ProSiebenSat.1 expects 2024 revenue growth
March 7, 2024
Germany’s ProSiebenSat.1 Group reports that it saw a positive development in many areas of the portfolio at the end of 2023 and thus achieved its most recently specified targets for the year.
At €3.85 billion, Group revenues declined by 7 per cent or €311 million on the previous year; adjusted for currency effects and portfolio changes, the decline in revenues (organic) was 4 per cent or €163 million. The market environment in the first half of 2023 in particular was characterised by uncertainty among consumers and the associated restraint in investment by the advertising industry. In Q4, however, the Group’s revenues increased again as expected. This reflects the slight growth in advertising revenues in the German-speaking region (Germany, Austria and Switzerland) and the high advertising demand for Joyn. The Group also recorded strong growth in the Digital Platform & Commerce portfolio.
Bert Habets, Group CEO ProSiebenSat.1 Media, commented: “Our strategy with Joyn at the center is now starting to pay off. This is also underlined by the positive development, especially in the fourth quarter of 2023. Our goal is to further increase usage and user base of Joyn with double-digit growth rates per year. We are firmly convinced that a free offering, centered on one platform, is the key to success. We are increasingly focusing on local and live content to strengthen our TV channels and scale Joyn by investing significantly more in this area in 2024. Exclusive content is the driver that will enable us to further improve the monetisation of our reach – both in traditional TV and on our digital offerings. With our focus on Entertainment, we also evaluate opportunities to crystalize value from our non-core assets, depending on the market environment.”
Operational Performance 2023
External revenues in the Entertainment segment amounted to €2.57 bmillion in the financial year 2023, which corresponds to a decrease of 11 per cent (previous year: €2.88 billion). The main reason for this is the 6 per cent decline in advertising revenues in the German-speaking region. However, a positive trend emerged towards the end of the year: After the first two quarters of 2023 in particular were still characterised by the macroeconomic environment, advertising revenues in the German-speaking region increased again slightly year-on-year in the fourth quarter.
The decline in TV advertising revenues slowed down significantly in Q4. In addition, revenues in the digital & smart advertising business, which also include the sales of the streaming platform Joyn, grew dynamically in the important Christmas period as well as for the full year. This underlines that the investments in Joyn are paying off and that ProSiebenSat.1 Group is increasingly monetising its digital reach, noted the company. At the same time, advertising revenues in the audio business and in programmatic trade of advertising time increased. In total, digital & smart advertising revenues in the German-speaking region were up 10 per cent compared to the previous year. Their contribution to advertising revenues in the German-speaking region is therefore already 16 per cent.
In addition to the expected overall decline in advertising revenues over the course of the year, the disposal of the US production business of Red Arrow Studios as of July 1st 2022, had a significant effect on segment revenues. This had contributed €136 million to segment revenues in the first half of 2022. Organically, segment revenues therefore declined by 7 per cent or €182 million in 2023.
In March 2023, ProSiebenSat.1 presented a new strategy that puts the Entertainment business and in particular the streaming platform Joyn at the centre. Joyn developed positively as a result and recorded its strongest quarter to date in the Q4 2023. The number of monthly video users increased to 6.3 million (+30 per cent compared to previous year quarter), viewing time to 8.8 billion minutes in total (+15 per cent year-on-year). At the same time, AVoD revenues grew significantly by 37 per cent in the fourth quarter of 2023. ProSiebenSat.1 Group is strengthening Joyn through partnerships, especially in programmatic trade of advertising time and distribution. The aim is to address new users and especially advertising customers with a digital affinity.
External revenues in the Commerce & Ventures segment saw double-digit growth in 2023 and amounted to €844 million (previous year: €757 million). Organically, growth amounted to 13 per cent. Revenues were driven by the Digital Platform & Commerce companies, in particular Verivox and flaconi: Verivox has benefited from the easing on the energy markets since the beginning of 2023 and has grown significantly since then. In addition, flaconi developed very positively, reflecting the high demand from consumers in the online beauty market. The strong growth in the Digital Platform & Commerce portfolio therefore more than compensated for the expected decline in revenues from Jochen Schweizer mydays’ experience and leisure business and SevenVentures’ media-for-revenue and media-for-equity business.
Outlook 2024 and Dividend Proposal
ProSiebenSat.1 aims to increase Group revenues to around €3.95 billion compared to the financial year 2023 (previous year: €3.85 billion, previous year’s figure adjusted for currency and portfolio effects: €3.82 billion) with a variance of plus/minus €150 million.
The slight growth in Group revenues expected for 2024 depends in particular on the development of Entertainment advertising revenues in the German-speaking region: With Group revenues at the midpoint of the target range, ProSiebenSat.1 expects Entertainment advertising revenues in the German-speaking region to grow by around 2 per cent. While the TV advertising revenues included in this figure should remain stable, digital & smart advertising revenues are likely to continue their growth momentum.
At the same time, ProSiebenSat.1 Group expects an adjusted EBITDA of €575 million (previous year: €578 million) with a variance of plus/minus €50 million – and thus a midpoint on the previous year’s level. Adjusted for currency effects and portfolio changes, adjusted EBITDA amounted to €580 million in the financial year 2023. This forecast reflects the previously announced increase in programming investments, which – despite offsetting savings effects from efficiency measures – will have a negative impact on adjusted EBITDA but will sustainably strengthen growth in the Entertainment business.
The Group is focusing on strengthening profitability and a lean cost structure, which will have an increasingly positive impact on earnings performance and at the same time open up more headroom for investments – especially in local programming content. In order to strengthen the market share in linear TV and the growth of Joyn, ProSiebenSat.1 Group says it will focus even more clearly on exclusive local content and increase its programming expenses by around €80 million in 2024. The Group’s total programming costs will thus amount to around €1.03 billion in 2024 (previous year: €0.95 billion).
Martin Mildner, Group CFO of ProSiebenSat.1 Media SE, added: “After a successful year-end performance, we have made a good start to the new financial year. We have set an important course for growth again in 2023. Even though the macroeconomic environment remains challenging, we expect advertising revenues in the German-speaking region to develop positively in 2024. At the same time, we want to further strengthen ProSiebenSat.1’s profitability this year and invest €80 million more in local content. To this end, we will consistently continue our cash and cost management. A solid financial basis is the prerequisite for our growth.”