BERLIN -- Reflecting what has been a devastating recession in Germany's commercial TV sector, broadcasting group ProSiebenSat.1 posted Wednesday a 78% drop in full-year net profits for 2002 to €15 million ($16 million); revenues were down 6% to $2.03 billion.
Company's interim figures indicate the worst advertising slump since the introduction of commercial TV in Germany, according to ProSiebenSat.1 chairman Urs Rohner. The local advertising market saw an 8% to 10% drop last year.
"The past year was not only marked by an unexpectedly deep slump in the advertising market but also by the insolvency of our majority shareholder and most important program provider Kirch Media," Rohner said in a teleconference Wednesday.
Rohners would not comment on the possible sale of ProSiebenSat.1 parent Kirch Media to either German publisher Heinrich Bauer or producer Haim Saban but did say the company was considering a stake in the Kirch-owned film library following the takeover of the Kirch assets. "We are interested in a long-term attachment to the Kirch library," he said, adding that it had served as an important source of programming for three of the group's four channels.
ProSiebenSat.1's profits were also affected by sinking ratings of once popular programming -- like daytime talk shows and primetime's "The X-Files" -- and "special" factors such as the high price of World Cup soccer coverage and the cancellation of merger plans with the now bankrupt Kirch Media.
Group saw its overall TV market share among target 14-49-year-old viewers dip 2% to 28.1%, while it kept its leading advertising market share at a stable 45.4% (45.6% in 2001).
ProSiebenSat.1 reduced its programming budget by 2% to $1.48 million and tightened its belt in other areas like marketing and operational costs.
Group's leading web ProSieben saw a 10% drop in revenue to $834 million and a 21% drop in pre-tax profit to $221 million, while Sat.1 saw losses rise by 27% to $105 million and revenues dip 6% to $833 million. Web spent $58 million on World Cup soccer but made considerably less than expected by airing coverage of the event in addition to the live matches carried on pubcasters ARD and ZDF and pay channel Premiere. The high cost of Bundesliga (national league) soccer also contributed to Sat.1's poor performance.
Kabel 1, which airs a back-log of old movies and series, posted a 9% drop in revenue to $210 million and a pre-tax profit of $12.8 million, down 65% from the previous year.
Company cheered the financial improvement of 24-hour financial news channel N24, which saw a 42% boost in revenues to $101.7 million and a cut in losses by 37% to $26 million.
ProSiebenSat.1 execs said the local market has yet to hit bottom and do not expect a turnaround in the market anytime soon, adding that the first quarter of 2003 will be worse than 2002. A murky future and unknown effects of a possible war in Iraq on Germany's economy and consumer behavior makes further forecasts impossible, company added.
Nevertheless, Rohner said recent deals with U.S. studios have secured top films for the upcoming year, which had gotten off to a strong start with U.S. import "Alias" on ProSieben and local drama "Edel & Starck" on Sat.1, adding that the fare had put the group on the road towards improvement in 2003 and beyond.
Company's share price rose less than 1% to $6.54 following the release of the annual business report before settling at $6.51.
Contact Ed Meza at
ed.meza@mannaa.de