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2013 was another record year for the ProSiebenSat.1 Group. The Group grew profitably in all areas and reached important milestones on the way to becoming a digital entertainment and commerce powerhouse. CEO Thomas Ebeling looks back on the 2013 financial year.

Mr. Ebeling, how would you assess the 2013 financial year, looking back?

Thomas Ebeling 2013 was a very successful year for ProSiebenSat.1, both from a financial and strategic perspective. We grew profitably in all segments and again set new records for revenues and earnings. We founded two new free TV stations, expanded our share of the audience and advertising market, and continued to increase our distribution revenues. In the Digital & Adjacent segment, we grew our revenues by nearly 45 %. There were also key strategic milestones. With the sale of the Eastern European portfolio in December 2013, we moved away as planned from all television stations outside the German-speaking region. We will now concentrate on expanding our digital business, which is set to experience further dynamic growth in coming years. 2013 has shown once more: ProSiebenSat.1 is right on track, both in terms of its operations and strategy. The capital market also acknowledged this. Between January and December 2013, our share increased by almost 70 % to EUR 36.

How will you continue this dynamic growth in the years to come?

Thomas Ebeling In 2013, we presented record earnings for the third time in a row. Our strategy is a strong foundation for sustainable growth. We have a clear growth plan for the future of all segments. We are known for setting ourselves ambitious targets — and achieving them. The fact is, no other European media company uses synergies between the TV and digital businesses as consistently as we do. We reach more than 42 million TV-households every day with 15 TV stations in Germany, Austria, and Switzerland. Reach is capital: We use it to penetrate new markets with strong growth prospects in a targeted fashion. For example, these include the e-commerce business, the market for online video advertising, and digital home entertainment.

How does that work exactly?

Thomas Ebeling I will give you a specific example from the field of e-commerce. In 2013, we bought the online travel providers and, the experience website MyDays, and, all investments in the travel sector. Now customers can book the complete package via our travel cluster, from flights and hotels to rental cars at their destination. What is important is that travel is a visually powerful and emotive issue that we can advertise excellently on our TV channels. We use the advertising power of our television stations to accelerate our growth in new business fields. In 2014, we will build up additional digital commerce clusters in the same mold, for example in fashion or home & living.

At 76.7 %, TV delivers the largest share of revenues and is simultaneously the basis for further growth. How did the Broadcasting German-speaking segment develop in 2013?

Thomas Ebeling Very well. We are number one in the German TV advertising market and reached a new top figure with a gross market share of 43.6 %. At the same time, we increased our revenues from new customers to EUR 54 million. We also made gains in the audience market, increasing our combined market share to 28.1 %. Crucially, however, we have triggered new growth in the core business in recent years with new stations and our distribution segment. Two new free stations went on air successfully in 2013: SAT.1 Gold and ProSieben MAXX. Our women’s station, sixx, exceeded the 2 % mark in its core target group for the first time. All three are driving our growth in the audience and advertising market. The television industry is currently experiencing a new period of expansion and I am convinced that the market offers us potential for more TV stations.

How did the distribution business perform?

Thomas Ebeling Revenues from the distribution of our HD and pay TV programs continued to grow sharply at nearly 40 %. We also expect dynamic development in the years to come. This means we will be able to further strengthen our independence from the economically sensitive advertising market. Until a few years ago, the distribution of German TV stations was merely a cost issue. The stations paid cable network operators to distribute their programs. In Scandinavia and the USA, it was always the other way around. It is good that we have now flipped this model for HD stations in Germany, too. We take a share in the revenues that providers generate from the distribution of our HD channels. This gives us new prospects for growth, because HD is an extremely attractive product for viewers: The number of ProSiebenSat.1 HD subscribers climbed by more than 50 % to 4.2 million in 2013.

Let’s move on to the Digital & Adjacent segment: Revenues increased by almost 45 % in 2013. What was the key to this success?

Thomas Ebeling We established ourselves in pioneering business fields at an early stage, which is now paying off. We operate Germany’s biggest video-on-demand portal, maxdome. We are also Germany’s leading seller of video content on the internet. Our digital commerce business experienced triple-figure growth again in 2013. We particularly benefited from the expansion of our travel cluster here. This all helped to make our Digital & Adjacent segment not only the strongest growth driver but also highly profitable. We will continue in this direction. We aspire to leading market positions in all areas. Therefore, we purchased the games publisher Area Games Europe at the start of 2014. This now makes us one of the top three players in the European online games business, too.

Last year, ProSiebenSat.1 also grew via start-ups. What’s the story with the multi-channel network Studio71?

Thomas Ebeling People use video media in many ways these days. Television creates a familiar place to relax. I lean back and let myself be entertained. Mobile devices such as smartphones and tablets encourage you to search for content actively, regardless of the time or place. We meet all needs with our offerings and have established strong brands online: For example, these include our advertising-financed platform MyVideo, with which we reach eight million active users every month. We have now also launched a successful multi-channel network, Studio71, which we launched last year. We not only use it to aggregate and sell our content for the internet, but also to produce considerably more exclusive internet programs. In 2013 alone, we launched more than 100 channels and signed contracts with more than 30 internet stars. These include big names like Gronkh & Sarazar, with whom we now have an exclusive contract. They are real stars online, reaching millions with their shows. We are therefore on track for establishing one of Europe’s largest multi-channel networks. In January 2014, Studio71 already generated more than 100 million video views.

ProSiebenSat.1 is active in the production and sale of TV programs with the Content Production & Global Sales segment. How did things go there in 2013?

Thomas Ebeling In 2013, our program production and distribution subsidiary Red Arrow sold TV formats to more than 180 countries. We continued to strengthen our position in the English-speaking markets: We have sold the cooking show “The Taste”, developed by our US subsidiary Kinetic Content, to over 80 countries, including the USA and Great Britain. In these key markets, not only are the highest distribution and production margins achieved, but the English-speaking product is also in the greatest demand in the international TV business. For this reason, in 2013 we also significantly expanded our English-speaking fiction portfolio. In 2014, we will shoot films with international stars like Judi Dench and Dustin Hoffman. At the same time, in 2013 we pushed forward with our production business with platform operators, positioning ourselves early in a growing order market: We produced a pilot episode of the crime series “Harry Bosch” for Amazon. Amazon allowed its customers to vote on whether the series would continue online. The response was overwhelming. There is a very good chance that Amazon will soon commission us to produce a complete season.

Our strategy provides a strong foundation for sustainable growth.

2013 was not only a successful, but also an eventful year for ProSiebenSat.1. The financial investors KKR and Permira sold their shares in stages and withdrew completely in January 2014. What does this mean for the Group?

Thomas Ebeling We worked very well together with our former shareholders KKR and Permira for seven years. In this time, ProSiebenSat.1 performed extremely successfully. The incremental withdrawal via the stock market, which followed the merger of our share classes in August 2013, is a very good solution for our Group. It has no effect on operations. We are still intensively pursuing our growth targets and the advancement of our digital strategy. That was the basis of our success in 2013, too. Our share price rose from around 70 % to EUR 36, which means we performed considerably better than the MDAX stock market index in which we are listed. Over the past year, we have once again shown that the ProSiebenSat.1 share is a growth stock — with an attractive dividend yield. We will maintain this and involve our shareholders in the success of the Company. In line with our dividend policy, we intend to continue distributing an annual dividend of 80 % to 90 % of underlying net income to our shareholders. We are therefore proposing a dividend of EUR 1.47 per common share to the Annual General Meeting for 2013.

To conclude, let us take a look at the growth targets. By 2018, you want to generate EUR 1 billion of additional revenues. What will you do in 2014 to move closer to this goal?

Thomas Ebeling We will continue to grow in all segments. We will expand our Swiss and Austrian portfolio and give the mobile aspect of the distribution business a massive push. In the digital business, we will establish additional strong clusters in the mold of our travel cluster and tap into new business areas by entering into strategic partnerships. On Capital Markets Day in October 2013, we raised our growth targets for 2015, many of which we had already achieved. We are pursuing our targets for 2018 with the same ambition. We want to grow sustainably in the future and further increase our profitability in all business segments. We have attractive content and platforms which allow us to reach millions of people. The combination of the two provides us with opportunities that are available to almost no other company. Strategically, operationally, and in terms of personnel, we are outstandingly positioned to continue the growth story of the ProSiebenSat.1 Group.