ProSiebenSat.1 expected to reduce debt

German commercial broadcaster ProSiebenSat.1 is expected to reduce its debt by €500m over the next two years following a better than expected financial quarter.

The company is also continuing to eye the sale of non-core assets and has identified up to €50m of further cost savings it intends to make this year. The broadcaster has also suspended plans to offer a dividend this year. Analysts welcomed the move; investment bank Morgan Stanley noted: “Our view is that 100% of the 2010 free cash flow will be used to pay down debt and should the dividend be resumed next year, its payment would be covered by disposal proceeds. We estimate Pro7 will generate €500m of free cash flow over the next two years, which should almost entirely be dedicated to debt repayment.”

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