Antitrust fines hit profit
BERLIN — Germany’s biggest broadcasting group ProSiebenSat1 suffered a 61% drop in net profit in the first nine months of the year and a hefty third-quarter loss, due largely to one-off costs after being slapped with antitrust violation fines.
Company, which expanded across Europe this year with the acquisition of the SBS Broadcasting group, posted a nine-month net profit of Euros 49.9 million ($73.5 million), down from $187.5 million in the same period last year.
In the third quarter, ProSiebenSat1 was $115 million in the red — its first loss in four years — following the Federal Cartel Office’s $177 million fine. Germany’s antitrust watchdog busted ProSiebenSat1 and rival RTL Group in October for abusing their dominant positions and shutting smaller competitors out of the TV advertising market.
Nine-month sales jumped 19% to $2.5 billion while third-quarter revenue shot up 55% to $985 million due mostly to the merger with SBS, which ProSiebenSat1 acquired in July.
Not including the regulatory fine, ProSiebenSat1’s underlying nine-month net profit was up 51% to $291 million while underlying third-quarter profit, sans the fine, soared 385% to $100 million compared with a net profit of $21 million in the third quarter of 2006.
Despite the punitive fines, ProSiebenSat1 topper CEO Guillaume de Posch expressed optimism in view of ProSiebenSat1’s European expansion.
“Positioning the ProSiebenSat1 group internationally by acquiring the SBS Broadcasting group was the right strategic decision. The dynamics of other European markets more than made up for the subdued German market in the third quarter. As a pan-European television group, ProSiebenSat1 stands on a broader base and is better protected against downturns. The vigor of the other European markets will continue to drive our growth in the fourth quarter.”
The group’s combined revenue from domestic and international TV operations contributed a total of $789 million in the third quarter, up from $556 million in the same period last year, which was generated primarily by the group’s domestic channels.
ProSiebenSat1’s diversification unit, which includes pay TV, radio, print and Internet, saw revenue of $196 million, or 20% of the group’s total revenue, compared with $78.6 million in the third quarter of 2006, which accounted for only 12.4% of total sales.
Company is expecting higher revenue and earnings for the year due to the consolidation of SBS, adding that ad-financed free TV will remain the major growth driver for the future while its diversified media portfolio will help propel organic growth.
The group said it was confident that it would be able to reach its targets under the newly implemented ad sales model, which is in line with cartel law.