ProSiebenSat.1 reacts “quickly and strongly” to pandemic
March 4, 2021
Germany mass media company ProSiebenSat.1 closed the 2020 with a strong fourth quarter: In this period, Group revenues increased by 11 per cent to €1.492 billion. All segments contributed to this growth.
The 3 per cent increase in entertainment advertising revenues, continued dynamic revenue development of the online beauty provider Flaconi and the positive effects of the acquisition of the US online dating company The Meet Group were thekey drivers in the fourth quarter. Also Red Arrow Studios achieved significant growth year-on-year.
The Group thus generated total revenues of €4.04 billion in full-year 2020 (previous year: €4.13 million) and was therefore only 2 per cent below the previous year despite the effects of the Covid-19 pandemic, which significantly impacted the Group’s business in the second quarter in particular.
Rainer Beaujean, Chairman of the Executive Board & CFO of ProSiebenSat.1 Media SE: “We came out of the Covid-19 crisis quickly and strongly in 2020. We demonstrated this with strong performance and growth in all segments in the fourth quarter. In this traditionally important final quarter, our advertising business and international program production business continued to recover. We also remain very satisfied with the development of ParshipMeet Group. In addition to the consolidation effects from The Meet Group, its growth has also continued organically and in a profitable manner. As a result, we managed to noticeably exceed our most recent full-year forecast in terms of revenues and earnings. We are starting the new year with optimism: Although the first quarter will initially be impacted by the Covid-19 restrictions, we are confident that our business is robust and expect a significant upturn in the course of the year as soon as the environment returns to normal.”
Operating performance
Seven.One Entertainment Group’s external revenues grew by 2 per cent to €826 million in the fourth quarter of 2020 (previous year: €813 million). This was driven by the further recovery in advertising revenues, which increased by 3 per cent in this period. This underlines how the Group has continuously improved in the important advertising business over the course of the Covid-19 pandemic (advertising revenues Q2: -37 per cent; Q3: -6 per cent). The Group’s entertainment and infotainment offerings, which were particularly strong in prime time, also contributed to this positive development. Due to the effects of the Covid-19 pandemic, the segment’s external revenues fell by 9 per cent to €2.2 billion in the full-year (previous year: €2,5 billion).
The ParshipMeet Group segment generated external revenues of €132 million in the fourth quarter of 2020 after €53 million in the previous year. Besides the initial consolidation of The Meet Group, which has been part of the Group since September 2020, the organic development of Parship Group and especially the US dating platform eharmony was again very positive in the fourth quarter as well as in the full-year. ParshipMeet Group generated external revenues of €333 million (previous year: €209 million) in the full-year, which equates to a year-on-year increase of 59 per cent. Organic growth was 11 per cent.
External revenues in the NuCom Group segment increased by 8 per cent to €315 million in the fourth quarter of 2020 (previous year: €293 million). In particular, the beauty and lifestyle business with the online beauty provider Flaconi continued its dynamic revenue growth with significant gains and thus more than offset the declines at portfolio companies like billiger-mietwagen.de (SilverTours) and Jochen Schweizer mydays that were still affected by the consequences of the Covid-19 pandemic. Furthermore, the deconsolidation of the OTC provider WindStar Medical in December had a slightly contrary effect in the fourth quarter. In the full-year, NuCom Group recorded growth of 7 per cent to €807 million (previous year: €756 million).
While in the Red Arrow Studios segment the effects of the Covid-19 pandemic were particularly noticeable in the second quarter, the international programme production business continued to recover in the fourth quarter of 2020 and, like the global sales business and the digital studio Studio71, recorded clear growth. At €218 million (previous year: €191 million), the segment’s external revenues in the last three months of 2020 grew by 14 per cent compared to the previous year, partly due to catch-up effects, but did not fully offset the decline in the first nine months of 2020. In the full-year, external revenues decreased by 5 per cent to €620 million (previous year: €652 million).
The Group’s adjusted EBITDA grew by 12 per cent to €377 million (previous year: €338 million) due to the positive development in the fourth quarter of 2020. Accordingly, adjusted EBITDA for the full-year exceeded the Group’s most recent forecast: ProSiebenSat.1 ended 2020 with adjusted EBITDA of €706 million and thus down 19 per cent on the previous year (previous year: €872 million). Net income also increased considerably in the fourth quarter of 2020, improving by 30 per cent to €213 million (Q4 previous year: €164 million; full-year: €252 million, FY previous year: €412 million). Adjusted net income developed accordingly and increased by 14 per cent to €185 million in the fourth quarter of 2020 (previous year: €162 million). In the full-year, adjusted net income amounted to €221 million (previous year: €387 million), with this development being mainly attributable to the strong Covid-19 impact in the second quarter.
Since financial year 2018, ProSiebenSat.1 Media SE has pursued a general dividend policy of distributing around 50 per cent of adjusted net income to the shareholders as a dividend. In line with the distribution policy, the Executive Board and the Supervisory Board will propose a dividend of 50 per cent of adjusted net income or €0.49 per share to the Annual General Meeting for financial year 2020. This corresponds to a dividend yield of 3.6 per cent based on the closing price of the ProSiebenSat.1 share at the end of 2020.
The Group’s net financial debt fell to €1.968 billion as of the end of 2020 (previous year: €2.245 billion) due to good cash flow development. Accordingly, the leverage ratio as of December 31, 2020, decreased to 2.8x compared with the end of the third quarter of 2020 (end of Q3 2020: 3.7x; previous year: 2.6x). In this context, the Group also exercised its early redemption call for its €600 million notes, which were scheduled to be repaid in April 2021, and has already prepaid the notes at nominal value on January 15, 2021.
Strategy and priorities for 2021
ProSiebenSat.1 Group has been set up in the three segments Entertainment, Dating and Commerce & Ventures since January 1, 2021, in order to focus even more strongly on synergies and profitable growth. In this context, Red Arrow Studios’ production and distribution business as well as the digital studio Studio71 are integrated into the Entertainment segment. ProSiebenSat.1 thus takes the strategic proximity of these businesses into account, as Red Arrow Studios is focusing in particular on producing more content for the Group’s entertainment platforms. Since the core competencies and the complete value chain of the entertainment business are therefore represented in one segment, we bundle the Group’s minority and majority investment areas in the new Commerce & Ventures segment. This includes the investment arm SevenVentures as well as the companies of NuCom Group. ProSiebenSat.1 is building up these companies with media services and support, which further promotes the Group’s growth strategy. The Dating segment, which includes ParshipMeet Group, is unchanged compared to the end of 2020 and is expected to be a major driver of the Group’s diversification and to provide significant support for its future growth.
Beaujean added: “With our new set up, we are increasingly focusing on exploiting synergies within and between our business areas and thus creating added value as a Group. In the entertainment business, we are laying a profitable foundation for our diversification with a focus on local content and improved monetization across all platforms. While we are now preparing ParshipMeet Group for its IPO, we want to show in the Commerce & Ventures segment how we can use the power of advertising to build digital companies into leading consumer brands by way of minority and majority investments. In this way, we want to grow profitably with a clear focus on earnings and, in the mid-term, to improve our P7S1 ROCE (return on capital employed) target to over 15 per cent.”