ProSiebenSat.1 sees earnings drop by half as ad market takes toll

Germany’s ProSiebenSat.1 saw its earnings plummet in the second quarter as the German market’s advertising weakness took a heavy toll on its top line.

Group revenues dropped by almost half to €868 million in Q2, down from €1.043 billion last year, and adjusted EBITDA plummeted from €155 million a year ago to only €79 million.

Both drops were in line with existing expectations, and the company reiterated its full-year guidance. The company expects to rise on an improved economic situation across the German market in the second half.

The group’s 10% drop in revenues mirrored its first-half performance as a whole, with the half-year revenue number dropping by 9% organically (or 15% as reported) to €1.683 billion.

Entertainment revenues in Q2 dropped by 21%, with a 5% rise in digital advertising partly offsetting a decline in broadcast advertising. The group said growth in digital advertising was driven by its Joyn streaming service. However, costs associated with the consolidation of Joyn hit earnings.

ProSiebenSat.1 was also hit by the comparative impact of the sale of Red Arrow Studios’ US production business last year, which had contributed €75 million to the top line in Q2 2022.

The company saw a mixed picture elsewhere, with commercia and ventures revenues growing but its dating and video segment revenues declining sharply.

Bert Habets

CEO Bert Habets said that it was highly important that the group continue to implement its digital strategy in the face of weakness in its legacy advertising business.

“As expected, the second quarter continued to be characterized by a weak TV advertising market. This once again underlines how crucial it is that we focus on our digital business at ProSiebenSat.1,” said Habets.

“We are clearly aligning our organization and processes to our digital transformation. We are already seeing the first positive results here with our streaming platform Joyn: The launch in Austria was successful, advertising revenues on the platform are growing and Video Viewtime increased by 6% to 6.5 billion minutes watched in the second quarter. We are consistently pursuing this path, combined with our strong focus on costs and efficiency. With the organizational and strategic realignment now initiated, we are creating the basis for consistently implementing our growth strategy.”