Fine, SBS purchase to blame
German TV giant ProSiebenSat.1 reported on Tuesday net profits fell 63% to Euros 89.4 million ($136 million) in 2007, from Euros 240.7 million ($366 million) in 2006.
Poor results were blamed on the purchase of SBS Broadcasting and a Euros 120 million ($182 million) regulatory fine.
SBS was acquired last year in a Euros 3.3 billion ($5 billion) deal that established ProSiebenSat.1 as a pan-European broadcaster with 26 stations, rivaling the Bertelsmann-owned RTL Group.
Helped by the acquisition, sales jumped 29% to Euros 2.7 billion ($4.1 billion) for the full year.
In its German operations, sales rose a meager 2.3% to Euros 1.9 billion ($2.9 billion), due to sluggish consumer spending and a softening of ad revenues for the SAT 1 division.
Fourth quarter sales rose 51% to Euros 987 million ($1.5 billion) and net profit fell back 65% to Euros 39.5 million ($60 million).
Chairman Guillaume De Posch predicted rising sales and profit for 2008, due to synergy from the SBS deal and added that he wants to boost the company’s production arm.
Using the model of subsidiary Producers At Work, the company aims to focus on creating new content for its pan-European operations, including adapting TV formats for international markets.
De Posch gave the example of magic show “The Next Uri Geller” from MMC-Studios in Cologne, which has spun off franchises in Holland and Hungary.
Decisions about production strategy are expected to take some months. According to ProSiebenSat.1 CEO Patrick Tillieux, due to lack of agreement within the consortium of Red Bee Media and IBM, it’s still unclear if they will go for outsourcing, in-house production or a mix of both.
ProSiebenSat.1 is projecting earnings reaching Euros 40 million ($61 million) this year and rising to between Euros 80 million ($122 million) and Euros 90 million ($137 million) a year by 2010.
The company intends to set up more free TV webs in the future, De Posch said, some of which are likely to be based outside Germany.
In a separate statement, the company said it plans to buy back up to 1.13 million, or 1%, of its non-voting preferred shares, representing 0.5% of total share capital.