ProSiebenSat.1 outlines strategy to combat advertising decline

ProSiebenSat.1 is to invest upwards of €1bn ($1.05m) in programming next year that can work on both its linear networks and streamer Joyn, as the company fights the “unprecedented decline” of the local advertising market.

Bert Habets

Germany’s ad market has slumped around 10% in consecutive years, prompting an overhaul that saw it cut a swathe of jobs earlier this year amid a “realignment” to a digital-first business.

“There has been an unprecedented decline in the TV advertising market,” said group CEO Bert Habets during a roundtable with journalists on Monday here at MIPCOM.

“I’ve been around for quite a few years but I’ve not seen this happening before, with two years of 9% to 10% declines in the ad market,” continued Habets, the former RTL chief who took over at the company last year after replacing Rainer Beaujean.

Original DNA

Habets said that Germany’s macroeconomic environment had caused a greater squeeze on the broadcaster than its European counterparts and admitted that it is not clear if TV ad revenues will return to their former levels.

“There will be a recovery but at the same time whether we will get [back] to the original size of the market is questionable,” Habets told TBI.

“But that is why we are pivoting so much on building Joyn and our other digital assets. Digital revenues are growing at double digit growth despite the decline in the TV market.

“For us, it is about migrating eyeballs from TV to Joyn and our other digital asset base without the economic compression, that is the trick of the game. And we are confident that once we are scaling Joyn and the other digitla assets, in two to three years time, we should be able to off-set the TV decline.”

To deal with the shift, Habets has cut staff and is now looking to “go back to the original DNA of the group [around TV], expanding and investing in that direction.”

The broadcaster’s commerce & venture division will be broken up and sold off, along with its online dating division, with Haberts outlining a strategy to “crystalise value with the right strategic buyer”, with divestments expected in 2024.

Proceeds will then be invested into ProSiebenSat.1’s streaming efforts, he added, with the resultant company set to be “leaner and meaner”.

Seven One Studios MD Henrik Pabst, who led the German company’s deal to buy Warner Bros. Discovery’s stake in Joyn last year, also outlined how US studios have become more flexible on rights models, offering potential for new funding models.

“We will cooperate with other streamers, as others have done in their territories,” he said, highlighting the sharing of programming with global streamers as one way to get shows commissioned.

“We all need to look at how to finance content, but we are also growing the amount of money we are spending on content, so that will come in at around €1bn.”

Scripted programming will also be increased, but Pabst admitted that competing with public broadcasters in Germany was tough.

“They are producing three or four new movies on a weekly basis. That is quite a lot. They have four or five scripted series a week too, so you need to be careful where you are placing your bets.”