ProSieben surging

Saban sees gains despite Teuton ad slump

This article was updated at 7:07 p.m.

BERLIN — Despite the chilly blast of an advertising recession in Germany, Haim Saban is bucking the trend.

His Teutonic broadcasting group ProSiebenSat 1 reported a first-quarter surge of E72 million ($86 million) in pretax profits to $51 million according to preliminary figures released Monday, compared with a $35 million loss in the period last year.

That result continues the company’s dramatic recovery: It posted a 200% increase in net profits in 2003 to $54 million.

And just eight months after bursting onto the world’s second-largest TV market, the Israeli-American billionaire is looking to become a bigger player.

He’s interested in German music channel Viva for his own company, Saban Capital, and wants to buy more stakes in ProSiebenSat 1 if the equity investors who backed his takeover of the group last year, including Hellman & Friedman, Bain Capital and Thomas H. Lee, decide to sell.

‘Forget EM.TV’

“We wouldn’t be responsible businesspeople if we didn’t look carefully at every single opportunity,” Saban said. But he denied rumors that he’s interested in Munich-based license trader EM.TV. “Forget EM.TV. There never was nor is any interest.”

Under Saban, ProSiebenSat 1 has beat the ad slump by cutting programming costs and merging units. He has also overhauled the board, replaced several managers, including three of its four channel heads and CEO Urs Rohner, who was succeeded by Guillaume de Posch last month.

Saban also appears determined to shake up the rest of the German television industry. He looks set to pick a bone with the Kabel Deutschland Group, soon to be Germany’s single biggest cable operator with regional companies in every state.

‘Don’t understand it’

Broadcasters in Germany pay cable operators to carry their channels. “We pay so that KDG carries us,” said Saban. “In the U.S., it’s the other way around. In my entire life I have never experienced a situation where I deliver something and also have to pay for it. I just don’t understand it.”

Saban added that ProSiebenSat 1 was seeking to reach an agreement with KDG.

Similarly, Saban reiterated his desire to see the powerful pubcasters give up advertising altogether: “ARD and ZDF get $7.8 billion a year, risk-free, from license fees, and then on top of that an additional $479 million from advertising. I find that unacceptable.”

ProSiebenSat 1 saw revenue in the first three months of 2004 rise 6% to $522 million. It recorded pretax profits from all of its channels: ProSieben, Sat 1, Kabel 1 and news web N24. The main webs also upped ratings.

“We have created a solid basis for the fiscal year 2004,” said de Posch, who added that the positive earnings were due to cost-cutting plus “some seasonal effects in the first quarter.”

De Posch said he expected the TV advertising market to remain stable in 2004, adding that the company would try to improve earnings “even if the market stays flat.”

He said ProSiebenSat 1 would bid for high-profile sports rights like the Olympics and World Cup soccer.

(Bloomberg News contributed to this report.)

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