growing to the next level - prosiebensat.1 media se · october 15, 2015 growing to the next level...

| | October 15, 2015 |

October 15, 2015

Growing to the next levelCapital Markets Day 2015Thomas Ebeling

Keynote

| | October 15, 2015 | | Page 2| October 15, 2015 |

We have made great achievements since last year’s CMD …

Note: all audience shares target group A14-49, 9M 2015

Leading audience

share

>29%

Success of small

channels

Σ 3.9%

share

Key strategic

M&A deals

New commerce

verticals

Beauty & Accessories

Online Comparison

Distribution

deals

Lighthouse

productions

International

footprint of MCN

#1

GER

#5

Global


… and introduce new strategic elements and topics today …

“String of Pearls”

M&A strategy

New advanced

sales offerings

Enhanced

vertical

strategy

Distinct

positioning

of small

channels

Own Ad Tech

ecosystem


… supporting our strong equity story

We have delivered

multi-year

financial and

operational

outperformance

We maintain

leading positions

in the German-

speaking TV and

online video

business

We are strongly

positioned in our

growing core TV

market and in

dynamic digital

markets

We expect to

exceed our initial

EUR 1bn 2018

revenue growth

target

Share price increase and attractive dividends

Dual

approach

Market

leader

Growth

path

Financial

outperformance


External revenues

We grew dynamically in H1 2015 …

H1 2014

+155

(+12%)

H1 2015

1,272

1,427

[in EUR m]

Rec.

EBITDA

margin of

27.3%


… across all three business segments

Content Production

& Global Sales

+EUR 43.3m

Reve

nu

e g

row

th

vs

. H

1 2

01

4

Broadcasting

German-speaking

DistributionTV advertising

+3.4% +28.7%

+EUR 45m

+4.7%

Digital & Adjacent

Ventures &

Commerce

Digital

EntertainmentAdjacent

+37.2% +18.0% +9.1%

+EUR 66.6m

+26.1% +76.5%


We have continuously grown since 2009 …

Note: CAGR calculated based on annual growth rates of continuing operations at the time

[in EUR m]

2013

+8.6%

2014

2,8763,031

H1 2015

LTM

1,921

2009

2,051

2,6052,356

2,199

20122010 2011

External Group revenues

| Page 7

CAGR:


… with strong revenue and earnings performance

Note: CAGRs calculated based on annual growth rates of continuing operations at the time

+8.6%Revenues (CAGR 2009 - LTM H1 2015)

Recurring EBITDA (CAGR 2009 - LTM H1 2015)

Recurring EBITDA margin (LTM H1 2015)

Underlying net income (CAGR 2009 - LTM H1 2015)

Net debt reduction (2009 - LTM H1 2015)

Financial leverage (June 30, 2015)

+10.9%

+29.0%

+28.6%

EUR 1.5bn

2.0x

| Page 8


How we

strengthen

our TV

position

2

How we

build our

Group

strategy on

key industry

trends

1

How we take

D&A to the

next level

3

Our strategy

2

How we

broaden our

production

footprint

4

What is our

financial

outlook?

5

Outlook

1 3 4 5


Key industry trends are influencing our businesses …

Growing TV

viewing share of

best agers

Tech & data

as new key

success factors

Disintermediation

of key steps in

our value chains

Fragmentation of

channels &

platforms

Global platform-

driven players

entering the market

Changing TV

and online

viewing habits

Increasing convergence of

TV and digital commerce

1 2 3 4 5


… on which we base our strategic objectives …

Industry trend Our strategic objectives

1 2 3 4 5

Global platform players Build new platform-driven digital verticals

Convergence of TV

& digital commerceFurther connect TV and our digital commerce platforms

Tech & data Build own programmatic ecosystem with acquired Ad Tech stack

Disintermediation Integrate along the TV and online video value chain

Fragmentation Expand our reach through new distribution platforms

Best ager Establish specific products/services for elderly target group

Changing viewing habits Become a local and global video entertainment player


Broadcasting

German-speakingDigital & Adjacent

Content Production

& Global Sales

… translated into our segment strategies

Optimize portfolio value through M&A

Strengthen and expand our

leading TV position with

broader reach and leverage

synergies with digital

Build leading local and

international digital

commerce verticals &

entertainment platforms

Become a leading global

content producer/distributor

1 2 3 4 5


Capture CPM upside potential through premium pricing

Build reach and revenue streams through new distribution platforms

Follow 360° sales approach covering the entire value chain

Attack print, radio and outdoor – national and regional

Grow audience share with existing and new channels

TV growth plan at a glance

| Page 13

1 2 3 4 5


Digital & Adjacent growth plan at a glance

1 2 3 4 5

Become a global digital entertainment player

Secure top 3 PayVoD position through distribution deals

Enter new adjacent segments and digitize business

Accelerate growth through strategic M&A moves

Continue to build and grow new commerce verticals


Content Production & Global Sales growth plan at a glance

Continue to build scale across key markets (e.g. English-speaking) and genres

Extend US scripted, reality and factual portfolio

Targeted strategic content production partnerships

1 2 3 4 5

Continuously optimize portfolio

Expand own digital production capabilities and output


M&A growth plan at a glance

Accelerate build-up of digital commerce verticals by leveraging our TV power

Expand Digital Entertainment business globally

Continue to build (US) content/production footprint

1 2 3 4 5

No transformative acquisition or merger currently contemplated

Continue “String of Pearls” strategy with smaller and larger bolt-on acquisitions


How we

strengthen

our TV

position

2

How we

build our

Group

strategy on

key industry

trends

1

How we take

D&A to the

next level

3

Our strategy

2

How we

broaden our

production

footprint

4

What is our

financial

outlook?

5

Outlook

1 3 4 5


Audience share (A14-49)[9M, in %]

Best 9 months ratings performance in the last ten years …

28.327.9 27.9

28.6 28.6 28.6

27.7 27.6

28.4

29.5

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

| Page 18Basis: All German TV households (Germany + EU), A 14-49 years, Mon-Sun, full day 3-3h; P7S1 w/o N24 & w/o

9live, sixx since Feb. 1, 2011, SAT.1 Gold since Jan. 17, 2013, ProSieben MAXX since Sept. 3, 2013

Source: AGF in cooperation with GfK/TV Scope/P7S1 TV Deutschland

1 2 3 4 5


… with a clear lead over key competitor

1) Basis: All German TV households (Germany + EU), A 14-49 years, Mon-Sun, full day 3-3h; RTL

Mediengruppe w/o RTL II minority; Source: AGF in cooperation with GfK/TV Scope/P7S1 TV Deutschland

2) Gross values; Source: Nielsen/SevenOne Media, Sales Steering & Market Insights

| Page 19

1 2 3 4 5

Audience share1)

29.5

24.5

[9M 2015, in %]

33.3

44.5

[9M 2015, in %]

Share of advertising2)

%pts %pts

∆+11.2

∆

+5.0


The German TV market remains strong …

1 2 3 4 5

High quality content typically available on FTA TV

Lower Pay TV penetration, limited willingness to pay

Online video consumption incremental to TV viewing

TV viewing expected to remain stable in the coming years

Studio contracts with supporting rights (incl. holdbacks)

Windowing and preference for German language protect FTA TV

and drive reach as well as monetization


… and TV is by far the leading medium

Basis: TV viewers 3+; Internet users 2+; March 2015

Source: AGF in cooperation with GfK/TV Scope/Nielsen Netview/B4P/SevenOne estimates

1 2 3 4 5

Monthly net reach & usage duration

Usage

(hrs/month)

50%

Monthly net reach

100%

120100806040200

Internet

Private TV Total TV


Daily TV and video consumption1)

[Ø daily video viewing in minutes]

TV related consumption with increasing potential until 2020 …

1) Basis: All German TV households (Germany + EU)

Source: AGF in cooperation with GFK, SOM projection

• Online video usage is incremental to TV related consumption

• We have already captured the online eyeballs with our strong Digital Entertainment

portfolio and are well prepared for potential changes in video consumption

1 2 3 4 5

| Page 22

177 171

50

3831

217

9

2015E 2020E

259

117 98

60

29

33

2020E

187

2015E

162

12

Ad target group (A 14-49) Young segment (A 14-29)

+12%TV related -2%

TV related

[Ø daily video viewing in minutes]

Classic linear TV

Online TV related (streaming & catch-up)

Online non-TV related(including PayVoD)


… supported by low penetration of alternative offerings …

1) DE ProSiebenSat.1 Distribution (2015E); USA SNL Kagan (2015E); UK ofcom International CMR 2014 (2013); NORDICS Digital TV Research (2014E) 2) DE VPRT

Jahresbericht Pay-TV in Deutschland 2015 (2014) USA SNL Kagan 2015 (2014) UK ofcom International CMR 2014 (2013) NORDICS (*SWE only) ofcom International

CMR 2014 (2013) 3) DE AGF TV Scope (Q1 2015) USA Nielsen (Q1 2015) UK Thinkbox Annual Review 2014 (2014) NORDICS FIN Finnpanel Oy, TAM 2014 (2014) NOR

TNS Gallup TV-meterpanel (2014) 4) DE P7S1 Analysis, YTD 08/2015, based on Goldmedia, GfK, forsa, PWC, IHS, Ampere Research; USA Nielsen Total Audience

Report Q2 2015; UK ofcom CMR UK 2015 Q1; NORDICS eMarketer (2014) 5 & 6) TNS Google The Connected Consumer Survey 2014/2015 (2014) 7) AKAMAI Q1 2015

Pay TV penetration1) 20% 85% 53% 86-96%

Monthly spend per Pay TV

household2) USD 25 USD 95 USD 96 USD 33*

Share of time shifted

usage (vs. live TV)3) 2% 11% 14% 5-7%

SVoD penetration4) 7% 45% 22% 32-69%

Connected TV

penetration5) 32% 30% 41% 31-43%

Daily online video usage6) 21% 32% 33% 26-33%

Low penetration of pay offerings and alternative video technologies strengthen the position

of linear Free-TV in Germany compared to other countries

Share of broadband

connections >15 Mbps7) 14% 22% 24% 25-35%

1 2 3 4 5


… and distinct characteristics of the German TV market

Ad break intensityHigh intensity – no ad break regulations

(15-20 min/h)

Low intensity – highly regulated

(max. 12 min/h)

Channel

fragmentation

High fragmentation – premium TV package

incl. >300 channels

Less fragmentation – strong lighthouse

channels

Content quality in

Free-TV

High-quality & top sport content not in

basic TV service – Pay TV a ”Must Have”

>50 high/good quality channels in FTA

TV with top US & sport content

Language English language preferredDubbed version preferred

Studio contracts Broad syndication modelFTA TV with strong negotiation position

with supporting rights (incl. holdbacks)

Windowing Parallel windowing of top contentFTA TV widely protected vs. VoD

Distinct characteristics of the German TV market secure dominant position of Free-TV compared to the US

1 2 3 4 5

| | October 15, 2015 | | Page 25| October 15, 2015 |1) Media usage 2014 (n = 1,501); based on Adults 14+ years; forsa, SevenOne Media

2) Magna Global (June, 2015), TV incl. Multichannel/Pay TV, Online including search (incl. Google) & other (incl. Facebook)

TV usage share1) clearly

higher than print …

37%

4%

Print usageTV usage

… while TV advertising

share2) still lagging behind

37%

Print advertising

22%

TV advertising

1%pt increase in media mix equals ~EUR 60m net TV ad revenues for P7S1

1 2 3 4 5

[share of usage, in %] [net share of advertising, in %]

TV usage share above print while TV ad share lagging behind …

%pts

∆

+33%pts

∆

-15


… which strongly differs from media mix in other countries

Source: Magna Global (Jun, 2015), TV incl. Multichannel/Pay TV, Online including search & other

Share of advertising: TV vs. print 2014[in % of total media]

TV

1 2 3 4 5

PRINT

2231

53

38

28

40 3945

3637

2115

19 17 1612

20 21


National

RegionalNot directly

addressable2)

We see an addressable EUR 2.7bn print ad spending potential

1) Newspapers and magazines only; excl. professional magazines and direct mail

2) Not directly addressable: B2B, classifieds, tobacco, etc.

Source: Nielsen Media Research (2014)/SOM Market Insights

Gross print ad spendings 20141)

[in EUR bn]

National:

Core TV

potential

Regional:

TV & digital

potential

1.1

1.6

2.7

| Page 27

3.2

2.22.9

Total:

8.3

1 2 3 4 5

Addressable net print potential

(at 50% yield)


Our strategy aims to strengthen & expand our leading position …

Key market dynamics Our strategic priority

Linear TV with stronger position in

Germany than in most other markets

Still comparably high print ad share

in Germany

TV and digital remain complementary

but with increasing convergence

Defend and broaden our

core TV business

Gain advertising business from

print with TV

Exploit synergies between TV

and our digital business

1 2 3 4 5


… and translates into five priority actions

Broaden

channel

portfolio

Attack

print

Secure top

content

| Page 29

Drive

distributionand panel

coverage

Maximize

synergieswith digital

| Page 29

1 2 3 4 5

| Page 29


Content: Multi-year deals secure our program beyond 2019

1 2 3 4 5

Key TV program already secured beyond 2019

Examples


Channel portfolio: We have broadened our positioning …

1) Basis: All German TV households (Germany + EU), A 14-49 years, Mon-Sun, full day 3-3h

Source: AGF in cooperation with GfK/TV Scope/P7S1 TV Deutschland

1 2 3 4 5

9M 2015 audience shares1)

Grow small

channels

1.4% 1.4% 1.1%

Broaden core

channels

10.9% 9.4% 5.3%

Increase female share Become younger Increase relevance

Focus on female Strengthen elder female Become broader


… and continue to launch new small channels

1 2 3 4 5

Families & mainstream

middle class

Innovative low cost,

mono-thematic channels

for stable target groups

that are attractive for

advertisers

Approach Target groups

Elderly/best agers

Females

Less digital Millennials


Existing solution: Cable spot overlay

National spots with regional discount

SAT.1 regional windows

HbbTV 1.0 non-spot products

HbbTV 2.0 spot overlay

IPTV spot overlay (cooperation req.)

Mobile live stream targeting (e.g. 7TV)

Attack print: We are able to address regional potential of print

Long-termShort-term

Potential

ban 2016

Levers to address regional potential

1 2 3 4 5

HbbTV pricing

upside potential

due to print &

individual

TV targeting


HD

Mobile

Distribution: We maximize the value of our program offering

Windowing MonetizationReach

Increased reach through new

technologies and devices

1 2 3 4 5

Optimized windowing along

entire value chain

First time monetization of

terrestrial HD distribution (2017)

Catch up/

archive

Live TV

Teaser Full preview

Connected TV

+ +


Synergies: TV is the key enabler for our digital businesses

High potential for product

bundles and cross-promotion

>60k hrs top US studio content and

exclusive local content

Direct shopping through “clickable”

Smart TV/HbbTV

Content

Cross-

promotion

TV ad space at no additional cost Advertising

Sales channel

Shared customer data & insights Data

1 2 3 4 5

TV Dig. Entertainment

Ventures & Commerce


How we

strengthen

our TV

position

2

How we

build our

Group

strategy on

key industry

trends

1

How we take

D&A to the

next level

3

Our strategy

2

How we

broaden our

production

footprint

4

What is our

financial

outlook?

5

Outlook

1 3 4 5


PayVoD GamesAdVoDTravel

vertical

New

verticalsVentures

AdjacentDigital EntertainmentVentures & Commerce

Music, Artist Mgmt.,

Live, Licensing

Digital & Adjacent Market position

#4#1

Top

5

#2

Top

5

Top

5

#1

#1

#2

#1Beauty & Accessories

#1

#1

#1

#1

Online Comparison

Other assets

Top

5

Top

34)Top

35)

#1

#12)

#13)

Top

3

#2

#1

Leading German

media VC investor

(M4R/E)

Video Innovation Hub

7NXTNew

#1

#11)

1) Etraveli is the #1 flight player in the Nordics; Etraveli signed with envisaged closing in Q4 2015

2) Studio71 is #1 MCN in Germany, together with CDS top 5 globally 3) Yieldlab is #1 Premium SSP in DACH

4) SVoD market Germany, according to Forsa 5) Mobile and PC games publishers in Europe, excluding

direct publishing by developers, P7S1 estimates

| Page 37

We maintain leading positions with our D&A assets

1 2 3 4 5


In Ventures & Commerce we continue our success story

1) Source: eMarketer

1 2 3 4 5

E-commerce market growing double-

digit globally1) We continue to

invest with M4R/E

and in Lead Gen assets,

to build new verticals in

the most attractive markets,

and grow these verticals in

Germany and internationally

with our platforms and M&A

International platform-driven players

entering German market

New local digital markets emerging,

e.g. for health or food products



We optimized our four phase approach to build verticals …

1 2 3 4 5

Test media fit of

markets with

M4R/E

Understand

markets with

asset-light invests

Build verticals

based on phase 1

and 2 learnings

Expand most

promising verticals

internationally

M4R/ELead Gen

InternationalVertical

Key criteria for

vertical selection:

• Synergies with TV

• Structural market

growth

• Attractive margins

• Synergies with

existing verticals

• Low likelihood of

disruptive forces

Example: Phases of Travel vertical

40 countries


… and have proven that our vertical strategy creates synergies …

1) Estimated for FY 2015, rec. EBITDA w/o TV airtime costs

Note: Etraveli signed with envisaged closing in Q4 2015

We generate more revenues and cost savings with inter- and

intra-vertical synergies compared to standalone businesses

Marketing excellence (CRM, SEO, SEA)

Shared services (e.g. HR, Finance, Legal)

Cross-unit data management

Joint WKZ initiatives (ad allowance)

Cross-vertical lead gen and traffic pushExample:

Travel vertical >25%contribution to

revenue growth1)

>35%contribution to rec.

EBITDA growth1)

15%contribution to total

rec. EBITDA1)

1 2 3 4 5


… therefore we take our vertical strategy to the next level

1 2 3 4 5

Focus on selected profitable

market segments vs. “cover

everything”

Segment focus

Create new revenue streams

by bundling video, social and

commerce (e.g. through new

video innovation hub 7NXT)

Blended offerings

Broaden commerce portfolio

with own exclusive offline

brands/products

Own brands

Establish multiple

distribution platforms for

attractive brands

New sales platforms


In online video we further strengthen our position …

1 2 3 4 5


Video entertainment is becoming a

local and global market (YouTube,

Facebook)

Advertising targeting is shifting from

context buying to audience buying

Global players (Netflix, amazon) are

pushing into the German SVoD market

We build a global video player

with key content verticals

around Studio71 and CDS,

create an Ad Tech stack

to broaden AdVoD business,

and secure our national PayVoD

top 3 position via distribution


We create an own

Ad Tech stack along the

programmatic value chain

We secure our top 3

SVoD position through

distribution deals

We build the

foundation for further

global MCN expansion

… through global expansion, Ad Tech and distribution …

1 2 3 4 5


… growing our total video views further

1) Video Views of P7S1 AdVoD platforms and mandates

2) Collective Digital Studio video views pro forma (deal closed in Q3 2015)

P7S1 total video views Germany1)

[in bn]

H1 2014

+47%

1.8

H1 2015

2.6

Mandate

1 2 3 4 5

Mandate Mandate

+9bnCollective

Digital

Studio2)


We accelerate our growth with a “String of Pearls” M&A strategy

1 2 3 4 5

We will continue our “String of Pearls” strategy of bolt-on acquisitions and

opportunistic lighthouse deals to grow our commerce and entertainment business

Commerce examples

…

Entertainment examples

…

Bolt-on acquisitions accelerate our growth in

national and international markets

Attractive shareholder value creation potential

for us through synergies with TV and our verticals

Approach also includes joint deals with partners

(e.g. VC funds) to secure most attractive assets


Summary: In D&A we focus on five priority actions

1 2 3 4 5

Strengthen

Ad Techfootprint

Become a

global online

entertainment

player

Leverage

TV and vertical

synergies

Continue

“String of

Pearls”M&A strategy

Build & grow

further

commerce

verticals


How we

strengthen

our TV

position

2

How we

build our

Group

strategy on

key industry

trends

1

How we take

D&A to the

next level

3

Our strategy

2

How we

broaden our

production

footprint

4

What is our

financial

outlook?

5

Outlook

1 3 4 5


Red Arrow has been showing continuous growth

Red Arrow has been on an

aggressive growth trajectory …

[external revenues, in EUR m]

… while establishing a global footprint

20142012 H1 2015

LTM

20132010

CAGR+90%

1 2 3 4 5

2011

1438

95

124

202

246


Content production

1 2 3 4 5


Fragmentation of demand side –

more smaller channels and digital/

OTT platforms

“Golden age of scripted” – high

demand for English-language fiction

content

Online market highly active, yet still

experimental

Create and own rights of

“traveling” formats to

maximize return across

channels/platforms

Expand US scripted

catalogue

Build online production

and sales capabilities

| Page 49


How we

strengthen

our TV

position

2

How we

build our

Group

strategy on

key industry

trends

1

How we take

D&A to the

next level

3

Our strategy

2

How we

broaden our

production

footprint

4

What is our

financial

outlook?

5

Outlook

1 3 4 5


We continued our strong financial performance in H1 2015 …

1 2 3 4 5

Double-digit underlying net income growth

rate above revenue and rec. EBITDA increase

Strong rec. EBITDA increase

Continued double-digit revenue growth

+14.8%

+12.2%

+8.6%

H1 2015 vs. H1 2014


… and confirm our positive outlook for 2015 …

1 2 3 4 5

High single-digit Group revenue growth

TV ad performance in line with positive net TV ad market

Digital & Adjacent with double-digit revenue growth

Rec. EBITDA & underlying net income above prior year


… driven by positive development in all segments

Broadcasting German-speaking

• Continuing growth environment in TV advertising and distribution

• Growing reach and improved monetization of new channels

• Continuing efficiency of content exploitation across channel portfolio

Digital & Adjacent

• Gaining scale in Ventures & Commerce and Digital Entertainment business

• Further internationalization of SevenVentures business (“importer of choice”)

• Leveraging TV power, vertical synergies and scale of commerce portfolio

Content Production & Global Sales

• Broadening footprint in English-speaking markets

• Increasing benefits from traveling formats and returning shows

• Growing scripted and non-scripted catalogue through content investments

1 2 3 4 5


We already achieved our current 2018 targets to a high degree …

1) 2018 target has already been exceeded

2012-18 revenue growth target, degree of achievement[achievement based on H1 2015, in EUR m]

343

674

182

Broadcasting

German-speaking

Digital & Adjacent

600

300

Content Production

& Global Sales

1,000

1501)

150%

Achievement by H1 2015

Current CMD 2018 target

57%61% 67%

Target achievement in %

1 2 3 4 5

100

Current

rec. EBITDA

growth target:

EUR

200-250m


… and therefore raise our revenue & rec. EBITDA growth targets

1 2 3 4 5

300600

+175

+75

1,200+850

1,000

100

375275

1,850

+600

CMD 2018 target increase

Initial CMD 2018 target

2012-18 revenue growth target increase[in EUR m]

Broadcasting

German-speaking

Digital & Adjacent Content Production

& Global Sales

New

rec. EBITDA

growth target:

EUR

350m

growing to the next level - prosiebensat.1 media se · october 15, 2015 growing to the next level...

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