Creating new growth CMD 2014 Keynote Thomas Ebeling

Transcription

1 Creating new growth CMD 2014 Keynote Thomas Ebeling ProSiebenSat.1 Media AG Page 1

2 ProSiebenSat.1 s total shareholder return notably exceeded performance of major indices in the past years 2.500% 2.000% 1.500% 1.000% 500% 0% ProSiebenSat.1 (Total Return) ProSiebenSat.1 Dax Stoxx Media Source: Bloomberg as of September 30, 2014 Page 2

3 Strong revenue and earnings growth as well as substantial net debt reduction since 2009 Revenues (CAGR ) Recurring EBITDA (CAGR ) Recurring EBITDA margin (2013) Underlying net income (CAGR ) Net debt reduction ( ) Financial leverage (12/31/2013) +8.0% +12.2% +30.3% +36.0% EUR 1.85bn 1.8x Note: CAGRs calculated on the basis of annual growth rates of continued operations at the time. Page 3

4 ProSiebenSat.1 with first class dividend yield, top in class margins and valuation in line with its peers Key peers 2014E 2015E EV/EBITDA 9.7x 9.0x 11.6x 10.2x 8.7x 8.4x 21.6x 14.3x 4.8x 4.5x 11.7x 9.5x 25.8x 16.2x 9.6x 7.8x 10.7x 7.4x EBITDA margin 30% 29% 29% 30% 22% 23% 15% 20% 22% 22% 11% 12% 16% 24% 10% 12% 8% 12% Dividend yield 5.7% 5.1% 2.5% 2.8% 7.8% 7.2% 3.9% 2.4% 6.6% 7.0% 1.4% 3.6% 3.8% 1.8% 4.9% 5.3% 5.2% 4.5% Source: Bloomberg consensus estimates as of September 30, 2014; Dividend yields based on 2014/15 dividends to be paid in 2015/16 Page 4

5 We have built a strong position in the German TV market Share of viewing Share of advertising [Audience share, in percent] % owned 50% owned [Gross values, in percent] % owned 100% owned 2014 YTD 2014 YTD Basis: All German TV households (Germany + EU), A 14-49; Mon-Sun, full day 3-3h; 2014 YTD: January 1, 2014 September 30, 2014 / SoA YTD: January 1, 2014 September 28, Source: AGF in cooperation with GfK / TV Scope / ProSiebenSat.1 TV Deutschland Strategy & Operations / SoA: Nielsen Media Research / SevenOne Media, Sales Steering & Market Insights. Page 5

6 and leading positions in our digital key business units D&A revenue split and activities [H1 2014] Digital Entertainment Digital Commerce + #1 #1 #2 #2 #3 Pay VoD Ad VoD Online Games 39.3% 12.8% 47.9% Adjacent #1 #1 #2 #1 Top 5 #3 #4 Continuing operations. PayVoD market only considering SVoD. Page 6

7 FDM Key elements of ProSiebenSat.1 s equity story Track record of multi-year operational and financial outperformance Market-leading positions in German-speaking TV and online video business Solid growth profile and attractive dividends Growing core TV market and focus on dynamically developing digital markets Balanced growth strategy to reach EUR 1bn revenue growth by 2018 vs Page 7

8 Growth across all three business segments in H Broadcasting 1 2 Digital & Adjacent 3 German-speaking Content Production & Global Sales TV advertising Distribution Digital Entertainment Digital Commerce Adjacent +3.2% +26.9% +29.1% +29.5% -12.3% Revenue growth vs. +EUR 32.6m +EUR 45.9m +EUR 6.2m H % +21.9% +12.2% Continuing operations Page 8

9 TV continues to dominate media consumption in Germany Average daily usage in Germany [in minutes, years] [in min] CAGR [ ] TV usage % Online w/o Online Video 78 +9% Online Video incl. TV-related content % Page 9 Note: Representative survey on media usage, data refer to each year s 2-week inquiry period (mostly in February). Online since 2008 without passive usage; Online Video before 2011: P7S1 estimate. Source: SevenOne Media/forsa, Enigma GfK, mindline media

10 Variety of viewer motivations Linear TV Lean back/ watching with family SVoD/TVoD 1 Audiovisual insurance, US binging, convenience, autonomy and cost saving Catch up Ensure to stay tuned Basic Pay TV Ad-free enrichment of lean back experience UGC/SPC 2 New content experience/ snacking, short format driven 1 SVoD = Subscription Video on Demand; TVoD = Transactional Video on Demand 2 UGC = User Generated Content; SPC = Semi-Professional Content Page 10

11 are covered well by us Linear TV SVoD/TVoD Catch up #1 portfolio #1 1 #1 2 Basic Pay TV UGC/SPC 3 channels #2 3 1 maxdome is #1 SVoD player in Germany 2 MyVideo is #1 premium content video portal and #2 German video portal behind YouTube 3 Studio71 is #2 MCN Studio in Germany Note: Excluding Premium Pay Page 11

12 Opportunities for development of new audiovisual products Catch up destination platform Mega audiovisual app combining streaming, catch up, OTT VoD Attractive SVoD/TVoD offerings Thematic channels combining TV content, information, commerce Online basic pay offerings Affordable attractive unbundled single premium pay channels New tailored content experience Exploit cooperation with platform provider 7TV app maxdome Smart channels, e.g., Tastyfy Exploring Exploring MCN Studio71 The medium is very much alive Page 12

13 TV also remains strong in US People continue to watch TV TV viewing still dominant way of media consumption Even heaviest viewers of internet video with TV set viewing of 2hr 15min per week 1 mirrored in strong share of TV ad spending TV as share of total advertising spend in US 44.1% +4.6%pts 48.7% TV set viewing increases in core market US despite US already in 2007 with highest TV ad spend per capita Significant technological change Strong market fragmentation Internet ad has not affected TV ad to same extent as print E 1 vs.1 hr 32 min internet video and 19 min smartphone video; adults aged 18-24; in Q Source: Enders Analysis based on BARB/InfoSys+, Nielsen, AGF Page 13

14 Germany clearly less vulnerable to disruption of linear TV than US (1/2) Pay TV penetration 1 Monthly spend per Pay TV HH 2 On-Demand TV penetration 3 Multi-screen video 84% ØUSD 79 17% 17% ØEUR19 5% penetration 4 45% 29% Connected TV penetration 5 46% 10% Digital affinity US (e.g., music streaming 6 ) 18% 5% Germany Page 14 1 US: IHS 2014E; DE: VPRT 2 US,DE: IHS 2014E; ARPU; for Germany digital TV ARPU, excluding mandatory public licensing fee of 18 /month 3 US: GfK Over The Top TV 2014; DE: Digitalisierungsbericht Video consumption via non-tv set at least once per month; US: emarketer; DE: Digitalisierungsbericht Active connected TV sets; US: emarketer; DE: Digitalisierungsbericht Music streaming revenue share 2014E; US,DE: PWC Global Entertainment Outlook 2014

15 Germany clearly less vulnerable to disruption of linear TV than US (2/2) Ad break intensity No ad break regulations high intensity (15-20 min/h) and frequency Channel fragmentation Content quality in Free TV Power of domestic content and local hosts Basic TV package incl. >500 channels due to diversity of ethnical groups & interests High-quality & top sport content not in basic TV service Pay TV a Must Have Many creative, local authors and formats Highly regulated low intensity (max 12 min/h) and frequency Less fragmented/strong lighthouse channels due to lower social diversity >50 high/good quality channels in FTA w/ top US & sport content alongside private channels Few local Must See hosts licensing of international content and formats on FTA channels Studio contracts Broad syndication model FTA biggest, supported by holdbacks Language Native language Dubbed version Illegal viewing Commonly used especially streaming Limited due to German language dubbing most illegal content only in English Less impact through streaming on German ad-driven FTA market compared to US Page 15

16 iplayer strongly influenced online video growth in UK Online video services 1 UK iplayer, paving the way for long form TV content online, and enabling rapid growth of Netflix (iplayer delivering 2.2bn TV requests in 2013 (2% of total BBC viewing time)) Germany Each broadcaster operating own catch-up platform; IPTV with low market share Connected TV penetration 2 25% 10% Pay TV penetration 3 54% 17% Monthly spend per Pay 4 TV HH ØEUR 58 ØEUR 19 Digital affinity (e.g., music streaming) 5 14% 5% 1 Enders analysis: Core TV and connectivity trends, October 9, 2014; 2 Active connected TV sets; HIS, Enders analysis 3 HIS 4 PWC Music Streaming: PWC Global Entertainment Outlook PWC Page 16

17 Scandinavia with significantly higher affinity towards pay and digital compared to Germany Pay TV penetration 1 88% Scandinavia 17% Germany Monthly spend per Pay 2 TV HH ØEUR 42 ØEUR 19 penetration 23% 5% 3 On-Demand TV Connected TV penetration 4 26% 10% Digital affinity (e.g. music streaming 5 ) >60% 5% 1 SCANDICS: IHS via IP Television Key Facts 2014 (SWE 87%; FIN 83%; NOR 90%; DEN 92%), DE: VPRT; 2 SCANDICS PWC (SWE 33 EUR; FIN 33 EUR; NOR 67 EUR; DEN 41 EUR), DE: IHS 2014E; ARPU; for Germany digital TV ARPU, excluding mandatory public licensing fee of 18 /month 3 SWE (for SCANDICS): GlobalWebIndex via Statista, Video-on-Demand Penetration Q1 2014, DE: Digitalisierungsbericht SCANDICS: IHS via IP Television 2014 (SWE 23%; FIN 19%; NOR 33%; DEN 31%), DE: Digitalisierungsbericht 2014 ; 5 Music streaming revenue share 2014E; SCANDICS, DE: PWC Global Entertainment Outlook 2014 (SWE 82%; FIN 39%; NOR 75%; DEN 46% ) Page 17

18 since Scandinavian TV characteristics also significantly differ from Germany Channel fragmentation Content quality in Free TV Power of domestic content and local hosts Fragmented with respect to total population - strong intl and lighthouse channels Medium quality overall High-quality mainly in Primetime Local hosts very strong, less international content available on FTA channels Less fragmented/strong lighthouse channels due to lower social diversity >50 high/good quality channels in FTA w/ top US & sport content alongside private channels Few local Must See hosts licensing of international content and formats on FTA channels Studio contracts Less FTA relevance, limited holdbacks FTA biggest, supported by holdbacks Language Illegal viewing English version Commonly used especially streaming Dubbed version Limited due to German language dubbing most illegal content only in English Less impact through streaming on German ad-driven FTA market compared to Scandinavia Page 18

19 Perceived SVoD threat with meaningful upside for P7S1 Meaningful upside in revenues and profits maxdome revenues Linear television Growing TV ad revenues despite slowly declining linear TV consumption Video on demand 2% Increasing SVoD penetration over time high 2013 future Note: Illustrative chart; maxdome subscription fee at EUR 7.99 per month, incl. 19% VAT; exluding TVoD/EST revenues Page 19

20 A We are well prepared to compete for growing SVoD market Pricing EUR 7.99 SVoD price for all devices including HD EUR based on video quality & devices Distribution Content Marketing Product Distribution deals with leading TV, mobile, broadband players & >90% OTT coverage Invested in new binge series Extended existing studio deals Exclusive series previews Leverages P7S1 marketing power Ability to do branded entertainment Extensive German market knowledge New brand/platform launched in September New recommendation engine implemented Includes offline mode Basic OTT placements Many binge series included Focus on originals Deep library content High marketing budget Brand building stage Scaling of platform investment Advanced content recommendation engine Online-streaming only Page 20

21 TV will remain strong in Germany Technology, distribution, format and channel and viewing enhancement innovations will support viewing time growth Stronger protection vs. (digital) disrupters than other international markets Less Pay TV penetration Most STB unable to receive VoD Lower digital affinity Low household spend for Pay/FTA limiting cord cutting/shaving risk Dubbed versions preferred, less illegal online viewing Studio contracts with holdback rights High quality FTA SVoD represents opportunity given maxdome s strong competitive profile Page 21

22 Key structural trends supporting our growth TV superiority over print for consumers and customers Increased time spent on audiovisual content Increased acceptance of consumers to pay for top content and technologies will drive HD and pay Smart TV and mobile penetration growth will open up new ad, pay and commerce revenue streams Increased digitalization will create ad income and additional digital commerce revenues Less power for key distribution platforms due to emerging alternative digital platforms Sound economic market conditions Page 22

23 TV market correlates with private consumption, which should be positive in 2015 German net TV ad market and private consumption [rate of change in percent] Net TV ad market (left scale) Net private consumption (right scale) dot.com crisis and September 11 Financial crisis p=prognosis, Net Ad market (ZenithOptimedia: Advertising Expenditure Forecasts Sept 2014) Sources: Destatis, ZAW, Zenith SevenOne Media, Market Insights (DZ) Page 23

24 Positive trend in disposable income and unemployment rate expected to drive private consumption Trend 2015 GDP, rate of change in % Private consumption, rate of change in % Disposible income of HH, rate of change in % Unemployment rate, in % E 2015E (Joint Economic Forceast) GDP: price adjusted, chain-linked, Unemployment rate: Federal Employment Agency (BA) concept Sources: Joint Economic Forecast Autumn 2014 Page 24

25 Three key growth strategies 1 TV Digital synergies Leverage TV and internet content, promotion and ad synergies and exploit the convergence of TV and Digital Commerce and Entertainment 2 Innovations and new business models Gain competitive advantages through innovative business models 3 Smart de-risked M&A Smart M&A with/without financial/strategic partner to constantly optimize portfolio to create synergies, to obtain scale, to capture leading market positions, to grow dynamically & to ensure best in class margins Page 25

26 Scale of Content Cost Monetization of User Lead Generation 9_84 7_84 Lead Generation 1 We create key synergies on three levels TV - Digital Inter Digital Verticals Intra Digital Verticals Value creation through advertising/scale/ convergence/artists Traffic exchange between clusters Cross-Selling Traffic flow within cluster Up-Selling Fashion Advertising Subscriptions Transactions Page 26

27 1 TV Digital synergies are best value drivers TV Cross-Country Synergies TV Production Synergies TV Digital Synergies No compelling synergies just based on TV Very limited Few convincing examples Advertising Cross-Promo/ Customer Sales Content Synergies Production Convergence TV with Digital Commerce Page 27

28 1 TV - Digital core synergies drive our transformation Free content >13,000 hours of exclusive local content, >50,000 hours US blockbuster content Free TV advertising Free cross-promo/ bundling power Convergence TV w/ Digital Commerce TV/Video sales power Entertainment competences Relationships in distribution >EUR 1bn of idle TV ad space available at no additional cost Shared customer data, product bundle, TV/internet promotion power Enabled by Smart TV/Hbb TV/2nd screen/online video advertising; Apps to allow to click on content/ads to shop digitally >500 ad customers (leverage salesforce, advertise relations, agency relations) ProSiebenSat.1 in TV for 30 years we know our audience Distribution platforms facing similar competition entry risk (US giants) Page 28

29 2 and we create new business models and drive innovation M4R/E Next Level Digital Importer of Choice 2nd Screen/Hbb TV Ad Tech TV Ad Digital Enhancement Apps Smart Channels Mega Apps Page 29

30 2 Innovation map to support growth TV/Sales Distribution, Pay & HD Digital Entertainment Digital Commerce Adjacent Content Production TV digital enhancement portfolio Individual targeting/ regional/local ads New ad customer segments/regulatory attack on ads on public channels New channels/formats Digital/TV freesheets Print attack Premium pricing Ad break innovation Sales/HR/corporate budget concepts Online pay Affordable premium cooperations (Ultra) HD Streaming, digital distribution Entertainment bundles Category mgmt. 7TV/2nd screens MCN/international alliances Monetization of games VOD bundles Smart channels Multi channel catch-up platform New mandates New entertainment segments New verticals International expansion Digital importer of choice International sourcing/ VC investments Incubator cooperation/ accelerator initiative Digital enabling services Talent/Live/ Rights Mgmt. Digital music business models Format/ company/ rights acquisition Page 30

31 3 M&A strategy evolution Larger bolt-on, alone or with financial/strategic sponsor Bolt-on Maximize value of portfolio, low cash M4R/E and small bolt-on Since 2010 Since 2013 From 2015 Stay within financial leverage target range of 1.5x-2.5x and continue dividend policy Page 31

32 3 M&A goals Drive digital transformation through Buy & Build of digital clusters Execute acquisitions to strengthen core business TV and to increase viewer share Expand digital business model to attractive international markets Scale to grow profitability Execute minority investments and M4R/E to get new ad funds and to participate in international value creation Realize value through attractive disposals (active portfolio management) Page 32

33 Our strategy broadens its geographic and business scope 1 Digital/Broadcasting German-speaking powerhouse 2 Internationalization of digital business 3 Digital/Broadcasting operator and smart investor/partner Year of completion Stay within financial leverage target range of 1.5x-2.5x and continue dividend policy Page 33

34 1 Building digital verticals by 2016 Investment logic Our TV assets can be successfully leveraged, providing a strong competitive position Revenue potential of >EUR 100m (per vertical) and double-digit EBITDA margin possible Growth markets with local edge, that are difficult to enter for global digital players Competitive technology available Availability of complementary partners to mitigate cash/inventory risk Travel Beauty & Accessories Home & Living Fashion & Lifestyle TV/Digital enhancement Established New/ Evolving Page 34

35 2 We are building a European Media Alliance to grow digital business Internationalize M4R/E model Create digital-equity value outside Germany by leveraging our skills Improve capability to offer Pan European deals" to US/international imports Increase deal flow among media partners - win-win-partnerships Invest in successful business models internationally Page 35

36 2 and we expand our scouting network to grow import deals Identify trends and competitive intelligence Expand M4R/E deal funnel Identify investment targets and partnership opportunities Close alignment with global VC/PE networks Page 36

37 2 We aim to become the importer of choice We provide a unique launch pad for companies entering the German/European market Successful import deals Testimonials Network & Know How Online Marketing M4R/E+ Creative TV Analytics Operational Services BI & Data Further deals currently under negotiation Page 37

38 3 Selective VC investments and cooperations with financial sponsors to support future growth VC cooperations Increase M4R/E deal flow Identify the next big thing Better assessment of M&A targets Financial returns Financial sponsor cooperations Facilitate meaningful larger deals Strengthen governance and portfolio management Improvement in value creation and optionality Page 38

39 3 M&A and portfolio considerations Scaling partnerships/ mergers Online Games MCN Content Production & Global Sales Partnerships with financial and/or strategic sponsors Digital Commerce verticals New Business Explore cooperations with digital affine TV/distribution strategic partners Focus on Central- and Northern Europe Explore other attractive geographies National cooperations related to Platforms & Pay Page 39

40 Well on track to hit 2015 revenue growth target [Achievement by H1 2014, in EURm] Degree of achievement % 84.2% 93.1% 79.8% Broadcasting German-speaking Digital & Adjacent Content Production & Global Sales Group EUR 800m to be achieved by year-end % linear projection of CMD target CMD 2015 target Achievement by by Q2 H Continuing operations. Please note: Broadcasting German-speaking includes Pay TV. Digital & Adjacent revenues excl. 9Live and excl. Pay TV. Page 40

41 and expect to achieve 2015 strategic goals already this year Strategic goals Achievements by 2014 Maintain leading competitive position Expand TV ad market, drive distribution revenues Strengthen perception of TV being most efficient medium Increase revenue share outside Broadcasting Germany Market leader in TV and key digital businesses >EUR 170m TV ad market growth since 2010, >EUR 40m distribution revenue growth Highest advertising effectiveness, highest long-term ROI in media Increase from 23% to 29% Page 41

42 All segments ahead of pro-rata 2018 revenue growth targets [Achievement by H1 2014, in EURm] Degree of achievement 34.8% 32.5% 34.6% 33.4% , Broadcasting German-speaking Digital & Adjacent Content Production & Global Sales Group CMD 2018 target Achievement by by Q2 H % linear projection of CMD target Continuing operations Page 42

43 Strategic growth focus of our four pillars Broadcasting German-speaking Distribution Digital & Adjacent Content Production & Global Sales Create strong cashflow out of a leading position in a large growing high margin market Create highly profitable FTA distribution revenues and participate in Pay TV growth opportunities Digital Entertainment: Participate in dynamic market growth Digital Commerce: Exploit the convergence of TV and digital commerce Adjacent: Complementary high Enrich access to content and leverage value/ scaling potential margin opportunities Page 43

44 Ad Sales TV Operations TV growth plan by 2018 Operating a leading channel portfolio delivering superior value to advertisers Rational investment approach hit optimal cost per hour relative to revenues per hour; avoid unprofitable genres and achieve that up to 50 percent of our program hours are cost free Good genre split balance between consumer preferences and optimization of profits Balanced investment mix between lighthouse formats, Basic TV and new innovative low-cost concepts Lead digital innovations to drive viewer loyalty and TV impact Leverage pricing opportunities Target/build new advertising segments and attack print spendings Regional/local/individualized advertising Gap to go EUR 125m +1.4% implied revenue CAGR H Create new ad customer segments/regulatory attack on ads on public channels TV-Digital enhancement/second screen apps 1 H Page 44

45 Distribution growth plan by 2018 Our linear assets everywhere, anytime on any device Strive for 100% reach of our digital assets on key relevant devices Monetization of technology HD and future technology growth potential Strengthen and grow our Pay TV business Gap to go EUR 71m +14.6% implied revenue CAGR H H Page 45

46 Digital & Adjacent growth plan by 2018 AdVoD: Invest in new content and MCN; drive sales excellence as well as new ad technologies PayVoD: Add new/extend studio deals and further improve user experience Games: Leverage scale effects, develop strong position in mobile and assess partnership options M4R/E: Foster value add beyond TV-Media and expand deal funnel to new countries Travel Cluster: Drive consolidation and leverage intra cluster synergies Digital commerce: Continue building existing clusters und build further verticals in new investment categories (physical and non- physical good) Adjacent: Enter new adjacent segments and digitalize business Tech/Data: Implement tech operational excellence and exploit full potential of data Gap to go EUR 405m +13.5% implied revenue CAGR H H Page 46

47 Content Production & Global Sales growth plan by 2018 Continue to build scale across key markets (US, UK) Become a leading independent source of English-language scripted product Strategically launch and own global formats Gap to go EUR 65m +9.5% implied revenue CAGR H Further build digital production capabilities Create, own and monetize brands 1 H Page 47

48 Summary: ProSiebenSat.1 financial targets Revenue growth +EUR 1bn Recurring EBITDA growth (CAGR) mid single-digit Underlying net income (CAGR) Free cash flow 1 (CAGR) above revenue CAGR above revenue CAGR 1 Before M&A, CAGRs in % Page 48

49 We update our 2014 financial targets FY 2014 targets Group revenue growth Recurring EBITDA Net income Financial leverage High-single digit Above prior year Above prior year x Continuing operations. 1 Previous guidance was mid to high single-digit Group revenue growth Page 49

50 Outlook: ProSiebenSat.1 confirms 2014 and mid-term targets FY 2014 outlook update 1 CMD targets 2015 to be achieved in 2014 CMD targets High single-digit Group revenue growth EUR 639m revenue growth by H EUR 1bn revenue growth by Previous guidance was mid to high single-digit Group revenue growth Page 50

51 Summary TV will remain strong with P7S1 being a leader Powerful TV/Digital synergies driven by advertising, content and business model innovations Strategy will broaden its geographic and business scope Strong pipeline of innovations supported by positive structural trends will create dynamic growth On path to at least hit 2015/2018 CMD growth targets Page 51

52 Disclaimer This presentation contains "forward looking statements" regarding ProSiebenSat.1 Media AG ("ProSiebenSat.1") or ProSiebenSat.1 Group, including opinions, estimates and projections regarding ProSiebenSat.1's or ProSiebenSat.1 Group's financial position, business strategy, plans and objectives of management and future operations. Such forward looking statements involve known and unknown risks, uncertainties and other important factors that could cause the actual results, performance or achievements of ProSiebenSat.1 or ProSiebenSat.1 Group to be materially different from future results, performance or achievements expressed or implied by such forward looking statements. These forward looking statements speak only as of the date of this presentation and are based on numerous assumptions which may or may not prove to be correct. No representation or warranty, expressed or implied, is made by ProSiebenSat.1 with respect to the fairness, completeness, correctness, reasonableness or accuracy of any information and opinions contained herein. The information in this presentation is subject to change without notice, it may be incomplete or condensed, and it may not contain all material information concerning ProSiebenSat.1 or ProSiebenSat.1 Group. ProSiebenSat.1 undertakes no obligation to publicly update or revise any forward looking statements or other information stated herein, whether as a result of new information, future events or otherwise. Page 52