Vision and Strategy
Television is the basis of our success. We use the millions-strong reach of our TV stations to advance into digital business areas. In this way, we have consistently diversified our Company in recent years and created additional sources of revenue. Today, our growth is based on four segments: German-speaking TV business, our digital units with a large entertainment and e-commerce portfolio, and our international program production and sales subsidiary. We have been so successful with this strategy that we raised our medium-term growth targets once again in October 2016.
We are consistently diversifying our value chain and digitalizing our portfolio. Our high reach is a crucial competitive advantage in two respects: Even in the digital world, no other medium reaches an audience of millions as quickly as TV. Not only our advertising customers benefit from this; we also use the impact of television to promote our own offerings.
compared to 2012
TV activities in Germany, Austria and Switzerland are allocated to the Broadcasting German-speaking segment. With a population of over 80 million, Germany is Europe’s largest television market and we are a market leader here. Our success is based on a multi-station strategy: The individual stations serve different core target groups and thus complement each other. While SAT.1 offers TV programs for the whole family, ProSieben is primarily aimed at young viewers aged between 14 and 39. The core target group of kabel eins includes viewers aged between 14 and 49. Sixx focuses on young women between the ages of 14 and 39. SAT.1 Gold is also aimed mainly at women between 40 and 64 and therefore a particularly attractive target group for the advertising industry. ProSieben MAXX complements the TV family with its programming that is mainly focused on male viewers aged between 14 and 39. The new free TV station kabel eins Doku, which focuses on documentaries and reports, started broadcasting in September 2016. kabel eins Doku is aimed at men aged between 40 and 64.
A second and increasingly important source of revenues in the TV segment is distribution. For example, ProSiebenSat.1 has for many years taken a share in the technical activation fees that cable network, satellite and IPTV operators generate from the distribution of ProSiebenSat.1 HD stations. With SAT.1 emotions, ProSieben FUN and kabel eins CLASSICS, the Group also operates three basic pay TV channels. ProSiebenSat.1 Group has thus established a business area with long-term recurring revenues. ProSiebenSat.1 Group is growing highly profitably in its core business with a recurring EBITDA margin of around 30 %.
ProSiebenSat.1 pursues a digital entertainment strategy and covers modern forms of media use in this way. The Group bundles its online video business activities in the Digital Entertainment segment. This includes, among others, the pay-video-on-demand portal maxdome, the multi-channel network (MCN) Studio71 and the areas of ad-tech and data. We are also operating our own record label and are active in the areas of artist management and music and live entertainment.
By extending and integrating TV formats on digital platforms, the Group is strengthening viewer retention and creating new, cross-media advertising space at the same time. As a result, the Company offers its customers a high advertising reach with digital media as well. ProSiebenSat.1 reaches around 30 million unique users every month in the German market with advertising-financed online websites alone.
ProSiebenSat.1 is also the market leader in the sale of online video content in Germany. Digital development has moreover introduced new refinancing models for us. In addition to advertising revenues, ProSiebenSat.1 is generating subscription- and transaction-based revenues in the Digital Entertainment segment, for instance, with maxdome’s video-on-demand (VoD) offers. ProSiebenSat.1’s digital entertainment offers have a good position in their respective market segments. The number of maxdome’s subscribers grew to one million in 2016. With around 60 billion video views in 2016, Studio71 is one of the four largest MCNs in the world and is the number one in Germany.
Raising brand awareness quickly is a decisive competitive factor, especially for young companies in an early stage of development. We therefore use our wide reach to develop digital business areas or to acquire companies, for instance, in the commerce areas of travel, lifestyle, online dating and online comparison portals. The Group is advertising these brands on its TV stations and accelerating their growth thanks to free advertising time.
We tap into new market segments and finance growth in line with the “reach meets ideas” principle. Thereby, ProSiebenSat.1 increasingly made larger acquisitions in the last two years. In doing so, our commerce and ventures portfolio has now become our largest revenue growth driver and is making a significant contribution for the expansion of the digital business. In 2016, the segments external revenues increase by 65% and amounted 768 Mio Euro.
compared to 2012
ProSiebenSat.1 plans to generate outside the classic TV advertising business until 2018; Red Arrow contributes to it
The Red Arrow Entertainment Group complements our value-adding processes. This company develops, produces and sells programs. Red Arrow is a global company, but it focuses on the US. In addition to high revenues, the USA is also strategically relevant for Red Arrow because TV content in English can be sold more easily around the world. The activities of the Red Arrow Entertainment Group are bundled in the Content Production & Global Sales segment.