German TV Giant ProSieben Reports Higher Second-Quarter Results

German TV giant ProSiebenSat.1 Group reported improved second-quarter financials on Thursday amid better results at its German networks and its production arm Red Arrow.

The company said underlying earnings rose 4.5 percent to $138 million (€104.3 million). Second-quarter revenue jumped 11.4 percent to $827 million (€624.8 million). The gain was partially offset by higher costs due to growth initiatives.

The results are for continuing operations, which exclude Scandinavian TV and radio firm SBS, which Discovery Communications recently acquired. It also excludes Eastern European operations still classified as “held for sale.”

ProSieben said all three major units of the company – TV networks, digital and production arm Red Arrow – recorded growth in the latest quarter.

“We are leveraging the synergies between the TV and digital areas and their growth potential in an extremely consistent fashion, which hardly any other media company does,” said ProSieben CEO Thomas Ebeling. “This is also evident in our medium-term targets. By 2015, we want to generate an additional growth potential of at least €600 million (794 million). We already achieved 72 percent of this by the end of the second quarter.”

In ProSieben’s TV segment, German-language networks, including free TV and pay TV channels, second-quarter revenue rose 2.4 percent. “The ProSiebenSat.1 Group expanded its net TV advertising revenues in all its German-speaking markets,” the company said. “In the audience market of viewers between 14 and 49, the ProSiebenSat.1 Group was again the market leader on a quarterly and half-year basis, ahead of the RTL Group.”

The company’s SAT.1, ProSieben, kabel eins, sixx and SAT.1 Gold networks closed the second quarter with a German audience market share of 27.8 percent, compared with 27.6 percent in the year-ago period. It lauded the success of newly launched The Voice Kids and the continuing ratings for The Voice of Germany.

Digital and adjacent segment revenue, which also includes commerce, music and live events and ventures, rose 65.5 percent. ProSieben said its online video unit reached a market share of 47 percent. “With maxdome, the group operates Germany’s largest online video platform and has with MyVideo successfully launched Germany’s first web TV station,” the firm said. 

The company’s Starwatch Music unit is Germany’s largest independent music label with such local stars as hip hoppers Die Fantastischen Vier, folk music singer Heino and newcomers Passenger.

Red Arrow revenue rose 42.2 percent to $33.6 million (25.4 million) in the second quarter. Costs rose at a slower rate, meaning that operating cash flow rose to $4.0 million (€3.0 million) from $1.5 million (€1.1 million).

U.S. production company Left/Right, in which Red Arrow acquired a majority stake last year, “again made an important contribution to revenue growth,” ProSieben said.

Lauding Red Arrow as one of the global top 10 independent production companies, ProSieben cited the successes of a French adaption of German hit cop series Der letzte Bulle (The Last Cop) and hidden camera show Off Their Rockers, which has reached almost six million viewers on Britain’s ITV1.

The Last Cop format has been picked up in 13 countries, with TNT developing it for the U.S. with Sylvester Stallone as an executive producer. The show is about a cop who awakens after almost 20 years in a coma to a changed world. The U.S. show will center on an LAPD cop.

Asked about its auction of its Eastern European assets, ProSieben management declined to comment on Thursday beyond saying the target remains to finish it by year’s end.

E-mail: Georg.Szalai@THR.com
Twitter: @georgszalai