German broadcaster ProSiebenSat.1 Media SE has warned for weak revenues in the third quarter due to a downturn in advertising revenues in the German market. Revenues at its Broadcasting German-speaking segment are expected to decline by a mid-single digit percentage compared to the EUR 472 million reported a year ago.
After a promising start to the quarter, ad revenues fell short in September, the most important month of the quarter, the company said. However, group revenues are still expected to increase by a mid-single digit percentage in Q3 on an annual basis, thanks to positive developments in the TV distribution, content production and digital activities. Adjusted EBITDA is expected stable year-on-year, due in part to the sale of the international online flight agency Etraveli.
ProSiebenSat.1 still expects the ad market to improve in Q4, but lowered its forecast for the TV market over the full year, now forecasting flat ad revenues compared to a previous forecast for 1.5-2.5 percent growth. Its own revenues in the German broadcast market could still grow in the low single digits, thanks in part to internal revenues.
For the entire group, ProSiebenSat.1 still expects revenue growth in 2017 in "at least a high-single digit percentage", while both adjusted EBITDA and adjusted net income should exceed last year’s levels. ProSiebenSat.1 also confirmed its policy and financial leverage target range.
The Etraveli disposal resulted in an extraordinary gain of EUR 319 million in the third quarter. This positive earnings effect will be largely offset by other charges in the third quarter, including a "strategic revaluation" of parts of the group’s programming assets.
ProSiebenSat.1 furthermore announced that it has started a review of its group segment structure and certain other portfolio measures. Objectives are the "alignment of the structure to a dynamically developing media landscape and to maximizing shareholder value". This may include a potential combination of the Broadcasting German-speaking and Digital Entertainment segments into one combined entertainment segment. In addition, the company targets "meaningful" cost synergies in the medium term.
It also confirmed the group is reviewing options for its content production and commerce businesses. This may lead to a potential joint venture or merger with another investor or a public listing for the activities.
Further details on the plans will be announced at the Q3 results 09 November and at a capital markets day on 06 December.
