Solid ProSieben looks to future

First-half profit up; content unit part of restructure

ProSiebenSat.1, Europe's No. 2 broadcaster, presented solid first-half figures Wednesday as it unveiled a major restructuring of the company following its $4.5 billion takeover of pan-European TV group SBS Broadcasting last month.

CEO Guillaume de Posch also outlined a major restructuring that will see the Munich-based media giant consolidate and centralize the acquisition, production and marketing operations of its 50-odd free and pay TV channels.

ProSieben has set up a new division — Group Content — to oversee acquisition and production activities.

Group Content Acquisitions, which will be run by German TV head Jan Frouman, will be responsible for buying international films and series for the entire group. ProSieben acquisitions head Rudiger Boess will assist Frouman in running the unit.

Production will be centralized in the new Group Content Production division, to be run by Gabor Kereszty, managing director of SBS' Hungary channel TV 2. Based in Munich, the unit will focus on developing series and formats with cross-border appeal. De Posch said a key goal will be setting up facilities to allow back-to-back productions in several languages of a single hit format.

The acquisition of SBS, entirely financed by debt, has led to speculation that ProSieben might have overextended itself. But CFO Lothar Lanz moved to reassure investors that the company is in a solid position and not threatened by the current global credit crisis.

First-half revenue at ProSiebenSat.1 hit €1.1 billion ($1.4 billion), a 3.6% year-over-year increase. Profit jumped 11.9% to €127.8 million ($171 million).

Including SBS on a pro-forma basis, total revenue at ProSieben increased 5.1% to €1.6 billion ($2.1 billion). SBS figures will be fully consolidated for the first time in the third quarter.

The results, while largely unchanged from 2006, were slightly ahead of analysts' predictions, pushing ProSieben shares higher.

"Last I checked, we were set to invest €1.6 billion ($2.2 billion) in programming this year," De Posch said in a conference call Wednesday. "That's more than we invested in 2006 and about half of our total revenue. So you can see that content remains our main focus."

De Posch also is counting on content to revive sickly German channel Sat.1. Revenue at the Berlin-based network fell 9% to €210 million ($283 million), and pretax profit dropped 13% to €56 million ($75.6 million) in the second quarter.

To counter this, Sat.1 has launched a programming offensive, greenlighting 40 new pilots for the fall season, the highest number in its history. While Sat.1 has renewed licensing deals with U.S. series including "NCIS" and "Criminal Minds," de Posch said 60% of Sat.1's programming budget would be dedicated to homemade series and shows.