BERLIN — Haim Saban’s acquisition of Germany’s biggest broadcaster ProSiebenSat.1 earlier this week was sweetened Thursday after the group tripled its second quarter net profits to 32 million euros ($36 million).
Yet despite registering profits from all of its five channels, the group recorded a 6% drop in revenues to $530 million as a result of the ongoing advertising slump.
Company, which suffered a $37 million first-quarter loss, managed to cut costs across the board, including 11% from programming and material expenditures, which were trimmed down to $717 million.
ProSiebenSat.1 prexy Urs Rohner said, “Business developed more positively than expected. The cost-cutting measures kicked in and the performance of our stations improved significantly over the past 12 months.”
The broadcaster nevertheless saw a consolidated half-year net loss of $900,000 on revenues of $997 million, down 11% from the first half of 2002. Although squeezed by the advertising downturn, company’s second-quarter revenues were boosted by a slight market recovery between April and June.
ProSiebenSat.1, the core division of the insolvent Kirch Media group, controls roughly half of Germany’s commercial TV market but has lost ground to market leader RTL during the past year. However, its market share rose slightly to 28.9% among its 14-to-49-year-old target viewers in the first half of the year.
Since the collapse of Kirch Media last year, ProSiebenSat.1 has reworked output deals with nearly all of the major Hollywood studios, most recently with Sony for blockbuster movies like “Spider-Man” and “Terminator 3: Rise of the Machines.” It has also acquired the most valuable titles from Kirch Media’s film library as well as rights to European Champions League soccer.
Kirch Media’s creditor banks approved Saban’s second offer of $1.3 billion for ProSiebenSat.1 Aug. 5 after his initial offer fell through in June.
Saban, who is backed by five equity investment groups, is expected to restructure ProSiebenSat.1 in an effort to improve profit margins, although he has indicated that Rohner and ProSiebenSat.1’s current management team will remain in place. At the same time, Saban will be very hands-on in his approach, according to Saban sources.
The new owner is backing a capital increase for ProSiebenSat.1 that would raise around $300 million to finance further growth, strengthen the company’s capital structure and further lower the group’s debt. The broadcaster has already cut its liabilities this year by 6% to $1.3 billion on the strength of cost-cutting measures.
The Israeli-American billionaire, who is seeking to wrap up the purchase in coming days, has said he plans no job cuts at the broadcaster and won’t change the “basic philosophy” of its channels.
Rohner welcomed Saban’s takeover of the group, saying ProSiebenSat.1 would have a “stable ownership structure and the necessary peace to concentrate on the operational business. We will profit from Haim Saban and his co-investors, who are perfect partners for us. Now it’s important to finalize the acquisition as soon as possible.”
“ProSiebenSat.1 will benefit greatly from Haim Saban’s professionalism and expertise,” added company spokesman Torsten Rossmann.