GERMAN TV BROADCASTING MARKET AN INTERNATIONAL PERSPECTIVE MARCH 2008

Transcription

1 GERMAN TV BROADCASTING MARKET AN INTERNATIONAL PERSPECTIVE MARCH 2008

2 Germany has the largest TV market in Europe and largest total advertising market in continental Europe Western European, US and Japanese TV households 2007 (000s) Western European, US and Japanese Ad spend 2007 ( mm) USA 112,115 USA 142,881 Japan 48,944 Japan 30,791 Germany 35,055 UK 18,542 UK 25,552 Germany 17,540 France 22,582 France 10,320 Italy 21,430 Italy 8,982 Spain 14,011 Spain 7,726 Netherlands 7,111 Netherlands 3,802 Belgium 4,371 Norway 3,201 Sweden 4,199 Belgium 3,056 Portugal 3,709 Switzerland 2,515 Austria 3,338 Austria 2,423 Switzerland 3,176 Sweden 2,408 Denmark 2,439 Ireland 1,902 Finland 2,378 Denmark 1,888 Norway 1,964 Finland 1,299 Ireland 1,487 Portugal 925 Source: Informa, ZenithOptimedia Advertising Expenditure Forecast December

3 TV consumption in Germany has experienced a healthy increase Television consumption per day for viewers older than 3 years (minutes) Source: agf 2

4 German TV ad market still below 1999 levels German TV net advertising expenditure ( bn) +6.3% +6.8% +9.1% (5.1)% (11.5)% (3.7)% +1.3% +1.8% +4.7% +3.0% +1.1% c. 0.9bn E Source: ZenithOptimedia Advertising Expenditure Forecasts December

5 The German TV ad market offers more upside when compared to other European markets TV net advertising investment Index [2000 = 100] Germany UK France Italy Spain Source: ZenithOptimedia Advertising Expenditure Forecasts December

6 German advertising intensity remains below its long-term average Ad intensity¹ in Germany since 1989 Potential ( bn) 1.0% 10 year Ø = 0.89% year Ø = 0.83% 0.8% 0.72% 0.6% Ad intensity 0.72%¹ TV Other media Ad intensity 0.83%¹ Source: Global Insight, ZenithOptimedia Advertising Expenditure Forecast December 2007, JPMorgan estimates ¹ Advertising as a percentage of GDP 5

7 advertising on TV is underweighted and poised for growth media consumption vs. share of advertising Online Print TV 62% 35% 24% 12% 4% 7% media consumption advertising media consumption advertising media consumption advertising Note: Time Budget 12, November 2005, SevenOne Media; ZenithOptimedia Advertising Expenditure Forecasts December

8 Media split net share of advertising in Top 5 European advertising markets 2007 (%) Newspapers Magazines TV Radio Cinema Outdoor Internet 4.1% 4.9% 4.1% 24.2% 0.7% 18.8% 6.7% 3.7% 1.3% 12.2% 10.6% 7.6% 0.8% 3.5% 6.7% 3.2% 0.8% 5.7% 7.2% 8.6% 0.5% 22.8% 26.6% 33.9% 53.2% 44.3% 39.2% 11.9% 31.1% 20.1% 13.7% 14.8% 18.9% 9.2% 24.6% Germany UK France Italy Spain Basis: Net advertising revenues net of discounts, production costs, incl. agency commissions; including classified advertising Source: ZenithOptimedia Advertising Expenditure Forecasts December

9 German TV market, with over 35 commercial free-toair stations, is already fragmented Public Stations: 26.8%¹ Private: FTA 38.5%¹ (1st tier channels) Private FTA:18.5%¹ (2nd tier channels) Private FTA Special Interest:13.8%¹ (3rd tier channels) Pay TV:2.4%¹ ² Note: Free-to-air and Pay TV channels, as at January 1, 2007 Source: AGF/GfK Fernsehforschung, pc#tv aktuell, informa Basis: All TV households Germany (D+EU) ¹Audience market share Mon Sun., h, viewers 14 49, Ø2006 ² Seven regional channels 8

10 Potential margin upside for German broadcasters compared to broader European context 2007E EBITDA margins of European Free TV broadcasters 45.7% Average 2007E margin: 29.0% 25.5% 29.7% 30.1% 32.3% 35.6% 38.1% 21.0% 15.8% 16.2% ITV TF1 TV Core channel¹ RTL 2,4 P7S1 M6 TV Core channel¹ Mediaset FTA Italy Antena3 TVN CME 3,4 4 4 Telecinco Source: ZenithOptimedia Advertising Expenditure Forecasts December 2007; Company information, broker reports ¹ Estimated EBITDA of core TV channel ² Estimated EBITDA of German activities ³ German FTA activities 4 Based on actual results 9

11 German TV market Concerns and Risks Key risks and concerns for the German FTA market Global economy Risk of stagnation in German advertising caused by a cyclical slowdown in the overall German economy Competition Threat of increasing costs for attractive programming, thereby limiting operating leverage: Increase in licensed programming cost Increase in local (production) cost Substitution Shift of consumer time and advertising funds to online media Regulatory uncertainty Media vs. cartel authorities Recent RTL/P7S1 fines 10