War sinks profit at Saban’s Prosieben

Revs dipped 16% to $474 million

BERLIN — War in Iraq took its toll on Haim Saban’s Teutonic TV group ProSiebenSat 1 in the first quarter of the year, resulting in a $38 million net loss compared with last year’s profit of $6.9 million.

Germany’s biggest multi-channel broadcaster, which the U.S. producer is buying from the creditors of bankrupt former owner Kirch Media, said Tuesday that the advertising crisis intensified during the conflict in March. Revenues dipped 16% to $474 million.

“The market very likely bottomed out in March,” said topper Urs Rohner, adding that demand for TV advertising was back up in April. “But we believe any real improvement in the TV advertising market is unlikely until the second half of the year, at the very earliest.”

Rohner admitted that the ad slump was not the only factor behind the group’s losses. “They also come in part from weaknesses at Sat.1 and ProSieben,” he said. “We’ve corrected most of these problems, but not quite all.”

The chief exec said ProSieben’s afternoon schedule and some primetime slots as well as Sat 1’s weekend and prime access schedules needed to be “optimized.” The group nevertheless leads the TV ad market, with a gross market share of 44.3%.

Exemption sought

ProSiebenSat.1’s financial state has prompted Saban to ask German federal finance authorities to exempt him from a mandatory tender for outstanding shares in the group as part of his takeover bid. Saban is arguing that the estimated $500 million he’d have to spend on the buyout would be better spent on ProSiebenSat 1.

Of the group’s four main channels, only ProSieben and Kabel 1 were profitable. ProSieben saw pretax profits drop 78% to $17 million from sales of $179 million while Kabel 1 posted a 33% drop to $2.3 million on revenue of $53 million. Sat 1 cut its losses by 68% but was still $15 million in the red after $204 million in sales and news channel N24’s losses were up 14% to $9.2 million from revenue of $17 million.

Group has cut programming and material costs by 9% to $366 million and further operating costs 5% to $65 million.

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