Saban sees healthy numbers

ProSiebenSat 1 posts 200% rise in net profits

BERLIN — Despite a continuing advertising slump last year, Haim Saban’s German broadcasting group ProSiebenSat1 saw a 200% increase in net profits in 2003.

Company booked an annual win of 45 million euros ($57 million) while revenues in the period dropped 5% to $2.3 billion.

At a press conference in Munich Friday, ProSiebenSat1 execs said the group would carry out a capital increase in April of up to $354 million aimed at reducing the group’s net financial debt and “thus enhancing its maneuverability against the competition and reinforcing the basis for new growth.” The price of the new stock to be issued has not yet been fixed.

While the advertising market remained difficult in 2003 — shrinking by some 5% from the previous year and leaving a dent in company sales — ProSiebenSat1 managed to raise earnings through cost reductions of 11%, or $262 million. The most important cost factor, said chief exec Urs Rohner, was getting rid of high-priced Bundesliga soccer rights, which only provided low-rated game highlights for group web Sat1.

While Rohner declined to comment on reports that the group was seeking the Bundesliga’s coveted live pay-TV rights, saying he would not comment on ongoing negotiations, he said live matches were much more attractive than post-game rundowns.

Rohner confirmed that ProSiebenSat1 was considering a foray into pay TV, saying the digitalization of Germany’s cable systems would offer new and cost-effective opportunities for pay TV ventures. He stressed that ProSiebenSat1 would not be spending huge amounts of money nor risk high losses on a pay TV investment, specifically on the development of technical infrastructures.

ProSiebenSat1 is reportedly eager to acquire Bundesliga pay-TV rights as a cornerstone for pay TV content and is said to be offering the German Football League (DFL) $762 million, outbidding German paybox Premiere, which currently holds the rights, by some $40 million per season.

Rigorous cost management also reduced the group’s programming and material costs by 9% to $1.6 billion and whittled down personnel by 9% to 2,781 employees.

“In spite of the adverse environment, we made a substantial improvement in our company’s profitability,” said Rohner. “The results demonstrate the success of our long-standing efforts to put ProSiebenSat.1 on the most efficient footing possible. We’ve improved our cost base, optimized our structures and increased our ratings, enabling us to strengthen our market position significantly amid tough conditions. We’ve laid the groundwork for the group to perform better than average in the years to come.”

In 2003, ProSiebenSat.1’s four main stations increased their combined share of target 14-to-49-year-old auds by nearly 1% to 28.9%. ProSieben remains the strongest web with a 12% market share, followed by Sat1 (11.5%), Kabel 1 (4.9%) and news channel N24 (0.5%)

Three of the four channels were profitable, at least in terms of pre-tax earnings, including Sat1, which made a pre-tax loss of more than $100 million in 2002. Last year Sat1 posted a pre-tax profit of $6.3 million and sales of $982 million, which remained unchanged from 2002 aside

from the strong gains made by the euro over the U.S. dollar.

ProSieben, which showcases Hollywood films and hit series like “Sex and the City” and remains the group’s most profitable station, posted a 34% boost in pre-tax profits to $170 million while booking a 12% drop in revenue to $869 million.

Kabel 1 saw revenue drop by 3% to $240 million while pre-tax profits rose 50% to $23 million. The group’s money-losing news web N24 reduced its losses by 54% to $14 million while sales dipped 25% to $90


Execs admit this year’s developments in the TV market remain difficult to forecast, adding that the local economy is expected to grow 1.7% this year but whether that would translate into increased consumer

spending remained to be seen. “Our goal is to enhance ProSiebenSat.1’s earnings substantially in 2004, even if we can’t expect growth in the TV advertising market,” said Rohner, adding that further cost reductions and improved ratings would help.

Filed Under:

Want to read more articles like this one? SUBSCRIBE TO VARIETY TODAY.
Post A Comment 0

Leave a Reply

No Comments

Comments are moderated. They may be edited for clarity and reprinting in whole or in part in Variety publications.

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

More Scene News from Variety