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ProSiebenSat.1 Reports ‘Solid’ Q1 Results Despite Marginal Revenue Decline

CEO Conrad Albert highlights ratings success of 'Young Sheldon'

Germany’s ProSiebenSat.1Group has reported a “solid start” to the year despite seeing a slight drop in revenues in the first quarter of 2018. The media giant saw revenues reach €881 million ($1.04 billion), a 3% decrease from the same period of 2017 (which had in turn seen 13% growth over 2016). However, ProSiebenSat.1 Media SE CEO Conrad Albert said that when looked at on an organic basis, adjusted for consolidation and currency effects, Group revenues would actually increase 1%.

The Group’s entertainment business provided the bulk of revenues, which were up 2% at €642 million ($759.9 million).

CFO Jan Kemper explained that the marginal decline in Group revenues during the first quarter had mainly resulted from what he called “temporary effects” of some deconsolidation in ProSieben’s travel business as well as a “still challenging environment in the U.S. production business combined with some effects head winds due to a weakened U.S. dollar.”

Adjusted net income and adjusted EBITDA both saw growth, with net income up 6% at €93 million ($110.1 million) and EBITDA up 7% at €200 million ($236.7 million).

Speaking on a conference call Wednesday morning, Albert and Kemper said they expected full year revenues to see low to mid-single digit percentage growth with adjusted EBITDA in the mid-20% range, in line with the 2017 level.

Kemper said the company anticipated a decrease in adjusted EBITDA in both the second and third quarters of the year “with a counter-balancing effect in the fourth quarter.” “This expected development is mainly due to consolidation effects resulting from transactions throughout the finance year 2017 combined with a different seasonality with regards programming costs,” said Kemper. “Overall we re-confirm our financial outlook for the year with regards revenues, adjusted EBITDA and net income.”

Of the first quarter Albert noted ProSieben’s TV ratings had enjoyed “very robust development in Q1. “Year-to-date we are slightly above the prior year by 0.4%,” said Albert. “That is not so bad if you take into account we were facing Winter Olympics and a strong sports content coverage on the public broadcasters.” He also noted what he called “remarkable” growth in Austria where ProSieben scored an all-time high market share of 31.2% in the 12-49 age group in April.

Albert said the company has maintained and expanded its leading position in the German market, leading RTL Group channels in terms of audience share by 1.1%. “That’s driven by both U.S. licensed content and local commissioned content so in our view the right and smart mix of content is the key to success,” said Albert. He highlighted the recent success of CBS’ “The Big Bang Theory” spin-off “Young Sheldon” (pictured), which debuted on ProSiebenSat.1 in January and had scored ratings of up to 25.4%. “That’s the strongest sitcom start we’ve seen in our market, ever.” He also mentioned that “The Big Bang Theory” was “still up there” with 22.3%.

“Across all our three German-speaking territories we’ve shown a very solid performance in Q1,” said Albert of the Group’s audience share. “We are at 26.8% market share, on the same level [as last year], in Germany. We’re seeing an increasing market share in Austria and also in Switzerland, and that is all despite the Olympics being broadcast on the public broadcasting channels.”

Albert said it was important to point out that “TV continues to lead in both reach and viewing time. Across all age demographics we still have over 90% penetration of classical linear TV usage; VOD usage with a penetration of 35% now is much smaller. We will not neglect that it is growing but TV is very strong.”

Television advertising delivered a solid first quarter performance with growth of 2.5% year-on-year. “TV remains the key for advertisers,” said Albert. “They are increasing their share in the media mix.”

Discussing its distribution business Albert noted that post-Q1 ProSiebenSat.1 had closed its minority participation transaction with General Atlantic in NuCom Group on April 4, saying they were “now going into full force operational growth mode with our partners, General Atlantic.” The objective of the partnership is to expand the commerce portfolio via acquisitions in Germany and Europe and further accelerate NuCom’s growth and profitability.

He also mentioned that the November acquisition for Red Arrow Studios of Gravitas Ventures “significantly expands our global sales business” by adding 3,300 titles to ProSieben’s catalogue. “Gravitas also brings to the table more than 140 new customers, so our international content distribution business is really gaining traction.”

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