The media group ProSiebenSat.1 will show fewer series and films from the USA and instead focus on locally produced content.
This will require millions in investments, which will have a negative impact on the results in the coming year. The company announced on Tuesday evening in Unterföhring that the adjusted earnings for interest, taxes, depreciation and amortization (Ebitda) in 2024 should be around the same level as the previous year. The decision to reduce the proportion of licensed content from the USA also leads to a write-off worth millions.
The group’s earnings forecast is lower than expected on the market, as analyst Lisa Yang from Goldman Sachs noted in an initial assessment. Industry experts had expected a return to growth after an expected decline in the current year. On average, they would have expected an increase of eight percent. A stock trader also spoke this morning of weak targets for 2024 compared to expectations.
ProSiebenSat.1 had announced the evening before that it would increase program investments by 80 percent to 1.05 billion euros next year. The company wants to expand local program content on the Joyn streaming platform and on its linear TV channels in order to increase market shares there. The higher costs would impact the results of the entertainment division in 2024.
Savings from the ongoing efficiency program had an opposing effect. The board therefore expects a “stable development” in adjusted operating profit (Ebitda) for the group. Sales are expected to increase, with management assuming a slight recovery in advertising sales.
The decision to rely less on licensed US content will result in an impairment of the existing program assets of up to 250 million euros, as ProSiebenSat.1 further announced. This is expected to be posted in the fourth quarter of this year. The company is also making provisions for onerous contracts for the acquisition of future program assets of up to a further 90 million euros. This has no impact on the forecast for the coming year, it said. There is also no change in net financial debt.
The future cash outflows for upcoming programs, which will primarily result from the burdened contracts, are expected to amount to a total of around 50 million euros in the next two financial years 2024 and 2025, taking into account opposing tax effects, as the group further explained. According to the information, these will not have a negative impact on results.
The group therefore reaffirmed its annual forecast and continues to expect an adjusted operating profit (Ebitda) for 2023 at the lower end of the range of 550 to 650 million euros. In the previous year the result was 678 million euros. At the same time, group sales are expected to be slightly below the target range of 3.95 to 4.25 billion euros – after 4.16 billion in 2022. The board of directors expects slight growth in sales and adjusted operating profit for the fourth quarter. The group plans to publish further details on March 7th.
In recent decades, private broadcasters in this country have often featured US goods with series or films as a core part of the program. To this day, the USA is still considered a place where programming trends emerge. Recently, it has been observed in this country that public and private television and streaming providers as well as global streaming providers are increasingly relying on local content in their respective markets. ProSiebenSat.1 wants to continue to buy US licensed content on a selective basis.
P7S1 shares under pressure
The news was met with a slide in prices on the stock market. The ProSiebenSat.1 share temporarily lost 5.60 percent to 5.79 euros in XETRA trading. This means that the paper has lost almost a third of its value over the course of the year so far.
UNDERFÖHRING (dpa-AFX)
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