imported shows such as The Big Bang Theory and Young Sheldon toward more home-grown fare, what the company somewhat oddly calls “local hero programming.”

On the digital side, ProSiebenSat.1 has joined forces with Discovery to launch a premium streaming service for the German market, which will aggregate content from both ProSieben's German networks and Discovery's free-to-air channels DMAX and TLC in Germany.
“2018 was not a year we can be satisfied with as the weakness in TV advertising was not yet sufficiently counter-balanced with digital and commerce growth,” Conze said. “Nevertheless, we kicked off the critical transformation to be a digital, diversified entertainment to commerce champion and the start into 2019 is showing encouraging signs of progress: Total video views are growing, latest TV ratings are the best since 2016 with a strong lineup of local hero programs.”
While ProSieben is looking to cut back on its Hollywood buys, this week the network re-upped its volume deal with local production group Constantin Film, securing rights to films from the German mini-major, including the hugely successful Suck Me Shakespeer comedy franchise.
ProSieben's ills are part of an overall malaise in the German TV market, which is only now feeling the impact of Netflix and co. on the traditional broadcast business. This has dovetailed with a flagging interest among German TV viewers in U.S. network series and films. Two of the country's leading licensers of U.S. content for television — Tele Munchen Group and Universum Film — were bought last month by private equity group KKR, which plans to lump together several German companies to create an independent content production and distribution platform for the German-speaking market.