Capital Markets Day 2017: ProSiebenSat.1 announces new group setup with three-pillar strategy

• Group continues successful diversification strategy and will organize its business in the three areas of “Entertainment”, “Content Production & Global Sales” and “Commerce”
•  TV business strengthened through synergies with digital entertainment: cost savings of over EUR 50 million planned by 2019/2020
• Potential co-investors in areas of Content Production and Commerce
• Outlook for full year 2017 confirmed
• New mid-term financial targets based on revenue growth and profitability: revenue growth of more than EUR 1 billion by 2022 compared to 2017
• Group continues attractive dividend policy with a payout ratio of 80% to 90%

ProSiebenSat.1 Group will continue its successful diversification strategy and now realizes over 50% of its revenues outside the traditional TV advertising business. To further accelerate this successful transformation, the Group will, as of January 2018, have a new organizational setup with the three business areas of Entertainment, Content Production & Global Sales and Commerce. The aim is to adapt the Group to the dynamically changing environment and to secure further sustainable, profitable growth. By combining the linear TV business with the Digital Entertainment division, ProSiebenSat.1 is able to provide increasingly platform-independent offers and universal marketing of programming content, thus achieving additional synergies in this area. In the process of this new setup, the Group wants to achieve a net savings potential of over EUR 50 million by 2019/2020. Including further investments in program and in areas such as AdTech and Data, this will lead to an improved cost development in the Entertainment segment.

Thomas Ebeling, CEO of ProSiebenSat.1 Media SE, said: “ProSiebenSat.1’s growth story has been uninterrupted for 32 consecutive quarters. We are one of the most profitable media companies in Europe and with revenues in the digital business areas exceeding EUR 1 billion, we have also become a relevant player in this field. All this was only possible because we have been systematically driving the transformation and diversification of the Company since 2009. With the three-pillar strategy, we are setting ProSiebenSat.1 up competitively for the future, strengthening the Group for further growth and creating additional value for employees and shareholders. Our management team and Supervisory Board have jointly developed this strategy in the last months. I am convinced that ProSiebenSat.1 will continue its sustainable success in the future with this new structure.”

Entertainment

In the Entertainment business, the areas of TV Broadcasting, Distribution, Advertising Platform Solutions (AdTech), SevenVentures and Digital Platforms (e.g. maxdome, 7TV app) will be combined. Thus, ProSiebenSat.1 will be able to offer its viewers even better all the Group’s entertainment content across all its media platforms. At the same time, the Company is increasingly investing in the growth areas of Addressable TV, AdTech and Data in order to access additional revenues in the advertising market through innovative, data-driven offerings. The Group also sees potential for value creation in Europe via partnerships within the European Media Alliance, in which twelve media companies from all over Europe are already working together.

Content Production & Global Sales

ProSiebenSat.1 is bringing together the Red Arrow Entertainment Group with the multi-channel network (MCN) Studio71 under the name Red Arrow Studios and is integrating digital video offers into the traditional production business as well as into its international distribution networks. Via Studio71, the production business thus gains direct access to a new talent pool and other growing digital channels. In this way, the Content Production business addresses the increasing demand for content on all platforms, branded content and influencer marketing. The Company will make optimal use of the synergies between the 21 production companies, the distributors Red Arrow Studios International and Gravitas Ventures, as well as Studio71, one of the leading MCNs with 8 billion video views per month. ProSiebenSat.1 is also examining a further acceleration of growth for Red Arrow Studios through cooperation with and co-investments by partners.

Commerce

In the Commerce business, ProSiebenSat.1 will operate as NCG – NUCOM GROUP and will bundle its subsidiaries in four categories: Home Services & Mobility (Verivox, billiger-mietwagen.de, Käuferportal), Leisure & Relationships (mydays/Jochen Schweizer, Parship Elite Group, Amorelie), Health & Beauty (Flaconi, Windstar Medical) and Style (moebel.de, Stylight). For the online travel business with package tours (weg.de/tropo) remaining after the sale of etraveli, ProSiebenSat.1 is continuing its review process for a potential sale.

Currently, ProSiebenSat.1 is in talks with potential partners regarding a minority investment in the NCG – NUCOM GROUP. The objective is to expand the portfolio and to further accelerate growth in the commerce area. It is expected that the talks relating to potential partnerships will be concluded in the course of the second quarter of 2018.

Acquisitions remain a key driver for further profitable growth

The successful acquisition strategy of ProSiebenSat.1 creates value and has significantly contributed to the development of the Group over the last few years. This is shown by the unchanged attractive return on the capital invested in the existing M&A portfolio as well as by the successful sale of the online travel agency etraveli.

Dr. Jan Kemper, CFO of ProSiebenSat.1 Media SE, said: “We will continue to successfully invest especially in commerce companies in the future and open up new customer groups for them through our cross-media distribution possibilities.

We have a proven track record for many years that we can successfully create additional value for the Group besides the traditional media business.”

Outlook for 2017 and dividend policy confirmed

ProSiebenSat.1 is confirming its outlook for the 2017 financial year and continues to anticipate Group revenues to grow by a mid-single digit percentage range. The Group continues to expect adjusted EBITDA and adjusted net income to slightly exceed the previous year’s level, respectively. The Group is also maintaining its dividend policy with a dividend payout ratio of 80% to 90% of underlying net income.

New medium-term growth targets

Additionally, ProSiebenSat.1 is transferring its existing financial targets for 2018 into new medium-term target ranges for both revenue growth and margins. The Company anticipates to continue profitable growth in the future and aims at a medium-term revenue increase in the mid-single digit percentage range. Based on these growth assumptions, ProSiebenSat.1 also expects to achieve revenue growth of more than EUR 1 billion by 2022 compared to 2017. It is expected that future larger bolt-on acquisitions would additionally raise the planned revenue growth. At the same time, the Group anticipates in the medium term a further increase of operating earnings and a profitability in the mid 20 percent range based on the adjusted EBITDA.