ProSiebenSat.1 doubles profits as buyers circle

European TV group doubled its net profits in 2010 to $434 million while sales jumped 8.7 % to $4.2 billion.


COLOGNE, Germany -- As investors circle European TV group ProSiebenSat.1, the bride upped her asking price with better-than-expected year-end figures.

ProSieben doubled its net profits in 2010 to $434 million (€312.7 million) while sales jumped 8.7 percent to $4.2 billion (€3 billion).

The bulk of the growth came in the company’s core German free TV business, which saw revenue up nearly 10 percent and operating profits surge 38 percent to $875 million (€631 million). In comparison, earnings from diversification -- a catch-all category that includes online, VOD, pay TV, radio and print revenues -- were up just 4.4 percent and operating profits 13.8 percent stronger at $127 million (€91.5 million).

Germany’s ad market, battered by the financial collapse two years ago, has come roaring back and the country’s old media giants -- ProSieben, RTL, Axel Springer -- have been reaping the rewards. ProSieben stock has more than doubled over the past year, further fueling speculation that KKR and Permira, the private equity groups that control 88 percent of the company’s voting shares, will cash out this year, selling the company on to industry and institutional investors and/or floating their stake on the market. KKR and Permira are expected to make their move by the end of this year.

Publishing giant Springer, which yesterday announced record earnings of its own, is thought to be eying a significant minority share in ProSieben – perhaps up to 25 percent of the company. Perennial suitor News Corp. could also be a contender.

When KKR and Permira took over ProSieben in 2007, their strategy was to make the German giant a European powerhouse by combining it with pan-European group SBS Broadcasting, which KKR and Permira also controlled. ProSieben paid $4.4 billion (€3.3 billion) for SBS, a figure many saw as far too high.

Four years later, ProSieben is looking to dump most of its SBS assets – SBS channels in Benelux and Scandinavia are expected to go on the block in the coming months.

The ProSiebenSat.1 group that will go on sale this year will look a lot like the one KKR and Permira bought in 2007 – a German free TV giant with a few international assets and a growing, though still secondary, online business.