German commercial free-to-air broadcaster ProSiebenSat.1 Media issued reduced guidance for its Full Year revenues and financials on October 28th. The news prompted analysts at investment bank Berenberg to review its own position and advice. The bank also suggested that ProSiebenSat.1’s conversations with MediaForEurope (MFE) might “now accelerate”. Berenberg maintains its “HOLD” advice.

“While the magnitude of the decline in Q4 advertising (-17 per cent) is greater than we had anticipated, we were already below consensus and guidance given that we viewed expectations as too high,” says the bank’s note to clients.

ProSiebenSat.1 itself guided to a 17 per cent decline in its Q4.

Berenberg says: “Advertising is highly correlated to consumer confidence and GDP, both of which are under pressure in Germany, so the decline is not a surprise. Moreover, advertisers can shift their allocations to particular media. The 17 per cent drop that the company foresees for Q4 likely reflects the fact that, as we have heard from other advertising platforms, including digital ones, advertisers are shifting to performance marketing rather than brand advertising. Equally, within video, there are many more alternatives for advertisers, with linear TV attracting an older (and thus less commercially appealing) demographic than online video.”

The bank expects ProSiebenSat.1 to trim €50 million from its programming budgets, but admits that after years of similar cost-cutting, and given wage and energy inflation, net savings will be hard to find.

Berenberg maintains its ‘HOLD’ advice but with a much-reduced share Price Target (PT) of just €6.50. A year ago its PT was €16.60.

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Categories: Blogs, Broadcast, Business, Inside Satellite

Tags: berenberg, MediaforEurope, Prosieben, ProSiebenSat.1