Pro7/Sat1: “Many attractions”

Investment banker Morgan Stanley, in a note to clients, suggests that despite recent share price growth for German commercial broadcaster ProSiebenSat.1, the network still has plenty of upside momentum. This positive outlook is helped by Pro7/Sat1 increasingly robust view that German advertising is recovering for 2012.

Forward TV ad-sales booking commitments are up 2 per cent, while January and February were also positive. This improving picture follows on from undoubted fears that German commercial TV was again under pressure in Q4/2011. Overall, Pro7 is “evolving in a structurally stable TV ad market,” says the bank, and that fragmentation and regulatory changes “should not impact German TV in the foreseeable future”.

“This guidance takes 2011 reported as a starting point i.e. €2756 million even though 9Live, which generated €17 million of revenue in 2011, was shut down during the year,” says Morgan Stanley. “Assuming ‘mid single-digit’ [as guided by management] means 4 per cent to 6 per cent, revenue guidance is therefore c. €2865 million to €2920 million. The mid-point, €2895 million, is +3.5 per cent above old consensus of €2795 million. Last year, Pro7 also expected mid single-digit revenue growth and ended up delivering 6 per cent growth despite the closure of 9Live,” the bank added.

But the bank’s view is that German TV ad-spend is poised for a solid year. “[As in] 2011, Thomas Ebeling, CEO, outlined the level of initial commitments, which are up 2 per cent y-o-y. The full-year outturn will depend on the strength of late money, which typically comes through in October, November and December. However, management sounded optimistic, saying that German TV ad-spend could be up low single-digit this year,” the bank reported.

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