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In order to spend more money on investments, the share of profits distributed to ProSiebenSat.1 shareholders is significantly reduced in the long run, as the television channel surprisingly announced on Wednesday night. In addition, write-downs of 400 million euros on US-based program licenses are not excluded this year. According to the Management Board, investments should weigh on the operating result in the coming year.
"We are currently engaged in the changes and investments needed to make ProSiebenSat.1 a fully digital, diversified and fast-growing company," said Group President Max Conze at the end of the year. a strategic meeting of the Management Board. ProSiebenSat.1 will invest significantly more in German-language films and series, which are to be produced largely by its own Red Arrow subsidiary. The Internet division with the Verivox, Parship Elite, Jochen Schweizer and Flaconi portals is expected to increase their medium-term sales to two billion euros from the last 800 million euros.
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The group wants to increase sales in the next five years to six billion euros. Of these, 50% will be bought in the digital sector instead of the previous 30%. The starting point is a turnover of four billion euros in the twelve months preceding the third quarter, which has just ended, the company said. Operating profit (Adjusted Ebitda) should thus rise from 1.5 billion euros to 1.5 billion euros.
ProSiebenSat.1 has confirmed and confirmed its medium-term objectives set last year. According to this, annual sales are expected to grow from a single digit percentage to less than 5%. About 25% of this amount is expected to come out of EBIT (Adjusted Ebitda margin).
In order to achieve this goal and boost long-term share price, ProSiebenSat.1 removes shareholders who have suffered dividend losses. In the future, only 50% would be distributed instead of 80 to 90% of the surplus, the board said. At the same time, a share buyback program of up to 250 million euros over 12 to 24 months is planned. On Friday, ProSiebenSat.1 plans to withdraw its own securities worth 50 million euros from the market.
When buying wrongly calculated
In addition, ProSiebenSat.1 admitted to having miscalculated its purchase programs in the United States again. As the American series have been removed from the German public and advertising blocks have not sold as expected, ProSiebenSat.1 will renegotiate with American studios. In case of failure, the broadcaster should erase its own data for the current year, up to 400 million euros on the hardware. Already a year ago, ProSiebenSat.1 had amortized 170 million euros on similar erroneous purchases.
It also needs to be negotiated over extended Internet distribution rights and smartphone apps, with ProSiebenSat.1 only partially licensed for conventional TV. The company draws its hope from successful renegotiations with the American studio Warner Bros., which have already resulted in a new framework agreement.
According to the group, the current year 's business figure will not increase as expected, but will decline from a low single – digit percentage to around four billion euros. In addition to portfolio changes, it has been the cause of surprisingly weak organic growth. However, the adjusted return on sales should be in the average range of 20%, as expected.
In the third quarter, sales and earnings have evolved in line with market expectations. Turnover stagnated at 892 million euros, operating profit decreased by 13% to 175 million euros. Analysts polled by Reuters were expecting a turnover of 895 million euros and a profit of 175 million euros.
Actions in free fall
ProSiebenSat.1 investors pulled the emergency brake on Thursday. The media group's shares collapsed up to 15.9%, reaching their lowest level in six years of 17.35 euros. They were by far the biggest loser in the small cap index, MDax. "The quarterly figures were largely in line with expectations, but the dividend cut and the planned developments for 2018 are a negative surprise," wrote Bankhaus Lamp badyst Christoph Bast in a short comment. "It's pretty disappointing," said a dealer. "Why should anyone else buy ProSieben stock?"
Analyst Ian Whittaker's broker Liberum confirmed his stock rating with "Hold" and the course goal with 22 euros. At the same time, he stressed that investors wishing to get involved in the German media should prefer to use their competitor, RTL Group. Its shares entered the downward spiral of ProSieben and temporarily lost 7.1%, for a record low of 52.20 euros.
RTL Group confirms its annual objectives
The European television group RTL Group sees its annual targets reach its goals after the first nine months. The company confirmed Thursday that sales for the full year would increase by 2.5 to 5% and that the operating result, excluding exceptional items, would stagnate.
In the third quarter, the turnover increased by 3.6% to 1.4 billion euros, mainly thanks to the good deals of the production subsidiary Fremantle and the digital activities. However, the decline in advertising revenues of the German television subsidiary allowed its operating profit (Ebitda) to fall by 3.4% to 254 million euros.
The decline in revenues was slowed by the sums of money paid to the Girondins de Bordeaux football club for the players' departure. Shortly before the French subsidiary of RTL channel, M6, sold the club to financial investor General American Capital Partners, striker Malcolm Filipe Silva de Oliveira was based at FC Barcelona .
(Reuters)
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