47. ProSiebenSat.1 SE
Revenues 2017: € 4.080 billion
The core business of the ProSieben Sat.1 Media AG is Free TV. On top of that, the company is active in the fields of production, marketing, distribution of television, Internet and transactional television. Since 2003, the station (which the Axel Springer AG left in 2008 since the founding of Sat.1 in 1984) has been controlled by international finance investors. The investors of the second generation, KKR and Permird, merged ProSiebenSat.1 with the pan-European SBS Broadcasting Group in 2007. Thus, the company that has its headquarters in Munich became the second-largest television company in Europe, one that is however laden with severe debts.
Branches: TV stations, TV production, radio, Internet
Legal Form: Public Company
Financial Year: 01/01 - 12/31
Founding Year: 2000 (merger of Sat.1 and ProSieben Media AG)
|Share Price (End of the year, in Euro)||36,62||44,91||33,60||50,25||21,30||14,12||22.50||8.06||2.40||16.39||24.85||16.35|
- Thomas Ebeling, Chairman & CEO
- Jan Kemper, CFO
- Conrad Albert, Legal Affairs, Distribution and Governmental & Regulatory Affairs
- Sabine Eckhard, CCO
- Jan David Frouman, Content & Broadcasting
- Christoph Wahl, COO
Board of Directors:
- Dr. Werner Brandt, SAP AG
- Lawrence A. Aideem, Iconic Entertainment
- Antoinette Aris, INSEAD
- Adam Cahan, Yahoo Inc.
- Dr. Marion Helmes, ehem. Celesio AG
- Erik Huggers, Verizon
- Ketan Mehta, Allen & Company
- Angelika Gifford, Hewlett Packard
- Rolf Nonnenmacher, Lazard&Co
The ProSiebenSat.1 Company is closely associated with the big names and dramatic ongoins on the most recent German media history. As the largest German media company that is held by finance investors, the company remains to be the centre of public interest.
Initially, the company had been a part of the Leo Kirch empire. The film trader (who died on the 14th of July 2011) created the company in October 2000 by merging the two stations Sat. 1 and ProSieben - a merger that had previously been disallowed due to regulations regarding mergers. Therefore, his son, Thomas Kirch, has been officially leading ProSieben for years. Over the course of these fusion, the Axel Springer AG acquired a 11,5 % share of the new ProSiebenSat.1 Media AG. Springer had already been involved in Sat.1 before; Kirch on the other hand held 40% of the Springer AG. When the first doubts regarding Kirch’s ability to pay emerged in 2001, Springer-CEO Mathias Döpfner attempted to deal the final blow to Kirch: He exercised a put-option that would allow him to sell the shares of ProSiebenSat.1 for 790 million €. He hoped to get a hold of the whole station group in case of Kirch’s inability to pay. However, Döpfner conceived his plan without taking the creditor banks into consideration: The Kirch-group shattered and the ‘remains’ were entrusted to an oblong insolvency process. Over the course of the negotiations, nearly every large media company was considered a potential buyer, such as Sony, TF1, the Bauer-publisher, the WAZ-group or even the international media tycoon Rupert Murdoch.
Finally, a hitherto unknown US-American media entrepreneur was awarded the bid in August 2003: Haim Saban and a bank consortium took over the majority share hold of the company. Thus, an integral part of the Germany AG was sold to foreign investors – despite the effort of several media politicians to prevent this from happening by means of propagating a potential ‘German solution’. It seemed that Saban could hardly believe his luck afterwards,considering that he managed to acquire a core piece of the German TV industry for ‘only’ 525 million Euro. "This level of ownership would never be allowed in the U.S.. It would be too much concentration", told Saban the "New York Times" in 2004. Especially his charming and winning demeanour probably helped a lot in closing the deal. While John Malone’s ruthless take-over attempt of German cable networks failed, Saban succeeded in making away with reservations held by the supervisory authorities en passant. The ‘NYT’ revealed his recipe for success: “I sweet talked them”.
Besides assuring that he planned to stay on board on a long-term basis indeed, Saban decided to sell ProSiebenSat.1 as early as Mid-2005. Negotiations with the Axel Springer AG about an eventual complete takeover of the company had already progressed to an advanced state, when the Federal Cartel Office and the Commission for investigating into monopolies in media (KEK) put a spoke in the wheel of the plans. The official justification referred to the – according to the Federal Cartel Office – non-approvable market power of the Springer company that would skyrocket as a result of mergers on the television market, the market for newspapers as well as national ad market for newspapers. The initial veto of the authorities led to a withdrawal of the take-over offer by Springer in early 2006. Despite the fact that the Federal court confirmed the interdict in June 2010, rumours regarding an eventual Springer-involvement in the station group or individual channels kept circulating. (see current developments).
In a second sale attempt, Saban and a consortium of foreign finance investors came to an agreement by the end of 2006. The company was sold to Permira and KKR for about three billion Euro. On the 6th of March 2007, the majority takeover of the ProSiebenSat.1 AG through the Lavena Holding 4 GmbH (controlled by KKR & Permira) became legally valid. The largest deal in the history of the German media world sextupled Saban’s invested capital.
In a surprising turn, the Axel Springer AG sold its 12% share of the station group for approximately 19 Euro per stock to Permira / KKR. The previous summer, the stock had still been worth 30 Euro and the transaction turned out to be a rather good one in hindsight, because despite the merger with the SBS Broadcasting (controlled by KKR and Permira), which happened in the meantime, the price of the stock fell below five Euro, even plummeting lower than the One-Euro mark in March 2009.
Another reaction to the decline of the share was the Dutch company Telegraaf Media Group’s (previously involved in SBS) decision not to use of a buying option over 12% of common shares that had been granted in June 2008. Nevertheless, it was ‘forced’ by Permira/KKR to take over the shares for the price of 377 million Euro, a rather advantageous price for the seller. That amounted to an approximate price of 28,71 Euro per share, which was available on the stock market for 5,50 Euro at the same time.
Ever since ProSiebenSat.1 emerged from the merger between different station groups, it tried to make maximum use of its individual stations’ market potential and use them for digital markets. Even in 2011, the primary directive is to “use the existing program content more efficiently” (Thomas Ebeling). At the same time, the program content of the two big channels Sat.1 and ProSieben had to be coordinated with each other. Time and time again, matters of cost reductions dictated the company strategy, whereas the group succeeded in creating popular content occasionally by producing cost-efficient series formats („Verliebt in Berlin“, „Richterin Barbara Salesch“, „Lenßen&Partner“, „Schillerstraße“) and give the market leader RTL a run for its money as far as being a motor of innovation is concerned.
When the illustrious Saban left the company, the control was officially transferred to the new shareholders, the Permira Beteiligungsberatung GmbH and Kohlberg Kravis Roberts & Co (KKR). KKR is one of the world’s most experienced and largest finance investor. Ever since 1976, the investment company, which was founded in the USA, takes over weakened and struggling companies and trims them to a state in which they yield revenues again. According to its own statistics, KKR already concluded 165 transactions with a total volume of more than 420 billion US-Dollar (as of 2009). The company CV of KKR’s partner Permira (Latin for ‘very surprising’) comes across as rather modest in comparison, even though the company can look back onto more than 190 investments. Both companies dispose and disposed of majority share holds in media and telecommunication businesses. For example, KKR owned and owns „PagesJaunes“ (France), „SevenMediaGroup“ (Australia) and „Primedia“ (USA). In Germany, Permira is the majority shareholder of the telecommunication company ‘Debitel’ and owned the pay-TV channel Premiere (now: Sky) before it became a listed company.
Even though a survey by the Bredow-Instituts (2008) came to the conclusion that finance investors could not be the object of complaints, at least as far as broadcasting legalities are concerned, the question of the long-term consequences of their involvements in the rather sensitive media field remain a matter of discussion.
Before the ProSiebenSat.1 deal, Permira and KKR already owned the pan-European station group SBS together. As had to be expected, the owners merged the two station groups on the 3rd of July 2007. The number two in Europe, right behind the RTL Gruppe, the ‘new’ ProSiebenSat.1 is received by 78 million households in 14 countries, according to in-house statistics. The company is based in Munich. Guillaume de Posch still helmed operations under Permira/KKR, who had been enticed away from the French TF1-group by the previous owner Saban already. The native of Belgium did a fabulous job of adhering to Saban’s demand to polish up the company for an eventual sale and also set his sights on the new master’s target regarding a potential return of investment. Due to the high SBS buying price of 3,3 billion Euro alone, which had been imposed on ProSiebenSat.1 in form of debt, Posch opted to continue the harsh cost-efficiency strategy. Despite mutual assurances, hundreds of employees were fired. When Sat.1 cancelled the boulevard formats ‘Sat.1 am Mittag’ and ‘Sat.1 am Abend’ and economized the news programs, as a result of which anchorman Thomas Kausch left the channel, the ‘FAZ’ lamented and wrote of a ‘locust logic’ (“The owners of the private station company ProSiebenSat.1 just finished off a chapter off German broadcasting history in but a week. They buried it . . .)
In the business year 2007, during which the company’s net encumbrance rose from 122 million € to 3.328,4 million €, the company suffered an effective drop in profits, primarily due to a fine issued by the Federal Cartel Office against the company’s own advertising-time marketer SevenOneMedia over 120 million Euro. The crisis gained momentum in 2008. Although the company revenue increased to 3 billion Euro, the annual profit remained negative with -129,1 million Euro. Both is related to the first-time & year-round consolidation of the SBS group – by means of which there was no chance to realize the projected synergy effects on the nationally clustered European television market that had previously been expected to happen. However, the fact that 98,9 percent of the adjusted company surplus were paid as dividends, while on the other hand an additional 70 million Euro had to be saved in the budget for the upcoming year, triggered lots of protest by small shareholders and the press. Subsequently, even the owners themselves publicly questioned business policies (Permira-chairman Thomas Krenz in 2008 talking with the Spiegel Magazine: When the decision was made, we did not face a potential world recession and saw justified grounds to have high hopes for the new business model. From today’s point of view, it is definitely correct to question whether the decisions could and should have been made any differently.” When the financial crisis and decreasing advertising revenues continued to deteriorate the state of things and the debt repayment status hit 3.85 billion Euro, the shareholders completely waived all dividends in the business years of 2008 and 2009 (Common shares, of which KKR and Permira held the most, paid no dividends at all, while each preference share only paid out the minimum dividend of 0,02 Euro per share). Since that time, the financial situation has improved, even though the gargantuan heap of debt still remains.
The search for Posch’s successor, who announced his departure in June 2008, did not yield any results until December of the same year: Since March 2009, Thomas Ebeling, former CEO of the Pharma-company Novartis Consumer Health, has been leading the media company.
At the same time, numerous restructuring measures saw the light of day. Thus, Lothar Lanz (Finances, part of the company since October 2000, in the meantime went to work for Axel Springer in the same position) and Peter Christmann (Sales & Marketing) resigned from the board of directors, the advertising-sale model of which resulted in a loss of approximately 100 million Euro for the company, according to the ‘Kressreport’. The two were replaced by Axel Salzmann and Klaus-Peter Schulz, who left the company again in 2009. His successor as Sales & Marketing director is the chairman of the board himself, Ebeling.
Yet, Posch already established new management levels below the top-floor: The former ProSieben-CEO Andreas Bartl became the new ‘Managing Director’ of the ‘German Free TV Holding GmbH (shortly after he was appointed to the board of directors too). All the while, the ‘Content Manager’ now coordinated the fiction, infotainment & magazine as well as entertainment division for all stations. This, such was the claim, was an “Adaptation to the successful management model in other countries of the group, such as the Netherlands, Belgium, Sweden or Norway.”, explained Posch. The decision to relocate Sat.1 to Unterföhring, which was pushed through even in the face of severe resistance, more management restructuring followed. As such, the meteoric rise at P7S1 led the former Kabel-1 CEO Guide Bolten straight into the Sat.1 head offices – until he resigned from the position in January 2010 due to weak ratings.
Even though the new chairman of the board, Ebeling, drew some broad attention on himself repeatedly in 2009 and 2019 due to ambiguous and hapless statements regarding the future strategy – be it a supposed entry in Pay-TV ("Handelsblatt") or the future of news programs in the station group’s core programs – the ever-important business numbers were on the up under his regime and that is all the shareholders cared about.
Ever since the surprising elimination of the Chief New Media Officer Dan Marks due to ‘personal reasons’ in 2010, the P7S1 board has consisted of three heads only, but the lower tiers of management witnessed the creation of new management positions at an increasing rate. “At least there is one way of saving that P7S1 does not adhere to: When it comes to the length of the positions’ denominations that are handed out by the company ”, mocked dwdl.de in 2009 due to a promotion title that read: "Senior Vice President Group Format Acquisitions & Development".
The core of the company is constituted by the TV stations Sat.1, ProSieben and Kabel 1, which have been combined under the ‘German Free TV Holding’ by now and reached an average audience share (viewers from 3 years up) of 21,9% in 2009. ProSiebenSat.1’s official share on the market of German television advertising amounts to 43,1 percent (as of I/2011).
It was the Internet first and foremost that rapidly increased in importance and became the focus of all company activities. As far as the company balance goes, the digital/online division is considered part of the diversification activities (which include everything that is not part of Free TV – both on the German and International market, that is to say online, basic Pay TV, Call-TV, video-on-demand, music, licensing/merchandising, radio and print.) The revenues amounted to 373,2 million Euro in 2010 (2009: 357,6 million Euro).
The video-on-demand gateway website „maxdome“ was started in 2006. Thanks to a cooperation with the Internet provider United Internet (Gmx, web.de) – 50-percent shareholder from 2008 to 2010), Maxdome is used by about 200.000 active users (as of 2009/10) according to in-house statistics. The number of titles that are available in ‘Germany’s largest online video library’ has increased to 35.000 by now and includes: Films in HD quality (High Definition), ZDF-productions such as countless Rosamunde Pilcher – screen adaptations as well as over 1000 ‘concerts of all genres’ thanks to a licensing contract with Universal Music. From time to time, Maxdome even provided football games through channels like ‘Schalke 04 TV’, which could not be received on free TV.
The company’s pay TV range is bundled under SevenSenses, which – in Germany – consists of the channels ‘Sat.1 comedy’ and ‘Kabel Eins Classics’. The few in-house productions by these channels and the ‘Niels Ruf Show’ (Sat.1 Comedy and Sat.1) are provided via Maxdome too.
Further diversification (music, games and more)
Since 2005, the company has been operating the "starwatch music" label in cooperation with Warner Music, which intends to support, promote and market upcoming artists. The popband ‘Monrose’, the first winners of the ProSieben-show ‘Popstars’, is signed by the label just like the German swing-artist Roger Cicero and the Irish singer Chris de Burgh.
Founded in 2006, ProSiebenSat.1 Mobile struggled under the circumstance that mobile TV had not been widely accepted in Germany at the time. The gaming platform "sevengames.com" and its spin-off for mobile services aim to participate and benefit from the growing market for computer games and multiplayer-online games. ProSiebenSat.1 is involved in the US-American game design company ZeniMax with nine percent.
Other recent developments by the exceedingly busy diversification division include the live shopping portal prosiebenproducts.de (Every day a mega deal!), which sells products that are being advertised in TV spots (including the in-house brand "We love") online as well as the company’s own mobile service brand "Fyve".
» "Tagesspiegel": "Sei Stadt. Sei Wandel. Sei München" (11/19/08)
» "SZ": "Ein Schlachtfest" (04/25/08)
» FAZ: Versunken im Schuldengrab (07/16/07)
» SÜDDEUTSCHE: Fernseh-Ehe ist nun amtlich (06/27/07)
» SPIEGEL ONLINE: Produktionssparte steht zum Verkauf (04/28
» WELT ONLINE: Höchster Gewinn in der Unternehmensgeschichte (02/22/07)
» FAZ: ProSieben Sat.1 auf dem Sprung nach Europa (12/14/06)
» ZEIT ONLINE: Wie viel sind fünf Fernsehsender wert? (11/30/06)
» FAZ: Permira strebt zurück an die Weltspitze (02/02/06)
» Pressemitteilung: Bundeskartellamt untersagt Fusion Springer/ProSiebenSat.1 (01/24/06)
» Stellungnahme der KEK zur Übernahme von ProSiebenSat.1 durch die Axel Springer AG (01/10/06)
the Open Society Foundations' Media Program,
Germany's Federal Agency for Civic Education,
the Rudolf Augstein Foundation,
the city of Cologne, Germany,
and the State of Thuringia, Department of Commerce.