January 2016 Company Presentation Unterföhring October 15, 2015 Page 1
Agenda 1 2 3 4 At a Glance Broadcasting German-speaking Digital & Adjacent Content Production & Global Sales October 15, 2015 Page 2
ProSiebenSat.1 Group At a Glance October 15, 2015 Page 3
1 2 3 4 At a Glance P7S1 Group a TV / Digital powerhouse Broadcasting German-speaking Digital & Adjacent Content Production & Global Sales TV: Linear Free TV financed by advertising Distribution: Monetization of HD technology, Basic Pay TV, Mobile distribution Ventures & Commerce: M4R/E, 7Travel, 7Commerce Digital Entertainment: Ad VoD, Pay VoD, Games Adjacent: Music, Artist Management, Live, Licensing, Sports Marketing Content Production: Developing & producing scripted & non-scripted programs Global Sales: Selling group or 3 rd party finished tape & format ideas to channels and platforms worldwide October 29, 2015 Page 4
1 2 3 4 At a Glance We have made great achievements in 2015 Leading audience share Success of small channels Distribution deals Lighthouse productions >29% Σ 3.9% share Key strategic M&A deals New commerce verticals Beauty & Accessories Online Comparison Fitness & Wellbeing International footprint of MCN #1 GER #5 Global October Note: all 15, audience 2015 shares target group A14-49, 9M 2015 Page 5
1 2 3 4 At a Glance supporting our strong equity story of combining steady growth and attractive returns Strong earnings and cash flows supporting attractive dividends Dual approach Market leader Growth path Financial outperformance We are strongly positioned in our growing core TV market and in dynamic digital markets We maintain leading positions in the Germanspeaking TV and online video business We have raised our 2018 revenue growth target to EUR 1.85 bn and expect to reach EUR 4.2 bn of revenues in 2018 We have delivered multi-year financial and operational outperformance October 15, 2015 Page 6
1 2 3 4 At a Glance We have continuously grown since 2009 [in EUR m] External Group revenues CAGR: 1,921 2,051 2,199 +8.9% 2,356 2,605 2,876 3,140 2009 2010 2011 2012 2013 2014 LTM 9M 2015 October Note: CAGR 15, 2015 calculated based on annual growth rates of continuing operations at the time Page 7
1 2 3 4 At a Glance with strong revenue and earnings performance Revenues (CAGR 2009 LTM 9M 2015) Recurring EBITDA (CAGR 2009 LTM 9M 2015) Recurring EBITDA margin (LTM 9M 2015) Underlying net income (CAGR 2009 LTM 9M 2015) Net debt reduction (2009 LTM 9M 2015) Financial leverage (September 30, 2015) +8.9% +10.7% +28.4% +27.4% EUR 1.3bn 2.2x October Note: CAGRs 15, 2015 calculated based on annual growth rates of continuing operations at the time Page 8
1 2 3 4 At a Glance We have built a strong position in the German TV market Audience share 1) Share of advertising 2) [9M 2015, in %] 29.5 +5.0 %pts [9M 2015, in %] 44.5 +11.2 %pts 24.5 33.3 1) Basis: All German TV households (Germany + EU), A 14-49 years, Mon-Sun, full day 3-3h; RTL October 15, 2015 Page 9 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
1 2 3 4 At a Glance with leading market positions across all our D&A pillars A Ventures & Commerce B Digital Entertainment C #1 Ventures (M4R/E) Leading German VC investor #1 #1 #1 Top 5 Top 5 #2 #1 Travel vertical New 5) #1 #2 Top 5 New verticals Beauty & Accessories Online Comparison #1 #1 #1 Top 5 Fitness & Wellbeing #1 New 5) #1 #2 Top 3 #1 1) #1 2) #1 AdVoD PayVoD Top Top 3 3) 3 4) Games Adjacent Market position Music, Artist Mgmt., Live, Licensing #4 9M 2015 revenue split 55% (EUR 293.0m) 35% (EUR 185.6m) 10% (EUR 51.0m) October 1) Studio71 15, 2015 is #1 MCN in Germany, together with CDS top 5 globally. 2) Yieldlab is #1 Premium SSP in DACH. 3) SVoD market Page 10 Germany, according to Forsa. 4) Mobile and PC games publishers in Europe, excluding direct publishing by developers, P7S1 estimates. 5) Deals closed in November (Etraveli) and October 2015 (Vitafy; minority investment).
1 2 3 4 At a Glance We continued to grow dynamically also in 9M 2015 [9M 2015 vs. 9M 2014, in EUR m] Revenues 2,174.2 +13.8% Recurring EBITDA 568.1 +8.8% Underlying net income 266.4 +11.7% October Continuing 29, 2015 operations Page 11
Revenue growth vs. 9M 2014 1 2 3 4 At a Glance across all three business segments Broadcasting German-speaking Digital & Adjacent Content Production & Global Sales TV advertising Distribution Ventures & Commerce Digital Entertainment Adjacent +3.9% +21.0% +38.5% +20.9% +4.5% +5.2% +28.0% +77.9% +EUR 72.4m +EUR 115.7m +EUR 76.2m October Continuing 15, 2015 operations Page 12
1 2 3 4 At a Glance Strong profits from Broadcasting and growing contribution from Digital & Adjacent and Content Production & Global Sales [in EUR m, 9M 2015, prior year in parentheses] External revenues Recurring EBITDA 24.4% (21.7%) 529.6 8.0% (5.1%) 174.1 Broadcasting Germanspeaking Digital & Adjacent FTEs 1 2,245 1,577 17.8% (16.5%) 102.0 1.8% (0.2%) 10.1 2,174.2 568.1 ² Broadcasting German-speaking Digital & Adjacent 67.6% (73.2%) 1,470.5 Content Production & Global Sales 824 80.4% (83.3%) 459.9 Content Production & Global Sales October Continuing 15, 2015 operations. 1. FTEs: average full-time equivalents Page 13 2. Group recurring EBITDA after elimination of EUR 3.8m
1 2 3 4 At a Glance P7S1 Group financial targets for 2015 Group revenue growth low double-digit 1) Recurring EBITDA above prior year Underlying net income above prior year Financial leverage 1.5x 2.5x October Continuing 15, 2015 operations 1) Updated from high single-digit on Oct 29, 2015 Page 14
1 2 3 4 At a Glance Our business unit strategies and growth objectives Broadcasting German-speaking Digital & Adjacent Content Production & Global Sales 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 Optimize portfolio value through M&A Become a leading global content producer/distributor October 15, 2015 Page 15
1 2 3 4 At a Glance Digital & Adjacent has a unique value proposition We are the only player combining significant commerce assets, digital audience reach, understanding of local communities and premium video content to build new businesses and leverage our TV advertising power to grow businesses Premium content Commerce platforms Audience reach and understanding of local communities October 15, 2015 Page 16
1 2 3 4 At a Glance Our unique business model leverages TV power and digital know-how TV synergies TV ad space at no additional cost Product bundles and cross-promotion Top US content and exclusive local content Extended sales channel through Smart TV/HbbTV Shared customer data & insights Ventures & Commerce + TV Digital playbook Marketing and data expertise Distribution capabilities Local operational launch pad Inter-vertical synergies Experienced leadership Digital Entertainment October 15, 2015 Page 17
1 2 3 4 At a Glance Strong track record of Digital & Adjacent segment driven by dynamic organic revenue growth and M&A [in EUR m] External revenues D&A 800 727 600 +35% CAGR 484 611 400 351 200 172 230 0 2010 2011 2012 2013 2014 LTM 9M 2015 Organic revenue development Inorganic revenue contribution October Note: 15, 20102015 and 2011 revenues adjusted for 9Live and Pay TV revenues Page 18
1 2 3 4 At a Glance We have a robust M&A strategy with four key pillars for potential investments in Digital & Adjacent Deal Type Rationale Investment style Examples 1 Synergistic value plays M4E Minority Majority Capture share of wallet of marketing spend plus cluster synergies 2 Advertising stimulation Stimulate ad spend increase in key advertising categories Fashion / E- commerce Dating 3 Sales platforms Build and scale distribution platforms creating potential for bundle offers for key media clients 4 Strategic hedges Hedge against key global trends potentially affecting core business Loss of TV eyeballs Studio dependency Loss of advertiser access / ad-dollars October 15, 2015 Page 19
1 2 3 4 At a Glance Red Arrow has been showing continuous growth since 2010 supported by a number of smaller, mainly US-centric acquisitions Red Arrow has been on a dynamic growth trajectory while establishing a global footprint: US accounts for 67% 1) of Red Arrow s global revenues [external revenues, in EUR m] 278 CAGR +89% 202 95 124 14 38 2010 2011 2012 2013 2014 LTM 9M 2015 Inorganic revenue contribution Organic revenue development October 1) US 15, share 2015 in the period 9M 2015 Page 20
Media investments Cash investments 1 2 3 4 At a Glance We benefit from a successful twofold cash & media investment strategy M&A activity 2012-15 EUR 27m EUR 57m EUR 122m EUR 509m 2012 2013 2014 2015+ YE: 11 (#) YE: 21 (#) YE: 27 (#) YE: 30 (#) 1) Note: M&A spend based on net purchase price and earn-out payments as well as bond redemption (etraveli). Media October 15, 2015 Page 21 investments partially with minor cash contribution; figures shown represent cumulative number of deals at year-end 1) As of September 30, 2015
1 2 3 4 At a Glance M&A activities since 2010 with a strong financial track record M&A spend >EUR 700m since 2010 External revenues 2015E vs. LTM at entry (EUR m) >50% External EBITDA 2015E vs. LTM at entry (EUR m) Weighted age of our portfolio 1) ~1.4 years >2x Note: Based on M&A transactions 2010-2015 across all segments. M&A spend based on net purchase price and earn-out October payments 15, 2015 as well as bond redemption (etraveli). 1) Age of assets within our portfolio since acquisition, weighted with Page 22 invested capital per asset respectively
1 2 3 4 At a Glance We create substantial value through market stimulation and elimination of media costs by leveraging idle TV ad inventory [illustrative indexed data, VERIVOX example] Pro-forma LTM EBITDA at acquisition Market share gains through TV ad leverage Marketing cost synergies Expected proforma acquisition EBITDA 10.0x Implied EV/EBITDA acquisition multiple October Note: Illustrative 15, 2015 and simplified value creation mechanism Page 23
1 2 3 4 At a Glance Our new 2018 financial targets are largely based on organic revenue growth assumptions 2012-18 revenue growth target increase (at Oct 2015 CMD) [in EUR m] 1,850 CMD 2018 target increase Initial CMD 2018 target 1,200 +600 +850 New targeted Group rec. EBITDA growth 2012-2018: EUR 350m 375 +75 300 Broadcasting German-speaking >30% 600 100 275 +175 Digital & Adjacent Content Production 15-20% & Global Sales subject to mix 10% 1,000 Segment rec. EBITDA margin profile 2018E October Continuing 15, 2015 operations Page 24
1 2 3 4 At a Glance We confirmed our financial policies and M&A strategy Financial leverage target range 1) 1.5-2.5x Dividend pay-out ratio 2) 80-90% Acquisition strategy smaller/larger bolt-on and media investments Maintaining a solid financial profile is a key element of our growth strategy October Continuing 15, 2015 operations 1) Net debt/ltm recurring EBITDA 2) Based on underlying net income Page 25
1 2 3 4 At a Glance We are delivering above-average total shareholder return Total shareholder return [indexed] 600 500 EPS growth and contribution ProSiebenSat.1 +12.2% 400 300 US peer group +7.3% +3.6% 200 100 Northern European peer group +4.2% 0 2004 2006 2008 2010 2012 2014 ProSiebenSat.1 Northern European peers US peers EPS CAGR based on operating/financial result EPS CAGR based on share-buybacks October Source: 15, Bloomberg 2015 (TSR 12/2004-09/2015), EPS ProSiebenSat.1 (2004: EUR 0.62 (211.0m shares), 2014: EUR 1.96 (213.3m shares); Page 26 EPS peer group CAGR 2004-2014 market-cap weighted; Northern European peer group market including ITV, M6, MTG, RTL Group, TF1; US peer group including 21st Century Fox, CBS, Discovery Communications, Time Warner, Viacom, Walt Disney
1 2 3 4 At a Glance based on our steady growth and attractive dividends Growth Solid growth in core TV market & dynamic growth in attractive digital markets Leader in both TV and Digital Digital growth opportunities Unique and successful business model + Dividend Solid financing structure Strong operating free cash flow Cash-equivalent promotional power of TV stations 80-90% dividend pay out ratio Dividends to grow in line with profits 2018 target: +10% revenue CAGR High single-digit underlying net income CAGR October Continuing 15, 2015 operations. 2018 Group revenues growth target vs. 2012. Page 27
Broadcasting German-speaking TV Operations October 15, 2015 Page 28
1 2 3 4 Broadcasting German-speaking / TV Operations The German TV market remains strong TV viewing expected to remain stable in the coming years High quality content typically available on FTA TV Lower Pay TV penetration, limited willingness to pay Online video consumption incremental to TV viewing Studio contracts with supporting rights (incl. holdbacks) Windowing and preference for German language protect FTA TV and drive reach as well as monetization October 15, 2015 Page 29
1 2 3 4 Broadcasting German-speaking / TV Operations Best 9 months ratings performance in the last ten years Audience share (A14-49) [9M, in %] 29.5 28.3 27.9 27.9 28.6 28.6 28.6 27.7 27.6 28.4 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 Basis: 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. Page 30
1 2 3 4 Broadcasting German-speaking / TV Operations Channel portfolio: We have broadened our positioning Broaden core channels Increase female share Become younger Increase relevance 10.9% 9.4% 5.3% Grow small channels Focus on female Strengthen elder female Become broader 1.4% 1.4% 1.1% 9M 2015 audience shares 1) 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 Page 31
1 2 3 4 Broadcasting German-speaking / TV Operations with increasing lead over key competitor Audience share Audience share Delta. [9M, in %] +1.9%pts [9M, in %] [9M, in %] 27.6 28.4 29.5 26.4-1.9%pts 24.6 24.5 Δ 3.8 Δ 5.0%pts Δ 1.2 2013 2014 2015 2013 2014 2015 2013 2014 2015 vs. Basis: All German TV households (Germany + EU), A 14-49 years, Mon-Sun, full day 3-3h, SAT.1 Gold since Jan. 17, 2013, ProSieben MAXX since Sept. 3, 2013; RTL Mediengruppe w/o RTL II. Source: AGF in cooperation with GfK/TV Scope/P7S1 TV Deutschland. Page 32
1 2 3 4 Broadcasting German-speaking / TV Operations New Swiss channel Puls 8 successfully launched in Oct 2015 Complementing our existing channel portfolio with good ad market demand in key target group 1) Official launch on October 8, 2015 Leveraging Swiss rights for high quality US license & German fiction content Distribution in 2.7m Swiss households through key players UPC, Swisscom, Swissdigital, etc. Great first month Ø 1.0% Ø 1.3% SoV in A15-49 SoV in key target group 1) to be continued! 1) A 20-49 purchase decision makers. Basis: October 8 to October 31, 2015 (launch October 8), D-CH, A 15-49 / A 20-49 purchase decision makers, full day 2-2h. Source: Mediapulse TV-Panel. Page 33
1 2 3 4 Broadcasting German-speaking / TV Operations We will continue to launch new small channels Approach Target groups Elderly/best agers Innovative low cost, mono-thematic channels for stable target groups that are attractive for advertisers Families & mainstream middle class Females Less digital Millennials Page 34
1 2 3 4 Broadcasting German-speaking / TV Operations New Disney volume deal fortifies access to top license supply NEW Examples Features Series (sitcoms) Multi-year volume deals with 6 out of 8 US major studios with key TV program secured well beyond 2019 Page 35
1 2 3 4 Broadcasting German-speaking / TV Operations particularly strengthening prime time & female content line-up Examples Feature films Series First programs available in 2016 Upcoming highlights (excerpt) Strategic rationale Strengthen prime time Expand (female) series line-up Efficient content through multi-channel / -slot usage and high repeatability Page 36
1 2 3 4 Broadcasting German-speaking / TV Operations Program rights management to protect our leadership position Continuous optimization of acquisitions with qualifiers to ensure top content inflow holdbacks & windowing terms to protect FTA with exclusivity additional rights (e.g. Pay TV, VoD, A-CH, sublicensing) for add. utilization & marketing Multi-channel & strong digital platforms secure efficient windowing/ monetization Page 37
1 2 3 4 Broadcasting German-speaking / TV Operations Comprehensive program mix of all genres ProSiebenSat.1 Group content break-down [in percent of total hours] Reality News, Magazines & Sports #1 breakfast television (SAT.1 Frühstücksfernsehen) Leading boulevard & lifestyle shows (taff, red!) #1 science show (Galileo) Reality Blockbuster (e.g. Newtopia, Biggest Loser, Rosins Restaurants) Film International Entertainment 13% 12% Deals with major studios Warner, 20 th Century Fox, Disney, Paramount, Constantin, Regency Top casting shows (The Voice Kids, Germany s next topmodel) #1 competition show (Schlag den Raab) Film & Series National Talk of town formats (e.g. Die Ungehorsame, Einstein) Commissioned content Licensed content 14% 2% 2% 7% 50% Series International & Animation Top crime series (Navy CIS, Criminal Minds, Elementary) US Highlight series (24, Flash, Gotham) Leading in sitcoms (Big Bang Theory, Two & a Half Men) Long-running cult series (e.g. Simpsons, Bonanza) Licensed non-fiction sixx, e.g. Jamie Oliver, Der Hundeflüsterer, Die perfekte Hochzeit ProSieben MAXX documentaries, e.g. Ross Kemp, Deadly 60, Duck Dynasty Notes: Jan-Jun 2015: Film International incl. international coproduction; Licensed non-fiction incl. documentaries & International Readymades Page 38
1 2 3 4 Broadcasting German-speaking / TV Operations TV related consumption with increasing potential until 2020 Daily TV and video consumption 1) Online non-tv related (including PayVoD) Online TV related (streaming & catch-up) Classic linear TV Ad target group (A 14-49) Young segment (A 14-29) [Ø daily video viewing in minutes] 217 31 9 259 50 38 177 171 +12% [Ø daily video viewing in minutes] 162 33 12 187 TV related 117-2% 98 TV related 60 29 2015E 2020E 2015E 2020E 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) Basis: All German TV households (Germany + EU) Source: AGF in cooperation with GFK, SOM projection Page 39
1 2 3 4 Broadcasting German-speaking / TV Operations TV panel upgrade to adequately reflect video consumption More TV usage situations Panel extension Live streaming Planned TV panel adaptions Complete coverage of 2nd, 3rd, TV sets Upgrade of single household measurement Inclusion of German-speaking non-eu foreigners (e.g. Turkish population) In web browser In mobile & Smart TV apps (e.g. 7TV, Magine, Zattoo) 2015 2015 01/2016 Q1 2016 H2 2016 +10% +5% Measured reach in young segment (A 14-29) Measured reach in key target group (A 14-49) October Note: SevenOne 29, 2015 Media estimates based on current planning Page 40
1 2 3 4 Broadcasting German-speaking / TV Operations Importance of TV supported by 2nd screen & social media Importance of TV 2 nd screen & social media impact 86% of daily video consumption is TV-related (A 14-49) 50% higher daily TV consumption of multi-screeners 1) 86% say TV will increase or maintain importance 61% recommend ProSieben due to social media activities 2) 94% adjust their living room furniture towards the TV set 38% of social media users watched an herein advertised TV format 1) Compared to mono-screeners (multi Screeners use >1 screen device) 2) Base: followers of P7 social media activities October 29, 2015 Page 41 Sources: Media Activity Guide 2015 (SevenOne, Forsa); Screen Life 2014 (Screenforce); Harris Interactive SocialLife 2014
1 2 3 4 Broadcasting German-speaking / TV Operations Online/mobile usage is driving reach of TV related content Content reach: P7 linear TV + online/mobile Example [views in m] season 10 (2015) Linear TV 1) 56.9 Owned & operated online + + + Online live streaming 2) 1.0 Full episode catch-up 2) 17.7 Short clips 2) 12.4 Total reach 88.0 +55% vs. TV only 1) Basis: A 14-49, TV contacts with >1 min of viewing 2) Channel websites + 7TV app (live-streaming w/o 7TV app) in period Feb. 12, 2015 Oct. 4, 2015 Source: AGF in cooperation with GfK/TV Scope/P7S1 TV Deutschland Page 42
1 2 3 4 Broadcasting German-speaking / TV Operations Digitally enhanced viewer experience to drive reach Examples 2nd screen/digital entertainment Social media Channel websites Increase engagement through live streaming, periodic news feeds, web-only events & interactivity Make TV content viral & snackable (e.g. <120s teaser clips for mobile) Drive additional monetization Gain actionable customer insights Orchestration of platforms drives reach Leverage social talk to create must see-appeal of formats Steer traffic/reach towards FTA and 2nd screen offerings Benefit from user generated content to increase buzz Page 43
1 2 3 4 Broadcasting German-speaking / TV Operations Low penetration of alternative offerings supporting linear TV in Germany Pay TV penetration 1) 20% 85% 53% 86-96% Monthly spend per Pay TV household 2) USD 25 USD 95 USD 96 USD 33* Share of time shifted usage (vs. live TV) 3) 2% 11% 14% 5-7% SVoD penetration 4) 7% 45% 22% 32-69% Connected TV penetration 5) 32% 30% 41% 31-43% Daily online video usage 6) 21% 32% 33% 26-33% Share of broadband connections >15 Mbps 7) 14% 22% 24% 25-35% Low penetration of pay offerings and alternative video technologies strengthen the position of linear Free-TV in Germany compared to other countries 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 Page 44
1 2 3 4 Broadcasting German-speaking / TV Operations and distinct characteristics of the German TV market Ad break intensity Channel fragmentation Content quality in Free-TV Language Studio contracts Windowing Low intensity highly regulated (max. 12 min/h) Less fragmentation strong lighthouse channels >50 high/good quality channels in FTA TV with top US & sport content Dubbed version preferred FTA TV with strong negotiation position with supporting rights (incl. holdbacks) FTA TV widely protected vs. VoD High intensity no ad break regulations (15-20 min/h) High fragmentation premium TV package incl. >300 channels High-quality & top sport content not in basic TV service Pay TV a Must Have English language preferred Broad syndication model Parallel windowing of top content Distinct characteristics of the German TV market secure dominant position of Free-TV compared to the US Page 45
1 2 3 4 Broadcasting German-speaking / TV Operations In the US, attractive TV channels for young target group missing Positioning age & gender: Full day, Ø 2014, top channels US [in %; size of bubbles = Ø share % adults 14-49] 100 Male 75 Old 50 Young 25 0 0 10 20 30 40 50 60 70 80 90 100 Female Note: Sample comprises of top broadcasting and cable networks Source: AGF/GfK Page 46
1 2 3 4 Broadcasting German-speaking / TV Operations Germany especially P7S1 has attractive TV channels for the young target group Positioning age & gender: Full day, Ø 2014, top channels Germany [in %; size of bubbles = Ø share % adults 14-49] 100 Male 75 Old 50 Young 25 0 0 10 20 30 40 50 60 70 80 90 100 Female Source: AGF/GfK Page 47
1 2 3 4 Broadcasting German-speaking / TV Operations TV is by far the leading medium Monthly net reach Monthly net reach & usage duration 100% Private TV Total TV Internet 50% 0 20 40 60 80 100 120 Usage (hrs/month) Basis: TV viewers 3+; Internet users 2+; March 2015 Source: AGF in cooperation with GfK/TV Scope/Nielsen Netview/B4P/SevenOne estimates Page 48
1 2 3 4 Broadcasting German-speaking / TV Operations Strong TV viewing in Germany despite high YouTube penetration Ø viewing time 2015 [indexed] 100 73 65x 69% Watch YT at least once a month 1) 14+ 14-49 1.5 2.2 TV has by far the highest daily usage 1) A14-49; Source: SevenOne Media, Forsa 2015 Basis: n=3.032; Total TV incl. live streaming, recorded viewing and catch up Source: SevenOne Media Online Video Usage Study 2015, Media Activity Guide 2015, SevenOne Media/forsa Page 49
1 2 3 4 Broadcasting German-speaking / TV Operations YouTube with much lower reach and ad effectiveness Ø Daily YouTube reach by time category 1) Ad comparison: Aided ad awareness Adults 14+ [in %] 50 40 For reach in TV a viewer only counts with more than 1 min of viewing time Index 500 400 TV ads are 2) +132 % more entertaining 30 20 300 +88% more sales stimulating 10 0 up to 1 min 1-2 min 2-3 min 3-4 min 200 100 Without contact InPage InStream TV +75% more credible 1) Basis: Total reach adults 14+ in May 2015; Source: Double Play data/media Activity Guide; own calculations/sevenone Media/Media Strategy & Analytics 2) BfP2014 II/MDS/SevenOne Media. Basis: n=200 persons 14-64 yrs; 4 campaigns per media; source: Eyesquare/SevenOne Media/Advertising Research Page 50
1 2 3 4 Broadcasting German-speaking / TV Operations Millennials media usage strongly shifts to TV after career start Millennials (aged 14-34): Ø daily TV, online & online video usage [in min] 150 139 148 TV -25% 112 +33% 100 81 +38% 103-4% 99 Online 58 50-28% 42-45% 23 Online video 0 Pupils Students/apprentices Young professionals Pupils: 14-19 yrs., students, pupils; students/apprentices: 20-34 yrs., students, apprentices, young professionals: 20-34 years, working part time or full time Source: TV: AGF TV Scope / Online: Media Activity Guide 2015 SevenOne Media/forsa Page 51
Broadcasting German-speaking Ad Market Page 52
1 2 3 4 Broadcasting German-speaking / Ad Market Positive development 9M 2015 9M German net TV ad market growth in line with full year expectation of 2-3% German-speaking TV advertising revenue growth of 3.9% y-o-y with Q3 accelerated growth of 5.2% y-o-y P7S1 gained advertising share in Q3. This trend is expected to continue in Q4 Continued increase of TV share in media mix 1 Continued positive net pricing development October 1) Source: 15, 2015 Nielsen; gross figures excluding YouTube and Facebook. Page 53
1 2 3 4 Broadcasting German-speaking / Ad Market German TV ad market benefits from sound economic conditions Net TV ad market, private consumption, GDP in Germany [change in %] 5.0 4.0 3.0 2.0 1.0 0.0 4.0 2.6 2.7 2.2 1.9 1.4 1.9 1.7 1.6 0.4 0.3 2012 2013 2014 2015 E 2-3* Net TV ad market Ø growth 2012-2014: +2.5% (*2015E: P7S1 estimate) Private consumption Ø growth 2012-2014: +2.1% GDP Ø growth 2012-2014: +0.8% October TV & 15, private 2015 consumption: in current prices; GDP: price adjusted, chain-linked Page 54 Source: Net TV ad market: Magna Global (December, 2015); 2012-2014 Destatis, ifo Economic forecast 2015 (December 2015)
1 2 3 4 Broadcasting German-speaking / Ad Market and German TV growth accelerates, yet still catch-up potential Net TV advertising market Germany, UK and US [indexed] 125 120 115 110 105 100 95 90 +0.7% +1.4% +2.2% +4.0% 2010 2011 2012 2013 2014 2015E UK Germany US CAGR 2010-14: +2.1% +3.3% +3.3% October Source: 15, 2015 Magna Global (December, 2015), indexed; TV incl. Multichannel/Pay TV Page 55
1 2 3 4 Broadcasting German-speaking / Ad Market Limited catch-up risk of German digital ad revenues vs. US Digital share of total net ad revenues 40% 30% 20% 10% 2010 2011 2012 2013 2014 2015E Source: Magna Global (December, 2015), SevenOne Media own estimate Page 56
1 2 3 4 Broadcasting German-speaking / Ad Market German TV ad spendings 9M 2015: 8 out of 10 biggest industries increased budgets Gross TV ad spendings of top 10 TV industries, Germany [9M 2015 vs. 9M 2014; in EURm, % and %pts] in EURm in EURm Share Δ Δ TV in media mix Total 576 9.303 100.0% +6.6% +1.4%pts Trade & Shipment 132 1.296 13.9% +11.4% +2.2%pts Food 42 1.229 13.2% +3.6% -1.9%pts Cosmetics & Toiletries 1 1.064 11.4% +0.1% +3.0%pts Business Services 176 911 9.8% +24.0% +3.1%pts Telecommunication 191 793 8.5% +31.7% +7.5%pts Beverages 38 522 5.6% +7.9% +3.5%pts Motor Vehicles -37 522 5.6% -6.6% -1.4%pts Pharmacy 10 465 5.0% +2.3% -4.6%pts Finance 20 413 4.4% +5.1% +3.4%pts Detergents -19 291 3.1% -6.1% +0.5%pts 9M: Jan-Sep Source: Nielsen Media Research (excl. Media & Publishing and Other Advertising). Page 57
1 2 3 4 Broadcasting German-speaking / Ad Market Strong net CPT development since 2009 Net CPT development [Index: 2007=100] 130 120 Market 110 100 90 80 2007 2008 2009 2010 2011 2012 2013 2014 2015E Basis: All TV-HH (D+EU), TA 1-30; SevenOne Media: SAT.1, ProSieben, kabel eins; IP: RTL, VOX. Source: AGF/GfK, TV Scope, SevenOne Media, Pricing & Media Strategy, own calculations. Page 58
1 2 3 4 Broadcasting German-speaking / Ad Market We increasingly capitalize our audience share gains from new channels Relative share of TV ratings vs. relative share of TV advertising Net share of TV advertising [in %] [in %] 56 55% Share of TV ratings (P7S1 1) vs. RTL 2) ) 52 52% Share of TV advertising (P7S1 1) vs. RTL 2) ) 48 2010 2011 2012 2013 2014 2015 YTD 2012 2013 2014 2015 YTD 1) P7S1: SAT.1, ProSieben, kabeleins, sixx, P7Maxx, SAT.1Gold 2) RTL: RTL, Vox, Super RTL, n-tv, Nitro Basis: 2012-2014: FY; 2015: Sept. YTD Page 59
1 2 3 4 Broadcasting German-speaking / Ad Market TV usage share above print while TV ad share lagging behind TV usage share 1) clearly higher than print while TV advertising share 2) still lagging behind [share of usage, in %] [net share of advertising, in %] 37% +33 %pts -14 %pts 23% 37% 4% TV usage Print usage TV advertising Print advertising 1%pt increase in media mix equals ~EUR 60m net TV ad revenues for P7S1 1) Media usage 2014 (n = 1,501); based on Adults 14+ years; forsa, SevenOne Media 2) Magna Global (December, 2015), Online including search (incl. Google) & other (incl. Facebook) Page 60
1 2 3 4 Broadcasting German-speaking / Ad Market which strongly differs from media mix in other countries Share of advertising: TV vs. print 2014 [in % of total media] PRINT TV 23 37 31 21 53 15 38 40 39 28 19 17 16 12 45 37 20 22 Source: Magna Global (December, 2015), TV incl. Multichannel/Pay TV, Online including search & other Page 61
1 2 3 4 Broadcasting German-speaking / Ad Market TV is the most effective and efficient medium Highest effectiveness Advertising effectiveness 1) [aided advertising recall, index 100 = without contact] Net CPT ranges 2) [in EUR] Attractive pricing TV 442 2.65 average long-term ROI 50 40 InStream Video 367 15 15 25 InPage / Display 190 10 Print 166 5 0.5 0 100 200 300 400 500 TV Newspapers Magazines Online 1) Eye Square 2012, basis: n = 200, 14-64 years; 4 tested advertising campaigns per medium 2) SevenOne Media own estimate, based on Solon 2015 Page 62
1 2 3 4 Broadcasting German-speaking / Ad Market Brand advertising on TV most cost efficient CPT comparison [A 14-39] [A 40-69] 266 736 210 100 112 100 130 173 TV Magazines Newspapers Instream video TV Magazines Newspapers Instream video Source: AGF, ma Presse 2014, AGOF Internet facts Page 63
1 2 3 4 Broadcasting German-speaking / Ad Market Limited competition for branding budgets only by digital video Digital net ad revenues, by format [in EUR m] Video Social Display Search CAGR 2014-2018: +43.4% +23.9% +3.4% +7.8% 2014: 95% of digital ad revenues not critical for TV Comparison: TV and video ad market [in EUR m] 0.3 bn 4.3bn Other 2014 2015E 2016E 2017E 2018E Video TV incl. FB/YouTube Despite high online ad intensity digital companies still spend 75% on TV Source: Magna Global (December 2015), SevenOne Media own estimate Page 64
1 2 3 4 Broadcasting German-speaking / Ad Market We see an addressable EUR 2.7bn print ad spending potential Gross print ad spendings 2014 1) [in EUR bn] Not directly addressable 2) 2.9 Total: 8.3 2.2 Regional Addressable net print potential (at 50% yield) 2.7 1.1 Regional: TV & digital potential Additional EUR 600m from regional radio and outdoor ad market adressable 3.2 National 1.6 National: Core TV 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 Page 65
1 2 3 4 Broadcasting German-speaking / Ad Market Attack print: We are able to address regional potential of print Levers to address regional potential Short-term Long-term 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) Ban as of January 2016 HbbTV pricing upside potential due to print & individual TV targeting Page 66
1 2 3 4 Broadcasting German-speaking / Ad Market Fast growing HbbTV will allow regionalization and targeting Existing products, HbbTV 1.0 HbbTV penetration Digital overlays on TV signals Red Button TV Spot with regional overlay & microsite Red Button SwitchIn (microsite program layover when switching to P7S1 channel) Red Button CutIn (layover during linear program, testing) Number of connected TV sets in Germany 1) [in m] 30 25 20 Connected TV incl. Hbb TV Hbb TV 2.0 16.2 19.8 22.8 26.0 28.4 29.8 HbbTV 2.0 starting 2016 15 12.4 Linear TV spot replacement/overlay 10 8.2 5 1.1 4.2 0 2011 2012 2013 2014 2015E 2016E 2017E 2018E 2019E 2020E 1) Excluding Digital TV receiver and DVD/Blu-Ray receiver Source: GfK Retail; P7S1 estimates Page 67
1 2 3 4 Broadcasting German-speaking / Ad Market Our products enrich TV with online functionality SwitchIn (on program) Regio Insert (on Spot) USE CASE GEO-TARGETING TARGET GROUP SELECTION FREQUENCY CAPPING 1) Microsite offered to viewer when switching to P7S1 channel (Microsite clickable by Red Button) states, large cities, small towns etc. age, gender individual, fixed maximum per hour Automatic layover over national TV spot for additional regional data shown per target region states, large cities, ZIP codes etc. via TV media planning contact regulation via TV media planning October 1) Frequency 29, 2015 capping channel-based Page 68
1 2 3 4 Broadcasting German-speaking / Ad Market Switch-In product features example of latest XXL format 996 x 560 px Viewable for about 10 sec. when switching to channel Within program (in-house productions) TV screen will be scaled > no TV overlay Fully animated (device-dependent) Clickable Geo-Targeting Frequency Capping Call to Action via RedButton Labeled as display ad Indication for data privacy protection Product has no measurable negative impact on TV reach 1) October 1) At 29, 1% 2015 click rate and an average length of stay of 90 seconds on microsite Page 69
1 2 3 4 Broadcasting German-speaking / Ad Market Regio inserts for regional TV spots within national campaigns Regio Insert (on TV Spot) Microsite (regionalized) Positive Image-Shift through Addressable TV campaign High length of stay Ø 1:32 min on Regio-Microsite Microsite usage increases willingness to buy up to 115% Source: SevenOne Media New Media Research, April 2015 October 29, 2015 Page 70 Microsite Tracking: Teveo interactive
1 2 3 4 Broadcasting German-speaking / Ad Market Overall solid growth potential for German net TV ad market Market drivers Net market growth potential 2018 vs. 2014 [in EUR m] Growth Basic market growth/net price increase 1 ~180 National print cannibalization 2 ~290 Media mix Regional TV advertising Individual TV premium advertising New markets/new segments 3 4 5 ~50 tbd ~50 Shift to digital video -130 Overall growth potential ~440 (CAGR 2-3%) October Estimate 29, 2015 based on Magna Global (December, 2015), SevenOne Media own estimate Page 71
1 2 3 4 Broadcasting German-speaking / Ad Market Sales outlook 2015 1 2 3 4 German net TV advertising market growth of 2-3% P7S1 to grow above market Continued increase of TV share in media mix Net CPTs to further increase due to increased value of reach Page 72
Broadcasting German-speaking Distribution Page 73
1 2 3 4 Broadcasting German-speaking / Distribution Distribution: We maximize the value of our program offering Teaser Windowing Full preview Mobile Reach Monetization Catch up/ archive Live TV HD + + Connected TV Optimized windowing along entire value chain Increased reach through new technologies and devices First time monetization of terrestrial HD distribution (2017) Page 74
1 2 3 4 Broadcasting German-speaking / Distribution New platforms create opportunities beyond incumbents Platforms since 2014 (mobile, apps) Broadcaster Platforms so far complementary, no cord-cutting Aggregators Improved negotiation leverage for P7S1 Telcos MobileTV Potential for additional revenues and/or reduction of distribution costs Page 75
1 2 3 4 Broadcasting German-speaking / Distribution Distribution in Germany historically dominated by large players Satellite Cable operators Playout (Unterföhring) Uplink 19.2 East Cable networks Mobile 2015 HH: 18.2m IPTV 2015 HH: 16.9 m (5.6m HH analog) Terrestrial Terrestrial (DVB-T) IPTV networks Satellite (direct-to-home) Quasi-monopolistic players with stable market shares 2015 HH: 2.3 m 2015 HH: 2.2 m Note: HH = households; DVB-T2 expected to be launched in 2017 Source: Astra TV monitor; Telekom publications; P7S1 own assumptions Page 76
1 2 3 4 Broadcasting German-speaking / Distribution Increasing HD penetration will complement TV ad revenue growth HD FTA subscribers [in m] 2.3 2.8 3.9 4.2 5.1 +0.9m 5.3 +18% y-o-y 6.0 3.2 9.2 HD growth levers 1 2 3 Platforms will grow HD through hard bundling and upselling Analog melt down/digital HH increase ~1m potential HD households Continued technical evolution (HD/UHD screens) push HD take rate Q3 2012 FY 2012 Q3 2013 FY 2013 Q3 2014 FY 2014 Q3 2015 2018E 4 Conversion of HD free users into paying subscribers (focus on satellite) HD penetration 1) 5.8% 7.1% 9.8% 10.6% 12.8% 13.4% 15.0% 23.0% 5 HD push measures initiated by P7S1 to sustain HD growth 1) HD pay penetration based on total TV households in Germany (39.6m) Source: Astra TV Monitor Page 77
1 2 3 4 Broadcasting German-speaking / Distribution Growing mobile reach for linear channels Independent mobile TV aggregators Incumbents mobile streaming products Germany's strongest EPG brand launched live stream >2.5m addressable user base 1) MobileTV Mobile TV app 2) for Telekom s mobile customers, no data volume restrictions 36m addressable customer base Mobile TV app, launch of private broadcasters streams >0.3m addressable user base 1) TV app for all T-Entertain/ IPTV customers, available through WLAN and for mobile customers 2.6m addressable customer base First mobile TV aggregators in Germany >0.4m addressable user base 1) Mobile TV for all Unitymedia TV households 6.5m addressable customer base 1) Average unique users, AGOF figures Q1 2015 2) Contract re-newed in Q1 2015 Note: T-Entertain includes private and business customers Page 78
1 2 3 4 Broadcasting German-speaking / Distribution Exclusive hard bundling deals for maxdome First SVoD hard bundling deal: maxdome as fixed component of Unitymedia s tariffs Available for Horizon, Horizon Go and all connected Unitymedia households Launch March 2015 >20% 1) of all German TV HH addressable Launch 2016 SVoD hard bundling of maxdome with Tele Columbus Available via new Set-Top Box, online app and for all connected Tele Columbus households 1) Total TV households in Germany: 39.6m; addressable households through maxdome bundling deals: 8.8m (Unitymedia: 7.1m; Tele Columbus: 1.7m) upside through recent merger activities: primacom (1.1m households) and pepcom (0.8m households) Page 79
1 2 3 4 Broadcasting German-speaking / Distribution FTA catch-up and Pay TV on Zattoo increase mobile reach Strong customer proposition FTA linear complemented by catch-up for all Zattoo HiQ 1) 0.7m monthly users 2) Launch 11/2015 Pay TV channels first time accessible via mobile aggregator October 1) EUR 15, 1.59 2015 for 1 day; EUR 9.99 for 1 month; EUR 27.99 for 3 months; EUR 99.99 for 12 months; Page 80 2) Source: Zattoo publications
1 2 3 4 Broadcasting German-speaking / Distribution Strong coverage of leading digital entertainment platforms >40% market share 2) 1 st page 1) 1 st page 3) 1 st page 1 st page 3) before Q3/2016 1 st page before Q3/2016 Anywhere, anyplace, any device distribution for full consumer reach 1) Android TV app store available on Smart TVs of Sony; Philips and Sharp 2) Samsung Smart TV market penetration based on IHS market October study 2015 15, 2015 3) Pre-installed on all new devices sold since 2015; additionally integrated within app recommendation area for all TV devices sold Page 81 since 2012
Digital & Adjacent October 29, 2015 Page 82
1 2 3 4 Digital & Adjacent We have leading market positions across all our D&A pillars A Ventures & Commerce B Digital Entertainment C #1 Ventures (M4R/E) Leading German VC investor #1 #1 #1 Top 5 Top 5 #2 #1 Travel vertical New 5) #1 #2 Top 5 New verticals Beauty & Accessories Online Comparison #1 #1 #1 Top 5 Fitness & Wellbeing #1 New 5) #1 #2 Top 3 #1 1) #1 2) #1 AdVoD PayVoD Top Top 3 3) 3 4) Games Adjacent Market position Music, Artist Mgmt., Live, Licensing #4 9M 2015 revenue split 55% (EUR 293.0m) 35% (EUR 185.6m) 10% (EUR 51.0m) October 1) Studio71 29, 2015 is #1 MCN in Germany, together with CDS top 5 globally. 2) Yieldlab is #1 Premium SSP in DACH. 3) SVoD market Page 83 Germany, according to Forsa. 4) Mobile and PC games publishers in Europe, excluding direct publishing by developers, P7S1 estimates. 5) Deals closed in November (Etraveli) and October 2015 (Vitafy; minority investment).
1 2 3 4 Digital & Adjacent which allowed us to grow dynamically since 2010 [in EUR m] External revenues D&A +35% CAGR 484 611 727 172 225 335 2010 1) 2011 1) 2012 2013 2014 9M 2015 LTM October 1) 2010 15, 2015 and 2011 revenues adjusted for 9Live and Pay TV revenues Page 84
1 2 3 4 Digital & Adjacent We have a unique approach to create competitive verticals with M&A use TV media to build brands and leverage our vertical synergies to create market leading businesses We acquire promising assets following a string of pearls approach October 15, 2015 Page 85
1 2 3 4 Digital & Adjacent We acquire promising assets following a String of Pearls strategy Bolt-on acquisitions accelerate our growth in national and international markets Commerce examples 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 Entertainment examples We will continue our String of Pearls strategy of bolt-on acquisitions and opportunistic lighthouse deals to grow our commerce and entertainment business October 15, 2015 Page 86
1 2 3 4 Digital & Adjacent We follow clear investment criteria to select our markets Criteria fit High Medium Low Selection criteria for verticals Travel Beauty & Accessories Online Comparison Entertainment TV works Brand-driven Community-focused Local edge Manageable inventory n/a n/a n/a Synergies with portfolio Structural growth market Attractive margins Manageable disruptive forces October 15, 2015 Page 87
1 2 3 4 Digital & Adjacent / Ventures & Commerce A We acquired a leading European OTA 1) for flights What Etraveli is Why we acquired it 98% 2) We complement our online travel vertical and close the blank spot flights in our customer journey Etraveli enables a profitable, low risk internationalization of Travel based on a cost efficient platform strategy 40 countries 1.6m trips per year ~70m ~1bn bookings 3) revenues 3) EUR gross EUR Building new brand for Etraveli meta business in Germany leveraged by TV October 1) Online 29, Travel 2015 Agency 2) P7S1 stake 3) FY 2014 figures Page 88 Note: Closed in November 2015
1 2 3 4 Digital & Adjacent / Ventures & Commerce A Our vertical approach creates synergies and thus further value Example: Travel vertical Cross-vertical lead gen and traffic push Marketing excellence (CRM, SEO, SEA) Joint WKZ initiatives (ad allowance) Shared services (e.g. HR, Finance, Legal) Cross-unit data management >25% contribution to revenue growth 1) >35% contribution to rec. EBITDA growth 1) 15% contribution to total rec. EBITDA 1) We generate more revenues and cost savings with inter- and intra-vertical synergies compared to standalone businesses October 1) Estimated 15, 2015 for FY 2015, rec. EBITDA w/o TV airtime costs Page 89 Note: Etraveli closed in November 2015
1 2 3 4 Digital & Adjacent / Ventures & Commerce A TV media is our key advantage to grow businesses Case study: Amorelie Average net revenues/day [indexed] 100 Pre-TV +50% in first TV flight 150 First TV flight 102 TV break +120% in second TV flight 225 Second TV flight 189 TV break We utilize our idle TV ad inventory to push businesses TV ads directly increase sales compared to non-tv phases (TV breaks) TV ads increase brand awareness mid-term, substantially leading to higher sales also in TV breaks October 15, 2015 Page 90
1 2 3 4 Digital & Adjacent / Ventures & Commerce A and we have proven significant performance uplifts with our acquisitions Case studies 1) 2014 2013 +125% Rec. EBITDA uplift within 12 months after closing 4.9x 2013 2014 Blended acquisition multiple EV/EBITDA H1 2015 LTM October 1) Year 15, of 2015 majority stake acquisition shown Page 91 Note: Rec. EBITDA w/o TV airtime costs
1 2 3 4 Digital & Adjacent / Ventures & Commerce A We successfully expanded our Commerce portfolio in 2015 M4R/E portfolio Commerce verticals National deals International deals Travel Beauty & Accessories Online Comparison Fitness & Wellbeing Selected assets New Selected assets New New New 7NXT New New New New New New New October Etraveli 15, 2015 closed in November 2015 Page 92
1 2 3 4 Digital & Adjacent / Ventures & Commerce A and will continue to build and grow new commerce verticals Key market dynamics Our strategic priority E-commerce market growing doubledigit globally 1) International platform-driven players entering German market New local digital markets emerging, e.g. for health or food products 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 October 1) Source: 15, 2015 emarketer Page 93
1 2 3 4 Digital & Adjacent / Ventures & Commerce A We further developed our Online Comparison vertical Online Comparison Portals New launches #1 #1 #1 Online car tire price comparison portal NEW NEW Switzerland Top 5 Home entertainment offering by preis24.de NEW October 15, 2015 Page 94
1 2 3 4 Digital & Adjacent / Ventures & Commerce A We explore the convergence of commerce & video with 7NXT Video content: Online coaching courses Example: Health & Wellbeing Commerce model: Subscriptionbased access Our portfolio of online courses Yoga, meditation, nutrition Bodyweight, cross-fit, HIT Sales platform: Enrichment with physical goods Box like a world champion Complete body transformation around health 2nd largest e-retailer for sports & lifestyle nutrition in Germany + Dedicated private labels for 7NXT eco-system New 1) October 1) Minority 29, 2015 investment; deal closed in October 2015 Page 95
1 2 3 4 Digital & Adjacent / Ventures & Commerce A We use an optimized four phase approach to build verticals Example: Phases of Travel vertical M4R/E Test media fit of markets with M4R/E Lead Gen Understand markets with asset-light invests Vertical Build verticals based on phase 1 and 2 learnings International 40 countries Expand most promising verticals internationally Key criteria for vertical selection: Synergies with TV Structural market growth Attractive margins Synergies with existing verticals Low likelihood of disruptive forces October 15, 2015 Page 96
1 2 3 4 Digital & Adjacent / Ventures & Commerce A Initially, we test new markets and verticals with M4R/E What we get from M4R/E deals Rationale +26% # of active deals 9M 2015 vs. PY 1) Equity Exit participation Revenue share Minimum guarantee Monetize our idle ad inventory and stimulate TV ad market Benefit from TV impact with performance-based models Test media fit and learn about potential new markets based on insights shared by assets October 1) Average 15, 2015 of period 9M 2015 vs. average of period 9M 2014 Page 97
1 2 3 4 Digital & Adjacent / Ventures & Commerce A We enter new verticals with asset-light Lead Gen businesses Our Lead Gen approach Rationale Understand market dynamics by investing in Lead Gen Travel Beauty & Accessories Online Comparison New verticals Avoid high risk thanks to high-margin businesses without inventory cost Use Lead Gen as conversion driver for new verticals October 15, 2015 Page 98
1 2 3 4 Digital & Adjacent / Ventures & Commerce A For new verticals, we target brand-driven (niche) segments Segment selection criteria Growth markets with local edge, that are fragmented/difficult to enter for global digital players Our TV assets can be successfully leveraged, providing a strong competitive position Revenue potential of >EUR 100m (per vertical) and double-digit rec. EBITDA margin possible or cash contribution from working capital Significant cluster synergies and potential for exclusive brands High average basket size Availability of complementary partners to mitigate cash/inventory risk Physical goods cluster Established Beauty & Accessories In preparation Home & Living Fashion & Lifestyle October 15, 2015 Page 99
1 2 3 4 Digital & Adjacent / Ventures & Commerce A We then develop verticals following our digital playbook Premium TV media to drive awareness and sales Marketing & data knowledge to optimize SEO/SEA and CRM Distribution capabilities with existing commerce platforms Local operational launch pad to support with HR, legal and finance Intervertical synergies with our existing commerce verticals Digital transformation expertise proven by current portfolio Leadership by an experienced strategy team and operational experts Our digital playbook We secure majorities in attractive local niche markets around communities, make these verticals big with our playbook and consolidate the market with bolt-on M&A October 15, 2015 Page 100
1 2 3 4 Digital & Adjacent / Ventures & Commerce A International: We leverage our Media Alliance to export verticals European Media Alliance Strategic rationale Scandi., CEE Media Alliance and strategic partner Next partner to join Access media of leading European broadcasters Spain New New UK Benelux & Finland France New Italy Poland Greece, Rom., Serb., Sl. Turkey >250m households reach Increase deal flow among media partners Offer Pan European deals to US/international imports October 15, 2015 Page 101
1 2 3 4 Digital & Adjacent / Digital Entertainment B In online video, we cover the whole value chain in Germany Content creation Aggregation Distribution Monetization AdVoD.de.de New New New MCN New New PayVoD 19bn video views in 9M 2015 1) October 1) Video 29, 2015 views of P7S1 AdVoD platforms and mandates, incl. CDS (pro forma, deal closed Q3 2015) Page 102
1 2 3 4 Digital & Adjacent / Digital Entertainment B We maintain the #1 position in a growth market Solid 9M growth in premium video ad market to be further boosted in the future Nielsen in-stream video ad market 1 [in EURm, gross revenues] ProSiebenSat.1 #1 in premium video ad market 1 262 +22% 319 9M 2014 9M 2015 Ongoing increase of video ads on smartphones and tablets Continued shift from classic display to video ads P7S1 market share Premium video ad market 2) 43% Total video ad market 3) 16% Growth of programmatic buying for online video 1) Source: Nielsen Media Research; German gross instream video ad market without Google / YouTube, Amazon, Facebook, October 29, 2015 Page 103 longtail ad networks (Smartclip, etc. 2) Gross market: Nielsen Media Research (excl. YouTube/Facebook), 9M 2015 3) Net market: P7S1 estimate (incl. YouTube/Facebook), 9M2015
1 2 3 4 Digital & Adjacent / Digital Entertainment B while we are further growing our total video views P7S1 total video views Germany 1) [in bn] 2.9 +43% 4.1 +15bn Collective Digital Studio 2) Mandate Mandate Mandate 9M 2014 9M 2015 October 1) Video 29, 2015 Views of P7S1 AdVoD platforms and mandates; source: P7S1 tracking. 2) Pro-forma YTD figures Page 104
1 2 3 4 Digital & Adjacent / Digital Entertainment B We are now a Top 5 global MCN with a premium market position Premium market position with highest reach per channel 1) GLOBAL >2.5bn monthly VV >300m subscribers 1,300 channels High (>1bn) Total reach p.m. Low (<1bn) Low (<0.5m) Global aggregator MCN Niche/local aggregator MCN Avg. reach per channel p.m. Global premium MCN Niche/local premium MCN High (>0.5m) 1,300 Channels >50,000 Channels >15,000 Channels >30,000 Channels >50,000 Channels 0m 1m 2m Ø 1.8m VV/channel October 1) Average 29, 2015 VV/Channel calculations based on numbers from SocialBlade, for Studio71 out of own CMS, for Maker from Page 105 company website, own calculations
1 2 3 4 Digital & Adjacent / Digital Entertainment B We build our own Ad Tech stack to broaden our AdVoD business Demand Side Platform Exchange/ Marketplace Supply Side Platform Ad server Sales house Publisher + mandates Data Management Platform Virtual Minds and Smartstream are our nucleus for a European alternative in programmatic to broaden our AdVoD business October Note: 29, Active 2015 Agent, Yieldlab and Adition are subsidiaries of Virtual Minds; Page 106 The Adex is a minority investment of Virtual Minds
1 2 3 4 Digital & Adjacent / Digital Entertainment B In SVoD we secure our national top 3 position Investments in binge and exclusive content New distribution partnerships +95% SVoD subscribers 1) +87% Total video views 2) +44% Total user base 3) Top binge series 2016 Top exclusive series 2015 October 1) End 29, of 2015 period Q3 2015 vs. end of period Q3 2014 2) 9M 2015 vs. 9M 2014 3) Ø of period 9M 2015 vs Ø of period 9M 2014 Page 107
1 2 3 4 Digital & Adjacent / Digital Entertainment B with the German SVoD market still underpenetrated German penetration comparably low SVoD TV household penetration [in %] but several new players 3) entered the market 2006 market players as notable growth is to come until 2018 SVoD TV household penetration 5) [in %] 45 1) +47% 22 1) 2015 7 2) 7 2) 2015 CAGR 25 4) 2018E October 1) SVoD 29, 2015 TV household penetration; Nielsen Total Audience Report Q2 2015, Ofcom CMR UK Q1 2015 Page 108 2) P7S1 analysis, 08/2015, based on Goldmedia, GfK, forsa, PWC, IHS Screen Digest, Ampere Research 3) SVoD 4) P7S1 analysis; 2015 EoY estimates 5) based on 38.9m TV households in Germany
1 2 3 4 Digital & Adjacent / Digital Entertainment B German PayVoD market with positive growth outlook maxdome will prevail as key PayVoD player Market size SVoD [in EUR m] Market size TVoD/EST [in EUR m] +45% 575 187 137 +25% 265 2015E 2018E 2015E 2018E Key players Key players October Source: 29, 2015 P7S1 analysis based on Goldmedia, GfK, forsa, PWC, IHS Screen Digest, Ampere Research Page 109
1 2 3 4 Digital & Adjacent / Digital Entertainment B as the digitization of home video in Germany accelerates Digital PayVoD will surpass physical video in Germany by 2019 Market size: Total home video market in Germany [in EUR m] 1,800 1,825 1,850 1,875 1,925 1,950 18% 25% 34% 45% 57% 66% Digital PayVoD 82% 75% 66% 55% 43% 34% Physical video 2015E 2016E 2017E 2018E 2019E 2020E October Source: 29, 2015 P7S1 analysis based on Goldmedia, GfK, forsa, PWC, IHS Screen Digest, Ampere Research Page 110
1 2 3 4 Digital & Adjacent / Digital Entertainment B maxdome secured landmark deals with traditional distributors All-in-one Set-Top-Box solution for linear TV & leading SVoD service maxdome exclusive and fully integrated SVoD service All-in-one Set-Top-Box solution for linear TV & leading SVoD service maxdome exclusive and fully integrated SVoD service 7.1m potential households 1.7m potential households 1) October 1) Additional 29, 2015 potential upside through recent Tele Columbus acquisitions of primacom (+1.1m households) and pepcom Page 111 (+0.8m)
1 2 3 4 Digital & Adjacent / Digital Entertainment B maxdome s strategy is primarily focused on driving SVoD Strategic focus Core: SVoD Upsell: TVoD/EST PRODUCT Bread & Butter Core of user experience and product feature upgrades Sharpen value proposition and drive upsell into SVoD user base CONTENT Key ingredient Focus on binge viewing for top US and exclusive series and secure top movies Ensure 100% coverage of studio output deals MARKETING Traffic driver Tap new marketing channels Leverage strong studio relationships for joint effort to push top-tier titles DISTRIBUTION Accelerator Focus on distribution partnerships Push service onto new platforms and tap new distribution channels October 29, 2015 Page 112
1 2 3 4 Digital & Adjacent / Adjacent C We have built an ecosystem around music in Adjacent Live events Ticketing Music label Marketing Our TV reach and marketing competence is our key benefit to build ecosystems Cooperation labels Artist management October 29, 2015 Page 113
1 2 3 4 Digital & Adjacent / Adjacent C Sports will be our next ecosystem and we already started it Sports management, events and ticketing TV/Rights + + Digital Video platforms/products We leverage synergies with our commerce assets around sports, e.g. October Note: Sportdeutschland 29, 2015 is a majority investment, Eversport and 90min are minority investments, and Ultimate Fighting Page 114 Championship (UFC) are acquired rights
Content Production & Global Sales October 15, 2015 Page 115
1 2 3 4 Content Production & Global Sales Continuous improvement in key KPIs 81 vs. 59 / 9M 2014 53% vs. 47% / 9M 2014 800+ vs. 700+ / 9M 2014 200+ Number of returning shows Returning shows rate Shows in the catalogue Territories sold to October Note: 15, Shows 2015 in the catalogue and territories sold to are cumulative 2010 to 9M 2015; Territories include sovereign countries Page 116 and administrative territories; Returning shows with revenues booked in 9M 2015
1 2 3 4 Content Production & Global Sales Drive scale with smart US-centric M&A Bolt-on non-scripted and scripted acquisitions in key markets (US and UK) with top creative talent who fit culturally Deals based on accretive valuations and margins, and long-term/aligned partnership models To the extent possible, drive genre and customer breadth Identify succession plans for key assets in key markets M&A approach: Majority and minority investments with path to control and 5-7 year partnership model; staggered management share sale model to mitigate continuity risk October 15, 2015 Page 117
1 2 3 4 Content Production & Global Sales Red Arrow s portfolio reflects current US content trends REAL REALITY E.g.: Real Men, The Last Alaskans SOCIAL EXPERIMENTS E.g.: Married At First Sight, Seven Year Switch, The Day The Cash Came SCRIPTED E.g.: Bosch, Odd Mom Out, Donny!, Cleverman, Partners in Crime PANEL E.g.: A League Of Their Own, Fake Reaction, Safe Word MILLENIALS E.g.: Ctrl Freaks, My Selfie Life October Source: 15, P7S1 2015 Format Scouting (briefings at MIP, Natpe, RealScreen, etc.) Page 118
1 2 3 4 Content Production & Global Sales catering to a large array of leading US broadcasters Producing for >30 US broadcasters Limited dependency on any single outlet OTHER 0% 5% 10% 15% 20% 25% October 15, 2015 Note: % of total US production revenues; Includes FY 2015 estimates for US-based production companies (Kinetic Content, Page 119 Left Right, Half Yard, Fabrik Entertainment)
1 2 3 4 Content Production & Global Sales Group-wide collaboration enables US rights retention Denmark Denmark Norway 130+ countries, incl. October Note: Sales 15, 2015 include format and ready-mades Page 120