ProSieben posts weaker Q2

Figures show dilemma of European TV

COLOGNE, Germany -- Second-quarter results released Thursday by broadcast giant ProSiebenSat.1 illustrate a larger problem for the European TV industry: the growing disconnect between ratings and net ad revenue.

Although ProSiebenSat.1 strengthened its hold on audiences -- its core German channels increased market share 1.5% to 30.5% in Q2 -- that growth was not reflected in stronger ad sales.

Instead, Q2 revenue slumped 9% to €694 million ($1 billion). ProSiebenSat.1 limited the damage through severe belt-tightening -- it cut operating costs by 14% year-on-year. In addition to major job cuts -- ProSiebenSat.1 chopped more than 600 positions from its roles compared with last year, the group's channels have relied on a heavier rotation of repeats to stretch their programming dollars.

Consolidated profit for the quarter was €50.9 million ($73 million) against €62 million in Q2 2008.

Company CEO Thomas Ebeling avoided giving a forecast for the full year, saying it was difficult to know when the ad market would recover.

"Optimists might say the second half of the year. Pessimists the second half of 2010, it is very very difficult at the moment," Ebeling said in a conference call with journalists Thursday.

Shares in ProSiebenSat.1 opened stronger Thursday but quickly dipped. By midday they were down 4.3% at €5.14 ($7.4)

Ad revenue figures actually suggest the German market is in relatively good shape. Nielsen Media Research reports gross advertising revenue is up 1.7% in the second quarter. But that fails to take into account the major discounts broadcasters are giving advertisers.

Net figures are certain to be much lower. Some estimates suggest a 5%-8% drop to be more realistic.