ProSiebenSat.1 FY revenues down 7%
April 28, 2023
ProSiebenSat.1 closed its 2022 financial year in line with its outlook. Group revenues were at €4.1 billion, down 7 per cent on the previous year, in what the German broadcasting group called a “severely weakened market environment”.
Organically, i.e., adjusted for currency effects and portfolio changes, Group revenues were down 5 per cent year-on-year. The portfolio effects totaled €218 million. In addition, as expected and announced at the end of October 2022, revenues were additionally directly impacted by the macroeconomic environment in particular. In 2022, it was characterised by high inflation and consumer restraint as a result of the Russia/Ukraine war and the associated energy price crisis. The negative development of consumer sentiment, particularly in our core market of the German-speaking region, impacted large parts of our portfolio. The advertising market in particular reacted very clearly and reflected fears of a potential recession in Germany. As a consequence, advertising revenues in the German-speaking region decreased by 6 per cent for the full-year compared to the previous year. The fourth quarter was down 12 per cent year-on-year. Furthermore, the increasing deterioration of the overall economic environment in the German-speaking region over the course of the year also had a negative impact on the companies in the Commerce & Ventures segment.
Bert Habets, Group CEO of ProSiebenSat.1 Media SE, commented: “We are investing in our future, setting up the Group in a new way and have launched a strict cost reduction programme. At the same time, we will propose a significantly reduced dividend to shareholders for the 2022 financial year and intend to make our general dividend policy more flexible in the future. All this is the cornerstone of a secure and successful future for our company.”Operating Performance 2022External revenues in the Entertainment segment declined by 7 per cent to €2,88 billion in 2022. Organically, thus adjusted for portfolio and currency effects, revenues declined by 4 per cent. The main reason for this revenue decline was the 6 per cent year-on-year decrease in advertising revenues in the German-speaking region. After advertising revenues had still developed dynamically at the beginning of the year – partly due to Covid-19 catch-up effects – the Group increasingly felt the economic effects of the Russia/Ukraine war over the course of the year. In the traditionally important fourth quarter of 2022, the segment’s advertising revenues in the German-speaking region were down 12 per cent year-on-year – and thus in line with the expectation communicated in October 2022. Furthermore, consolidation effects influenced revenues: In 2022, ProSiebenSat.1 focused its entertainment offering more specifically to the German-speaking region and sold the US production business of Red Arrow Studios as of July 1st 2022. This business had still generated revenues of €113 million in the second half of 2021. In November 2021, the US film distributor Gravitas Ventures was also sold, having contributed revenues of €37 million in the previous year.In the Dating & Video segment, external revenues amounted to €518 million in 2022, representing a decrease of €24 million or 4 per cent. Adjusted for currency effects of €45 million, the revenue decline was 12 per cent. This reflects the general consumer restraint, which particularly impacted the dating platforms in the German-speaking region. By contrast, the US dating provider eharmony continued its growth course throughout the year and is now the highest-revenue brand in the dating portfolio. In addition, full-year revenues were shaped by a comparison effect: The first quarter of 2021 was the Dating & Video segment’s strongest quarter to date. On the one hand, this was due to the positive effects of government stimulus in the US. On the other hand, the COVID-19 pandemic and the related restrictions on public life had stimulated the dating industry and especially the use of live video in 2021. Accordingly, revenues from the video business were down year-on-year in 2022.External revenues in the Commerce & Ventures segment decreased by 12 per cent or €98 million to €757 million in 2022 (previous year: €855 million). Organically, and therefore in particular without the revenue contributions totaling €64 million from the disposed companies Amorelie and moebel.de, revenues declined by 4 per cent or €34 million. Furthermore, the economic slowdown influenced revenues in this segment: Besides the consumer restraint, which negatively affected the segment’s commerce platforms, the development of the online comparison platform Verivox was impacted by the effects of the Russia/Ukraine war on the energy market. Throughout the whole year of 2022, Verivox’s business model was negatively impacted by the wide-scale rise in energy prices and the resulting limited options for consumers to switch providers. At the same time, the media-for-equity/-revenue business of SevenVentures declined compared with the strong previous year, reflecting the weakening of the advertising market over the course of the year.The negative macroeconomic burden also significantly impacted the Group’s adjusted EBITDA, which declined to €678 million in 2022 (previous year: €841 million). The decrease in high-margin advertising revenues had a particular impact here. The Group therefore made targeted cost adjustments in response to the cyclical, negative development of advertising revenues. These also include effective management of programming expenses, which in the full-year were slightly below the previous year. Portfolio measures also had an effect: The film distributor Gravitas Ventures, which was sold in 2021, still contributed earnings of €18 million in the previous year. The complete takeover of Joyn at the end of October 2022 also resulted in an effect of minus €11 million.Adjusted net income was primarily impacted by the decline in adjusted EBITDA and decreased to €301 million. Therefore, all earnings figures are in line with our outlook for the full-year most recently communicated in October 2022.In contrast, the Group’s net financial debt decreased compared to the end of 2021 to €1,613 million – despite the dividend payment of €181 million in May 2022. This represents an improvement of €238 million compared to the previous year’s reporting date. Against this backdrop, the leverage ratio of 2.4x (December 31, 2021: 2.2x) remained within the target range of 1.5x to 2.5x despite the earnings decline.
Habets added: “The economic research institutes expect the economy in Germany to recover noticeably only in the second half of the year. This continues to have a direct impact on our advertising business: In the first quarter, our adjusted EBITDA will be in the mid double-digit million Euro amount due to the difficult market environment. Simultaneously, as an early-cycle company, we anticipate a significant recovery in the important advertising business in the second half of the year in parallel with the forecast general economic development. These assumptions are reflected in our full-year outlook. At the same time, we are working to set up ourselves more efficient in terms of costs. Our adjusted dividend policy and the 2022 dividend proposal are also a logical step. In this way, we reconcile the expectations of our shareholders with appropriate balance sheet ratios and financial scope for necessary investments in our business.”