ProSiebenSat.1 posted its quarterly earnings this morning, indicating more signs of light in a European ad market showing tentative signs of recovery.
The German media group generated €888 million revenues in Q3 2023, representing a 3 percent YoY drop. But the company noted the quarterly results were “almost stable” compared to the first half of the year; the decline was less pronounced than ProSieben’s 9 percent YoY decrease in the previous quarter. But taken cumulatively, group revenues fell by 11 percent YoY over the first nine months of 2023.
The slight decline in the latest quarter was the same 3 percent drop in the Entertainment division, which is to be expected given the segment’s prominence in the group’s revenue mix. It includes the TV business, whose ad revenues slipped 5 percent YoY. But again, the losses were “significantly lower” than during the first six months of 2023, according to the broadcaster.
This suggests a slightly brighter TV ad market in Germany, and tallies with RTL’s results reported last week. The rival broadcaster posted a 3.7 percent YoY dip in ad revenues, compared with the 12.5 percent fall for the first half of the year.
The road to recovery
Prosieben noted that the TV declines were “partially offset” by a 16 percent YoY increase in digital ad revenues. The group has re-positioned its streaming service, Joyn, to drive its entertainment business. And the strategic refocus appears to be paying off, as Joyn saw a 58 percent YoY rise in ad revenues during Q3.
This is significant as digital revenues have generally not been enough to offset commercial broadcasters’ shrinking TV revenues. And although the entertainment business was still down 3 percent, the results suggest Prosieben is moving away from reliance on linear TV.
As part of this restructuring, the broadcaster cut 400 jobs following its full acquisition of Joyn. New management was brought in when Joyn’s former bosses resigned over “differing views on the future direction of the platform,” according to ProSieben.
“We have taken the challenges in the market as an opportunity to realign our group in terms of both personnel and organisational,” said ProSieben CEO Bert Habets. “In doing so, we are setting the course to expand our digital business areas more strongly. At the same time, we have now successfully implemented the cost efficiency program that we initiated at the beginning of the year.”
Performance to date
The Commerce & Ventures division also helped make up the bulk of lost TV revenues, with price comparison website Verivox and perfume retailer Flaconi contributing to the segment’s 14 percent uptick in external revenues.
The company reported a weaker performance from its dating and video segment, comprising dating apps and social entertainment, where external revenues fell 17 percent YoY. It is worth noting that Prosieben’s cost-cutting iniatitives include plans to divest the online dating service. “We will fully realise the savings from our efficiency programme in the fourth quarter respectively in 2024,” said Habets.
And the broadcaster is predicting further recovery for the rest of the year. Prosieben CFO Martin Mildner said the group is “currently expecting a slight increase in revenues and earnings in the crucial fourth quarter.” But that optimism remains on the cautious side, forecasting full-year revenues at the lower end of the group’s target range (€4.10 billion plus/minus €150 million).
Prosieben shares jumped 12 percent at the results, breathing life into the company’s stock price which has fallen sharply this year.