Turnabout for ProSiebenSat.1?

Equity researchers from Deutsche Bank have issued a note to investors following the news that German commercial network broadcaster ProSiebenSat.1 has appointed a new CEO – former Dyson executive Max Conze – to replace Thomas Ebeling.

As the researchers remind investors following the publication of results February 22nd, Pro7Sat.1 has issued three profits warnings over the past year and its share price has tumbled 30 per cent, but the bank says a change in strategy is unlikely. “The Pro7 Board has, on two occasions since November, endorsed the strategic plan of Mr Ebeling,” says the bank’s note. “In the announcement of his departure in November and at its Capital Markets Day in December, the Board has stated it ‘expressly supports the current strategy’ of three pillars for the group: a leading German broadcaster, ecommerce & consumer service provider, plus a Content producer.”

While Conze will have to work to the Board’s instructions, the bank’s note suggests there are other negatives in his appointment, not least “a lack of knowledge of running the core TV operations which are still 70% of valuation. The most recent problem has been underperforming programming and Mr Conze has no apparent knowledge of fixing these type of problems. But we highlight guidance on programming spend has been raised and 4-5% pa growth is now in consensus. This is an aggressive budget to deploy and audience share has recovered since October. Head of Programming has always been a very separate role to CEO in broadcasters and rightly so given the very different skillsets. The second negative is a law case against him by Dyson, alleging Conze had leaked company secrets and used company resources to research his own investment opportunities. However, this case was settled in December with Conze receiving “several millions” (FT, 21 December 2017), so should not be cause of major concern.”

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