ProSiebenSat.1 worries about recession and TV advertising slump
The ProSiebenSat.1 television group is feeling the effects of the economic slowdown and is skeptical about the important holiday season due to declining TV advertising revenues. «Two great weeks in December or two bad weeks in December can substantially change the full-year results,» CEO Max Conze told the Reuters news agency on Thursday.
While the company reaffirmed its guidance for fiscal 2019, it already had to shrug off a significantly weaker TV advertising business in the third quarter. "We don't want to paint a doomsday scenario," Conze stressed. But the predictability for the TV advertising business is extremely low, sometimes only one to two weeks, he said.
The warning for the end of the year did not go down well on the financial market. The shares fell by around nine percent at their peak to a three-week low of 12.82 euros and were still down around five percent at midday. The shares of competitor RTL lost just under two percent.
ProSieben CFO Rainer Beaujean spoke of rising macroeconomic uncertainties. "That's why it's part of our responsibility to point out the financial impact of a possible negative scenario." According to the report, adjusted earnings (Ebitda) in the current fourth quarter would be reduced by up to 60 million euros if total TV advertising revenues were to decline by a high single-digit percentage. In this case, earnings for the full year would fall more sharply than planned, to as much as EUR 850 million. In the third quarter, TV advertising revenues already fell by six percent and adjusted profit slumped by a quarter to EUR 131 million - also due to investments in the e-commerce unit.
The fourth quarter is traditionally the most important for ProSiebenSat.1, because viewers sit in front of the TV more around the holidays. According to Conze, that's when the Group makes about a third of its annual revenues and almost 40 percent of its profits.
So far, the station group from Unterföhring is planning for a mid-single-digit percentage increase in revenues in 2019 and an adjusted profit that is a mid-double-digit million amount below the previous year's figure of just over one billion euros. Between July and September, ProSiebenSat.1 increased revenues by four percent to EUR 926 million, benefiting from its digital and production business. "Now 56 percent of our revenues come from the non-TV advertising business - and this area grew 13 percent in the third quarter," Conze said. (SDA)
