Digital Sales Aren’t Compensating for Falling TV Revenues says ProSiebenSat.1

Group revenues in 2018 were down for German broadcaster ProSiebenSat.1, as growth digital ad sales aren’t enough to compensate for declining TV revenues. But the company says it is confident that increased investment in its digital properties and non-advertising businesses will pay off in the long run.

“2018 was not a year we can be satisfied with as the weakness in TV advertising was not yet sufficiently counter-balanced with digital and commerce growth,” said CEO Max Conze. Overall group revenues for 2018 were down by two percent to €4.009 billion, though revenues were up one percent when adjusted for consolidation and currency effects. This was largely attributed to a decline in ProSieben’s ‘Entertainment’ segment (which includes ad revenues), which fell by four percent.

The broadcaster said that while its TV audience market share was 0.8 percentage points above the previous year, it was hit by economic indicators and uncertainties which had a negative effect on the entire German TV advertising market. And while its digital reach grew with video views up 60 percent, this was not enough to compensate for the loss in linear TV advertising.

The group however plans to continue placing more focus on its digital offerings. Conze said its upcoming streaming service, a joint venture with Discovery set to be launched this summer, is a priority. The new offering will have both paid and free ad-supported subscription tiers, and is designed to be the ‘German Hulu’, acting as a competitor against the likes of Netflix. Both ProSieben and Discovery will invest up to €100 million in the venture this year, according to the financial statement.

ProSieben is also starting to measure ‘total video views’ – the total number of minutes of video content watched across its linear and digital content. The move is designed to help ProSieben more accurately describe its total reach in the face of falling TV audience figures. Total video views fell year-on-year in 2018, from 1,083 billion minutes to 1,078 billion. But the broadcaster’s early figures for 2019 show that total video views are now on the rise.

Nonetheless, the turnaround won’t be quick. ProSieben expects full year revenues in the Entertainment segment to remain roughly flat. But with strong growth in its non-advertising segments, which include e-commerce and online dating properties, it forecasts total revenue growth in the mid-single-digit range. “Transformation is never easy but I am confident we have the strategy, passionate people and will to lead and win,” said Conze.

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