Creating new growth
CMD 2014
TV Operations – Thomas Ebeling
ProSiebenSat.1 Media AG | October 15, 2014
| October 15, 2014
1
Agenda
1
Performance review & achievements
2
Market dynamics
3
TV operations
4
Summary
| October 15, 2014
2
P7S1 has a strong position in the German TV market
Share of viewing
[Audience share, in percent]
Share of advertising
[Gross values, in percent]
30.9
36%
owned
28.4
24.6
100%
owned
44.4
32.3
50%
owned
100%
owned
2014 YTD
2014 YTD
| October 15, 2014
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, 2014.
Source: AGF in cooperation with GfK/TV Scope/ProSiebenSat.1 TV Deutschland Strategy & Operations/SoA: Nielsen Media Research/SevenOne Media, Sales Steering & Market Insights.
3
Growing and outperforming key competitor
Audience shares
[in percent]
P7S1 growing market share…
…and outperforming key competitor
[Audience share in %pts vs. RTL Group]
Lead almost
doubled
+0.5%pts
28.6
+3.8
28.1
+1.8
+2.0
2013 FY
2014 LTM
∆ 2013 FY
| October 15, 2014
Basis: All German TV households (Germany + EU), A 14-49; Mon-Sun, full day 3-3 h; RTL Group w/o RTL II; 2014 LTM: October 1, 2013 – September 30, 2014.
Source: AGF in cooperation with GfK/TV Scope/ProSiebenSat.1 TV Deutschland Strategy & Operations.
∆ 2014 LTM
4
ProSieben with smallest gap ever vs. RTL – SAT.1 with clear
leadership vs. VOX
ProSieben vs. RTL
SAT.1 vs. VOX
Audience shares
[In percent, A 14-49]
Audience shares
[In percent, A 14-49]
16
12
14
10
12
8
10
6
4
8
Q1 2014
Q2 2014
Q3 2014
| October 15, 2014
Basis: All German TV households (Germany + EU), A 14-49 years; Mon-Sun, full day 3-3 h.
Source: AGF in cooperation with GfK/TV Scope/ProSiebenSat.1 TV Deutschland Strategy & Operations.
Q1 2014
Q2 2014
Q3 2014
5
Broad coverage of relevant target groups – complementary to
competition
Target positioning by age and gender
male
young
old
female
| October 15, 2014
Basis: All German TV households (Germany + EU), A 14-49; Mon-Sun, full day 3-3 h, January 1, 2014 – June 30, 2014.
Source: AGF in cooperation with GfK/TV Scope/ProSiebenSat.1 TV Deutschland Strategy & Operations.
6
Our channels hold strong positions in their relevant target
groups
Channel
Relevant
target group [In years]
Audience share in relevant target groups
[2014 YTD, in percent]
F/M 14-39
15.2
9.5
F/M 14-59
5.5
F/M 14-49
F 14-39
F 40-64
M 14-39
2.5
1.1
1.9
| October 15, 2014
Basis: All German TV households (Germany + EU), A 14-49; Mon-Sun, full day 3-3h; 2014 YTD: January 1, 2014 – September 30, 2014.
Source: AGF in cooperation with GfK/TV Scope/ProSiebenSat.1 TV Deutschland Strategy & Operations.
7
Key achievements since Capital Markets Day 2013
1
Expanded lead audience share in Germany (A 14-49)
✔
2
Maintained rating performance in fragmented/digitized market
✔
3
Fixed SAT.1 daytime
✔
4
New channel growth
✔
5
Created outstanding linear content
✔
6
Leading in TV 3.0
✔
| October 15, 2014
8
Agenda
1
Performance review & achievements
2
Market dynamics
3
TV operations
4
Summary
| October 15, 2014
9
TV will remain lead medium, having a tail wind from online/
digital
2
1
Online video market
2 Online video market
• New platforms and technologies drive viewing experience
and offer additional ways of content exploitation
TV/video
TV/video consumption
consumption
• No threat from price arbitrage for German TV driven
through very different TV fundamentals
• TV remains lead medium
in reach and usage
Content
supply
supply
3 Content
• Increased competition for US
content with global OTT
players, however, key
programs remain on FTA
• Online video will grow,
drive total video usage
and capture mobile –
increasing reach of TV
formats
P7S1
• Second screen benefits
first screen
• Better signal qualities and
high resolution screens
enrich TV experience
3
4
4 TV market
• Significant variety of content
via MCN can be leveraged
for new TV formats – low
additional reach versus TV
TV market
• Fragmentation of channels slowing down and relevant set
of TV channels will remain stable
• Only top formats & lighthouse with high ratings
| October 15, 2014
10
1
TV remains the central fire place for German households
TV market trends – P7S1 projection
Outlook

TV and TV-related continues to dominate media
consumption

TV remains the central fire place as the everyday
lean-back medium
78%

New TV screens/hardware make watching TV more
stirring – and people invest into new TVs
8m

Growing VoD market with minimal impact on
linear TV – but replacing DVD market
| October 15, 2014
185
min
196m
TV-related usage1
(0% CAGR 13-18)
Online video viewing1
(+19% CAGR 13-18)
Teenagers do not
expect a decline in 88%
importance of TV1
Prefer watching
in company4
HDTVs sold
in 20132
20
min
New screens make TV for
even more engaging5 58%
EUR VoD market 2014
(+27% vs. PY)3
VoD as percent of 13%
total video market3
11
Source: 1 AGF/GfK Fernsehforschung, SevenOne Media Mediennutzungsstudie, comScore Video Metrix, SOM estimate (TV-related usage = TV viewing time (on big screen) + TV related content (online)); 2 gfu/Bundesverband Technik des
Einzelhandels e.V./ GfK; 3 GfK/Goldmedia forecast 2014; 4 Medienradar 5/2011, mindline media/SevenOne Media, A 14-49; 5 Kartographie der TV-Wohnzimmer 2011 TNS/SevenOne Media; Note: figures in bubbles=2013.
1
Stable TV viewing time expected – online video and TV-related
content will drive total video usage
Average daily usage in Germany – Ad relevant target group A 14-49
[In minutes, before planned panel adaptions]
240
Total video
usage
CAGR
2013-2018
+2%
TV viewing
time
CAGR
2013-2018
-1%
Online video &
TV-related
content
CAGR
2013-2018
+21%
200
160
120
80
40
0
2012
2013
2014E
2015E
2016E
2017E
2018E
P7S1 projection
| October 15, 2014
12
Source: AGF/GfK Fernsehforschung, SevenOne Media Mediennutzungsstudie, comScore Video Metrix, SOM projection. Note: TV viewing time = viewing time on big screen (not incl. TV-related content online).
1
Potential 2015-2018 TV panel adaptations
TV panel extension with target groups
Increased coverage of actual TV viewing
Inclusion of German-speaking
non EU foreigners (e.g. Turkish
population)
All screens:
Live streaming in web browser and with
DVB-T sticks (Q3 2015)
Live streaming in mobile and smart TV apps
(e.g., 7TV, Magine, Zattoo; Q1 2016)
All usage situations in households:
Complete coverage of 2nd, 3rd, … TV sets
Inclusion of second home households
| October 15, 2014
Source: SevenOne Media
13
1
Video remains the preferred medium for young target groups
Average daily usage in Germany – Young target group A 14-29
[In minutes, before planned panel adaptions]
200
160
Total video
usage
CAGR
2013-2018
+2%
TV viewing
time
CAGR
2013-2018
-4%
Online video &
TV-related
content
CAGR
2013-2018
+18%
120
80
40
0
2012
2013
2014E
2015E
2016E
2017E
2018E
P7S1 projection
| October 15, 2014
Source: AGF/GfK Fernsehforschung, SevenOne Media Mediennutzungsstudie, comScore Video Metrix, SOM projection.
14
1
Online video & TV-related content conquers mobile devices…
Daily reach of online videos on mobile devices
[Tablets and smartphones, in percent]
Watched videos on tablets and smartphones
[At least one in a month, in percent]
Tablet
13% of all Germans
watch online videos
on mobile devices
29
40
35
11
A 30-49
5% of tablet
users consume
PayVoD content
10
3
A 14-29
A 50-64
Smartphone
9
5
Clips
Catch-up
9
5
7
Live
stream
Free
movies
| October 15, 2014
Left box – Basis: 14-64y, n=1.139; Source: Media Activity Guide 2014; Right box – Basis: 14-64y, n=829 Smartphone, n=228 Tablet; Source: TNS Convergence Monitor 2014.
5
2
VoD
15
1
…also growing reach of TV formats
Germany’s next Topmodel season 9 vs. 8
Season 8
Season 9
22.4
27.9
+25%
Full episodes
10.3
11.8
+15%
Short clips
10.8
14.4
+33%
Live stream
1.3
1.7
+31%
[In m]
Total video views
| October 15, 2014
16
1
1
Second
screen retains TV viewing
Parallel usage of TV and internet
P7 Connect retention rates 20141
P7S1 conversion rates 20142
[In percent, A 14-49]
[As factor, P7 Connect vs. TV]
[In percent, TV to P7 Connect]
4.4
+177%
75
x1.3
x1.2
100
27
2003
2014
Ø TV
viewing
time
Ø TV
viewing
time
Germany‘s
next Topmodel
The
Voice
| October 15, 2014
Source: Media Activity Guide 2014 (SevenOne Media, Forsa); AGF in cooperation with GfK/TV Scope; Google Analytics.
1 P7 Connect with x.X times longer usage than stand-alone TV viewing time; 2 Up to x.X% of TV viewers triggered to use P7 Connect during the show.
1.7
Germany‘s
next Topmodel
The
Voice
17
1
Market research proofs positive impact of second screen on
first screen
US citizens are increasingly integrating TV viewing and social media
25%
were more aware of TV program due to their social media interactions
15%
enjoyed TV more when social media was involved
11%
watched more Live TV because social media was involved
| October 15, 2014
Source: Nielsen, 2014 (YoY comparison 2012/2013)
18
2
Germany clearly less vulnerable to disruption of linear TV than
US (1/2)
Pay TV
penetration1
Monthly spend per Pay
TV HH2
On-Demand TV
penetration3
US
84%
79
17%
ØUSD
Germany
17%
19
5%
ØEUR
Multi-screen video
penetration4
45%
29%
Connected TV
penetration5
46%
10%
Digital affinity
(e.g., music streaming6)
18%
5%
| October 15, 2014
19
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 2014 4 Video consumption via non-TV set at
least once per month; US: eMarketer; DE: Digitalisierungsbericht 2014 5 Active connected TV sets; US: eMarketer; DE: Digitalisierungsbericht 2014 6 Music streaming revenue share 2014E; US,DE: PWC Global Entertainment Outlook 2014
2
Germany clearly less vulnerable to disruption of linear TV than
US (2/2)
Ad break intensity
Channel fragmentation
Content quality in
Free TV
Power of domestic
content and local hosts
Studio contracts
Language
Illegal viewing
No ad break regulations –
high intensity (15-20 min/h) and frequency
Highly regulated – low intensity (max 12 min/h)
and frequency
Basic TV package incl. >500 channels –
due to diversity of ethnical groups & interests
Less fragmented/strong lighthouse channels
– due to lower social diversity
High-quality & top sport content not in
basic TV service – Pay TV a ‘Must Have’
>50 high/good quality channels in FTA w/ top
US & sport content alongside private channels
Many creative, local authors and formats
Few local ‘Must See’ hosts – licensing of international content and formats on FTA channels
Broad syndication model
FTA biggest, supported by holdbacks
Native language
Dubbed version
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
| October 15, 2014
20
2
Scandinavia with significantly higher affinity towards pay and
digital compared to Germany…
Scandinavia
Pay TV
penetration1
Monthly spend per Pay
TV HH2
88%
ØEUR
42
Germany
17%
ØEUR
19
On-Demand TV
penetration3
23%
5%
Connected TV
penetration4
26%
10%
Digital affinity
(e.g. music streaming5)
>60%
5%
| October 15, 2014
21
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 2014 4 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% )
2
… since Scandinavian TV characteristics also significantly
differ from Germany
Fragmented with respect to total population - strong intl’ and lighthouse channels
Less fragmented/strong lighthouse channels
– due to lower social diversity
Medium quality overall – High-quality
mainly in Primetime
>50 high/good quality channels in FTA w/ top
US & sport content alongside private channels
Power of domestic
content and local hosts
Local hosts very strong, less international
content available on FTA 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
English version
Dubbed version
Commonly used –
especially streaming
Limited due to German language dubbing –
most illegal content only in English
Channel fragmentation
Content quality in
Free TV
Language
Illegal viewing
Less impact through streaming on German ad-driven FTA market compared to Scandinavia
| October 15, 2014
22
2
Strength of FTA limits potential for premium pay bundles
Key
Sports
Events
• Majority of mass market sports events covered by
publics1, RTL and ProSiebenSat.1
• sky only covers premium rights for selected events
(e.g., soccer premier league)
• Majority of Blockbuster movies and top US series
secured by ProSiebenSat.1/RTL
Top US
Content
• Pay TV monetization of US content not yet proven –
sky with very limited coverage
Value proposition
of Pay TV/sky
relatively weaker
in Germany –
• Ad-based monetization for studios more important
than Pay TV model in Germany
especially for
• German viewers prefer dubbed version
mass market
Local
• Limited number of local stars
Content
| October 15, 2014
1 Coverage regulated by State Broadcast Treats.
23
3
YouTube’s monthly net reach in young target group on TV
channel level…
Monthly net reach in target group A 14-29
[In m]
10.5
10.4
10.2
9.6
9.4
9.3
7.6
5.1
3.6
| October 15, 2014
Basis: A 14-29 years; Mon-Sun, full day 3-3 h; May 2014.
Source: Double Play dataset, own calculations, AGF/GfK TV Scope.
24
3
1
…but
high TV consumption of YouTube heavy users leads to
very low additional reach
TV viewing time of YouTube heavy user1
[Viewing time in minutes per day]
YouTube adds only 4% net reach to ProSieben
[Net reach per month in m; A 14-29]
173
180
A 14-49
YouTube heavy
user
10.4
+4.0%
10.8
120
A 14-29
| October 15, 2014
1 YouTube heavy user representing 80% of YouTube consumption
Basis: A 14-29 years & YouTube heavy user; Mon-Sun, full day 3-3 h; May 2014 Source: Double Play dataset, own calculation, AGF GfK TV Scope
&
25
4
Fragmentation of market slowing down – we expect a relatively
stable relevant set
Broadcast stations received and in 'Relevant Set'
77
73
85
80
63
52
41
5
6
6
6
6
6
7
2004 2006 2008 2010 2012 2014
2018E
Ø number of receivable channels
Ø number of Relevant Set channels (>80% of TV viewing time)
| October 15, 2014
Basis: All TV households Germany [D+EU]/Adults 14-49 years 'Relevant Set': channels which account for least 80% of TV usage time.
Source: AGF/GfK Fernsehforschung/TV Scope, SPSS/GfK, ProSiebenSAT1 TV Deutschland GmbH/Audience Research, 2018 P7S1 estimate.
26
Agenda
1
Performance review & achievements
2
Market dynamics
3
TV operations
4
Summary
| October 15, 2014
27
Key strategies

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, serial quality TV and
new innovative low-cost concepts

Lead digital innovations to drive viewer loyalty and TV impact
| October 15, 2014
28
Ten actions for successful strategy execution
1
Shape fragmentation actively by growing small channels to critical share and launching new ones
2
Mid-term programming strategy for each channel to capture broader and female audiences
3
Create outstanding linear content to maintain leading position
4
Balance lighthouse content, serial quality TV and low-cost innovative formats
5
Secure access to US content at acceptable terms
6
Secure distribution everywhere at lowest cost/maximize distribution income
7
Maximize content utilization
8
Execute on value based production and other cost efficiency measures
9
Digitally enhance viewer experience by creating a viable second screen experience
10 Best people, diverse teams, best creative process
| October 15, 2014
29
Finance lighthouses through higher share of serial quality TV
and low cost innovative formats
Lighthouse
Serial quality TV
Non-serial quality TV
Low cost
innovative formats
| October 15, 2014
Grid share
Higher share in grid
(2018 vs. 2014)
Lower share in grid
Drive share of serial blockbuster formats
Balance lighthouse investments
Decrease number of expensive one-offs
Introduce on more slots
30
Establish competitive but sustainable program mix with a
broad channel portfolio
Establish competitive but
sustainable program mix
Licensing (US/international)
(incl. documentary/ready-mades)
40-60%
Local lighthouse formats
(incl. fiction)
10-20%
Broad channel portfolio
One tier 1 channel for young viewers
i.e., ProSieben
One tier 1 channel for families
i.e., SAT.1
Serial quality formats
such as quiz and game shows
10-20%
One tier 2 channel
Content exchange/re-use
management
5-15%
Local low cost
innovative formats
5-15%
| October 15, 2014
i.e., kabel eins
4-6 well targeted niche channels
e.g., ProSieben MAXX, sixx, SAT.1 Gold
31
For top US content, multi-year output deals secured with US
major and leading independent studios
Examples
| October 15, 2014
32
Content exchange management means re-using existing
content for new formats
Content sources
New formats
Content Exchange
Management
+ other existing formats
| October 15, 2014
Content exchange management for “K11” & “Niedrig und Kuhnt” planned.
+ other new formats
33
Digitally enhance viewer experience by creating a viable
second screen experience
Key objectives of our second screen strategy
✔
Increase TV reach
Enhance mobile monetization
Foster digital profile of our TV channels
| October 15, 2014
✔
✔
34
Show case “7 Connect”
Live stream
Polling
Twitter
Social
News
| October 15, 2014
35
Execute value based production and other cost efficiency
measures
1
Execute on value based production targets
2
Rebalance commissioned portfolio
3
Produce as few as needed inefficient one-offs
4
Minimize high-risk lighthouse investments without payback
5
Increase share of (repeatable) serial quality TV
6
Further optimize programming
7
Maintain stock management
8
Cost efficient big data content sourcing by Content Cloud Management System
9
Push content sales for external clients
10
Use innovative production facilities to produce low cost TV formats
| October 15, 2014
36
Agenda
1
Performance review & achievements
2
Market dynamics
3
TV operations
4
Summary
| October 15, 2014
37
Summary

TV will remain lead medium – TV everywhere is booming

ProSiebenSat.1 with leading full day and prime time audience
shares

ProSiebenSat.1 well positioned to capture all segments of TV
viewers – driven by attractive channels and Blockbuster content

Key strategies in place to further optimize efficiency of program
investments and capture growth opportunities in online/digital
| October 15, 2014
38
Creating new growth
CMD 2014
TV Ad Sales – Thomas Ebeling
ProSiebenSat.1 Media AG | October 15, 2014
| October 15, 2014
39
Agenda
1
Key achievements
2
The advertising power of TV
3
TV market with further significant growth potential
4
TV effectiveness further improved through natural fit with digital ad extensions
| October 15, 2014
40
ProSiebenSat.1 with strong performance in 2014
YTD 2014
YTD 2013
~ +2.5%
~ +1.3%
TV share of advertising market (gross)
44.3%
43.1%
Share of advertising ProSiebenSat.1 (gross)
44.6%
44.2%
EUR 10.92
EUR 10.32
TV ad market growth (net)
Net CPT ProSiebenSat.1 core channels
| October 15, 2014
YTD: (Jan.-Aug.)
Source net TV ad market: SevenOne Media own estimate, Source gross: Nielsen Media Research, Source net CPT: AGF/GfK, TV Scope, own calculation
41
Key achievements of past years
1
Growing net TV ad market
2
Stable to slightly increasing share of advertising
3
P7S1 TV revenues outperforming market
4
Dynamic net price increase in past 5 years
5
Execution focused and innovative sales team with will to win
| October 15, 2014
42
Focus on innovation, customer satisfaction and sales
execution
Innovative ad concepts
Digital TV extension portfolio
Sales execution
360° conception
Brand extension with TVSMILES
Pricing excellence
Sales concepts according to market needs
Extends TV campaigns directly to mobile
Competitive gross price increases
Digital conception
Retail extension with shopkick
Targeting new customers
Customized concepts for TV & Online
Offers customers rewards for visiting stores
New channels expand target groups
Branded Entertainment
marktguru in Austria
TV/Online sales tandems
Integration between editorial contents
Digital freesheets
360° sales approach
Thematic ad breaks
HbbTV
Great research
Special packaging & exclusive positioning
Brand engagement on first screen
High-impact research projects
Theme weeks/ days
TV-Sync
Tailor made programming for sponsoring
Optimized search advertising
| October 15, 2014
Source: SevenOne Media
43
Agenda
1
Key achievements
2
The advertising power of TV
3
TV market with further significant growth potential
4
TV effectiveness further improved through natural fit with digital ad extensions
| October 15, 2014
44
The advertising power of TV
1
Combination of highest and fastest reach and strongest ad impact makes TV the most effective and
efficient medium with highest ROI
2
Mass reach becomes increasingly important in fragmented media landscape
3
TV remains the mass medium with increasing relative reach
• Massive reach decline of print
• Complex and fragmented digital media landscape
4
Therefore solid price increase potential despite possible slight net reach reduction
| October 15, 2014
45
The advertising power of TV
5
YouTube is not able to add incremental reach to TV campaigns because YouTube usage is highly
concentrated on a small group of heavy users.
6
Facebook disappoints as a medium of dialogue with less than 1% of followers showing brandengagement
7
The growing use of second screen opens new opportunities for TV advertising with no loss of ad
effectiveness
8
The role of TV in the Customer Journey is to select customers with brand relevance.
• Online search and internet research are directly driven by TV
| October 15, 2014
46
TV the most effective and efficient medium
Highest effectiveness
Attractive pricing
Advertising effectiveness
(Aided advertising recall, index 100=without contact)
Net CPT ranges
(EUR)
50
40
442
TV
367
InStream Video
15
10
190
InPage / Display
25
15
5
0.5
166
Print
0
100
200
300
400
| October 15, 2014
Basis: n=200, 14-64 years; 4 tested advertising campaigns per medium.
Source: Eye Square 2012; SevenOne Media estimate; CPT = Cost per thousand.
500
TV
Newspapers
Magazines
Online
47
TV price competitive in Germany vs. other European
countries
Ø Net-CPT (based on 20 seconds) Adults
Index
160
142
140
111
120
103
100
100
80
63
60
40
20
0
UK
France
Italy
| October 15, 2014
Source: 2013, Nielsen/ Auditel, Infoadex/ Sofres, DDS, ZAW/ AGF GfK, IREP/ Mediametrie
Germany
Spain
48
TV generates high long-term ROIs
Based on
204 analyzed FMCG brands
2.65
Average
long-term ROI
| October 15, 2014
Long-term ROI: ROI after 5 years, ROI = ratio of additional sales revenues / TV ad spend.
Source: GfK / SevenOne Media
65%
of all analyzed brands
long-term ROI >1
43%
analyzed brands with
long-term ROI >2
49
Superior and stable level of TV reach and impact
“Reach Impact Score” adults 14-49 yrs
Change “Reach Impact Score”
Score
250
+26%
+30%
202
198
+20%
200
+10%
157
129
150
113
-10%
90
100
-20%
-30%
50
+2%
0%
20 12
16 8
-40%
-18%
-19%
-31%
0
2008
TV
Radio
2013
Internet
Newspaper
Magazine
Reach Impact Score = net reach (number of media users in %) × staying time (Ø usage duration per media user in minutes)
| October 15, 2014
Based on Adults 14-49 yrs
Source: Media Usage Survey SevenOne Media 2008 / 2013 (SevenOne Media / mindline media)
50
TV dominates media consumption while digital is highly
fragmented
Monthly net reach and usage duration 2014
100%
Net Reach 14+
TV
Total
Private
TV
Internet
Total
50%
Usage Duration 14+
(hours per month)
0
10
20
30
40
50
60
70
| October 15, 2014
Basis: TV viewers 3+; internet users 6+; March 2014.
Source: AGF in cooperation with GfK / TV Scope / Comscore MyMetrix (internet at home & work w/o mobile usage)
80
90
100
110
120
130
140
51
Agenda
1
Key achievements
2
The advertising power of TV
3
TV market with further significant growth potential
4
TV effectiveness further improved through natural fit with digital ad extensions
| October 15, 2014
52
Solid TV ad market growth with higher upsides than risks
Market potential 2018 vs. 2012 [in EURm]
Market base case
1 Net price increases to drive ad intensity
80
170
30
50
Print
2 Print cannibalization – structural effect
3 New channels – expand target groups
4 Regional TV advertising
5 Combined TV/Digital for free sheet market
8 Attack fresh budgets (sales, HR, PR)
9 Increase placement/ new ad concepts
10 Potential shift to Online Video
50
-10
-40
75
30
30
-65
∑ 400
(CAGR 1.7%)
| October 15, 2014
Key risks
50
25
6 Individualized TV targeting based on IP
7 Build new markets (e.g., betting)
Market upside
-25
∑ 125
∑ -75
53
1
US network channels‘ tripled CPT despite viewing share cut in
half − growth potential for Germany
CPT, viewing share Prime Time‚ US-Networks
Index: 1995=100
CPT, viewing share Prime Time‚ Germany
Index: 1995=100
300
300
250
250
200
200
150
150
100
100
50
50
1995
2000
2005
CPT
2010
viewing share
2012
1995
2000
2005
CPT
| October 15, 2014
Basis: Germany (SAT.1, ProSieben, RTL, kabel eins, Vox, RTLII, SUPER RTL, ARD, ZDF) Prime Time based on Adults 14-49 years, USA (ABC, CBS, NBC)
Source: TV Dimensions 2013, AGF in cooperation with GfK
2010
2012
viewing share
54
2
Five levers to address print budgets
Currently
addressable
market
Addressable
through new
measures
•
Structural effect: innovative TV offers
•
New FTA channels: expand target groups
•
Regional TV advertising
•
Combined TV/Online offer for free sheet market (price promotion budgets)
•
Individualized IP based TV targeting
| October 15, 2014
55
2
TV share of total ad market will increase – as relation
between usage and ad spend continues to normalize
Usage vs. net media mix Germany 2014
(in percent)
Net media mix Germany,
2000, 2013, 2014E and 2018E (in percent)
4%
49%
66%
51%
49%
43%
37%
30%
25%
29%
30%
32%
Usage
Net media
mix share
2000
2013
2014E
2018E
TV
Print
1ppt increase in media mix equals
~EUR 60m for P7S1
| October 15, 2014
Source net media mix: ZAW, since 2014 SevenOne Media estimate, excluding direct mail and directories, Online including display (banner and video), excluding search and affiliate
Source: Media usage 2014 (n=1,501) | Based on Adults 14+ yrs | forsa, SevenOne Media
56
2
Lagging TV share in Germany offers large upside potential
Share of advertising: TV vs Print 2013
(as percent of total media)
48,7
45,3
40,0
42,4
38,9
38,5
38,9
31,8
22,6
21,9
19,3
22,4
25,7
20,6
24,5
20,5
25,1
17,6
TV
Print
| October 15, 2014
Source: Zenith Optimedia Advertising Expenditure Forecasts September 2014, harmonized on a near net basis / Total media incl. paid search/ affiliate and online
57
2
~EUR 1.7bn net print spendings addressable for TV
Print & direct mail gross advertising market 2013 (in EURbn)
12.0
Direct mail
27%
5.4
Magazines
Structural
effect
new channels
33%
2.3
0.4
Daily
newspapers
0.4
39%
1.7 net
3.5
Total
(gross)
Not directly addressable1
Price promotion/
free sheets2
Regional
Local
Core TV market
potential
| October 15, 2014
1Including:
direct mail (partly) addressed, Media, classified advertising, B2B, total spendings < EUR 200k, Tobacco, partly commercial advertising in daily newspapers; 2Including: direct mail
not addressed, commercial advertising (daily newspapers): commerce, mail order selling, building trade; Source: Nielsen Media Research (2013) / SOM Market Insights: own calculation
58
2
TV can address key reasons for print bookings
Key reasons for print bookings
Media
planning
Research
General
P7S1 actions
•
•
•
Target group fit
Additional net reach to other media
Yearlong media plan with small budget
•
•
•
Complementary P7S1 TV channels/formats
TV with fastest and highest net reach build-up
TV in short flight with higher net reach
•
Multiple exposure in different media
with better impact
Image transfer from high gloss
magazines and other advertisers
•
Multiple TV exposures increases campaign
recall and sympathy
Image transfer from format or P7S1’s Topic Breaks
for on air “gloss”
Print is permanent and haptic
No existing TV spot
Useful for products in need of
explanation
Sampling possible
•
•
•
•
•
•
•
•
•
| October 15, 2014
•
TV with highest ROI
SevenOne Media will support spot production
New TV advertorial product
TVSmiles TV extension allows for targeted
sampling of products
59
3
Well targeted new channels widen P7S1 customer base
sixx
| October 15, 2014
Source: SevenOne Media
SAT.1 Gold
ProSieben MAXX
60
3
Public broadcasters with EUR 300m net revenues potentially
attractive target for new channels
Structural shares
in % (size of circles = net TV revenues absolute in EURbn)
High hh net income
45,00
40,00
Old
Young
EUR 300m
net revenues
35,00
30,00
25,00
20,00
0
10
20
30
40
Low
50 hh net
income
60
70
80
90
| October 15, 2014
Basis: all TV households in Germany (GER+EU) / A 14+ yrs. (64,96m) / period: 01.01.-31.12.2013 / Mon.-Sun. / 03:00-03:00 h; Indication: x-axis: Adults 14-49 share of A14+: 52.2%;
y-axis: household net income EUR 2,500+ share of A14+: 39.2%; Source: AGF in cooperation with GfK / TV Scope / SevenOne Media / Media Strategy & Analytics
100
61
4
Tapping regional ad budgets of new customer segments by
testing regional ad technology model in selected markets
Reason
why
Status
•
Regional advertising market attractive with EUR 50m market
potential
•
Focus on tapping advertising budget of those new
regional clients currently investing in print
•
Regulatory and political obstacles get in the way of
implementing regional TV advertising via cable distribution
•
Alternatively push of national offers for regional customers
•
Furthermore testing regional ad technology model in selected
markets by driving technology enabled individual targeting
that complies with all data protection requirements
| October 15, 2014
62
5
Combined TV/Digital offer to target large free sheet
budgets
National retailer’s TV
spot with few offers
| October 15, 2014
Example Austria
App might provide
regional leaflets & offers to
user (location based)
63
6
Pilots for individualized targeting with HbbTV split
screen and switch-in product
Red Button Cut-In
Red Button Switch-In
Attractive user potential: 10 million households with HbbTV connected TV sets
• Playout within specific content possible
• Pilot case for individual targeting in preparation
• Strict observation of data protection requirements
| October 15, 2014
64
7
Strong potential for growth with betting customers
Estimated revenue potential private TV ad market
(in EURm)
99
104
Betting
New clients depending on granting of
licences (delayed to 2015)
104
Lottery
Exclusive partnership with GKL
Win new private clients
84
48
Pokerschools
Ongoing legal discussion
28
2013E
2014E
2015E
| October 15, 2014
Source: SevenOne Media estimate
2016E
2017E
2018E
65
8
Enlarging TV ad market by tapping non-media budgets
Type of budget
Platform/ad packages
Sales budgets,
trade marketing
• “Ad allowance”-packages
HR/recruiting
• Employer Branding package
• Recruitment short breaks
PR/Corporate
communication
• TV advertorials
• Corporate short breaks
| October 15, 2014
66
9
AdFactory targets
AdFactory established as the creative marketer of P7S1 to
meet market needs
1
Increase ad impact/de-commoditize TV advertising
2
Strengthen direct relationship with advertisers
3
Secure commitments & accelerate burn-down rate
4
Generate on top customer budgets
5
Attack fresh budgets
6
Develop new markets
7
Create new advertising inventory in addition to 12 minutes legally allowed
| October 15, 2014
67
9
Premium prices for special creations and exclusive positions
Split screen positions
Special thematic ad breaks
• TV commercial uniquely positioned in a
split screen during or close to the program
• Special packaging with perfect fit for
luxurious brands
• Premium pricing: 30-50% surcharge
• Exclusive positioning as short break
• Extra surcharges occur for additional
customization
• Premium pricing: 10-40% surcharge
| October 15, 2014
• Highly exclusive
68
9
On-top budgets through product placement and
branded entertainment
Product placement
Branded entertainment
• Different integration levels during
production
• “Advertisers TV show”, owned media in
free TV
• Digital product placement, a subsequent
integration in postproduction as a technical
solution allowing short term placements
• On top of 12 minutes
• On top of 12 minutes/on-top budgets
• Premium pricing
• On-top-investments
Dauerwerbesendung
| October 15, 2014
69
Agenda
1
Key achievements
2
The advertising power of TV
3
TV market with further significant growth potential
4
TV effectiveness further improved through natural fit with digital ad extensions
| October 15, 2014
70
Digital apps extend sales funnel from TV spot to POS
Branding/Image
Sales Funnel
Awareness
| October 15, 2014
Activation
Leads
Prospects
Sales
71
TVSMILES able to extend TV spot to test drive lead generation
conceptual
Lead to configurator and test drive
| October 15, 2014
72
Traffic generation is the key challenge for offline retailers –
shopkick with proven success
On the couch
In the shopping mall
IN-STORE TRAFFIC
INTENT TO BUY
The new digital
circular/freesheet for
inspiration at home.
The shopping navigator:
individual push
notifications steer users
to store.
In the store
INCREMENTAL
REVENUES
Customers get
rewarded with kicks for
walk-ins and product
scans.
Shopkick with proven success in increasing store traffic & revenues –
50-100% additional revenues within shopkick users for participating US retailers
| October 15, 2014
73
HbbTV usage leads to high brand engagements and
transactions
Intensive usage of “Hyundai”-Microsite
(36,300 clicks)
Promotional space in startbar
| October 15, 2014
Red Button TV spots
Microsite
74
Booming’s TV-Sync improves CPO for Klebefieber
Campaign briefing
• Increase sales in online shop
• Improve CPO
Implementation
TV-Sync optimization of SEA campaign
parallel to TV flight
Success
Orders in online shop improved
CPO with 15%, CPC with 41%
| October 15, 2014
Source: Google AdWords, Booming PIT; CPO: cost per order, CPC: cost per click
Period: 31.07.-10.08.2014, 11.08.-21.08.2014
75
Summary
1
TV ad market with further growth potential – mainly driven by gains from
print and pricing opportunities within a stable ad market
2
P7S1 with strong performance in 2010-2014 –
continued outperforming of TV ad market
3
Innovative ad concepts and stimulation of new markets drive share growth –
new digital TV extension portfolio in development
| October 15, 2014
76
Creating new growth
CMD 2014
Distribution – Conrad Albert
ProSiebenSat.1 Media AG | October 15, 2014
| October 15, 2014
77
Executive Summary
Since Q4 2012 Distribution P&L with positive recurring EBITDA contribution
2018 CMD
target
confirmation
We are ahead of pro rata CMD target for 2014
We will deliver our revenue target of EUR 155m by 2018
with further upside potential
Distribution everywhere, anytime, on any device –
driving reach and revenues for linear and non-linear assets
Distribution
Pay TV monetization growth through fostering existing and new offerings
growth drivers
Technology development creating future products and monetization upsides
| October 15, 2014
78
Key achievements
Consumers’ willingness to pay to translate
into estimated HD revenue CAGR of 15-20%1 to 2018
Channels included in successfully
monetizing SD and HD bundles
Q2 2014 year-on-year distribution revenue growth of
25% with high profitability
1 CAGR 2013-2018
| October 15, 2014
79
Important market trends
Growing willingness to pay –
for technology, quality and
content – enhancing
consumers’ convenience
Content –
platforms keener than ever and
in need of competitive
entertainment offerings
| October 15, 2014
Digitization –
of distribution and OTT delivers
alternatives for consumers
80
Four key strategies
1
Our linear assets everywhere, anytime, on any device
2
Strive for 100% reach of our digital assets on all relevant devices
3
Monetization of technology – HD and future technology growth potential
4
Strengthen and grow our Pay TV business
| October 15, 2014
81
1
Broad distribution already secured
Pay TV
Distribution
channels
Assets
FTA
| October 15, 2014
Note: 7TV being both a distribution channel and digital app asset
82
1
Mobile distribution – future driver of reach and monetization
Own app for live stream, catch-up; marketing
cooperation with major German mobile operator eplus
From day one in mobile TV streaming app magine
Already
H1 2014
~350k
mobile users of our
TV livestream
TV live stream on major German TV streaming app
TV live stream for all T-Entertain customers
| October 15, 2014
83
1
Clear path to grow mobile business
Distribution
Partners
• Win more telecommunication operators as partners
• Expand mobile streaming to more devices, e.g., Smart TVs
Sales
• Offer special promotional/bundled offerings
• Drive deep tariff integration
Outlook – OTT goes mass market1
| October 15, 2014
1 German tablet and smartphone penetration to double by 2018; source: eMarketer, 2013 vs. 2018
84
2
Ability to create reach for our digital assets
Mobile devices
Game consoles
New devices,
dongles, etc.
Devices
Smart TVs
Distribution
channels
4)
3
~90%
of devices –
maxdome
on 1st
page1
| October 15, 2014
Apps
available
on > 95%
devices2
3
maxdome
on >35%
connected
consoles
1 First page placement on Smart TVs of Samsung, LG, Sony, Philips, Panasonic sold in 2014; 2 7TV Apps available from Android: 4.0, iOS: 7.0, Windows Phone 8: WP 8.0;
3 Maxdome (already on PS3/PS4) & My Video app launch in Q3 on Xbox One with a connection Rate > 75%; 4 Amazon fire TV – launch announced for Q4
maxdome
– launch
partner on
top 2 new
devices
85
2
Strive for 100% distribution of our assets
• Reach
anywhere,
anytime
• Availability
on any device
• Create winwin partnerships with
platforms
from launchon
• Leverage big
data
Video
Pay VoD
Mobile
Tablet



Smart TV Consoles Chromecast



before
2016
before
2016
before
2015



before
2015
before
2016
Music





Games


Weather


before
2016
before
2016
Video
Free VoD
Fitness
| October 15, 2014
Note: Deezer – P7S1 minority participation, structured as warrant


before
2016
before
2016
Fire TV
before
2015
Driving
advertising,
transaction and
subscription
revenues
86
3
Steady growth of HD subscribers
HD FTA subscriber growth (m)
Average sequential quarterly
increase of +17%
1.2
Q1
2.3
1.8
Q2
Q3
2012
| October 15, 2014
2.8
Q4
3.3
Q1
3.7
3.9
Q2
Q3
2013
Note: „Subscribers“ refers to paying subscribers as reported by platform partners. Subject to subsequent adjustments if partners revise figures
4.2
Q4
4.8
4.6
Q1
Q2
2014
87
3
Top actions to further grow HD take-up
Product push 1 Free promotional periods: e.g., ‘Christmas in HD’
activities
2 Free HD periods and HD marketing during major sports events
April 2014
Bundling
TV power
Sales cooperations
3
Bundle HD with platform partners and P7S1 assets, e.g., HD+, HD+ replay and maxdome
4
Direct link from our websites to HD subscriptions
5
Integrate banderoles on SD channels to create awareness for HD
6
New HD spots for on air promotion including partner platforms
7
Cooperations with CE industry, e.g., pre-installations on hardware, HD voucher integration
8
Drive joint sales campaigns with distribution partners
| October 15, 2014
88
3
We expect ~40% of technically addressable households to pay
for HD in 2018
German HD subscriber growth 2011-2018
[HH in m, EoP]
ø ~300k
quarterly net
adds +49%
delivered
ø ~240k quarterly
net adds
to meet
+15%
target
21.7
18.9
Households
technically
able to receive
HD TV signal
12.7
0,7
2011
4,8
Q2 2014
9,2
Households
paying for HD
TV
2018E
• Continued double-digit subscriber growth
• Steadiness of revenues supported by low churn
| October 15, 2014
Source: TNS Infratest market research study commissioned by ProSiebenSat1 2013; P7S1 estimates; HH not paying for HD in 2018 composed of HH that consider free HD signal of public
broadcasters sufficient, that are price-sensitive and unwilling to pay, that are late adopters or technically non-sophisticated
89
3
Technological evolution opening new business opportunities
Quality
Devices
Future technologies
>20m
connected
devices
2020
Technology monetization
Smart TVs as
distribution platform
Proven technical
affinity of German
consumers
Reach and
monetization levers
through digital assets
Sources: IHS, P7S1 analysis
| October 15, 2014
5.5-6m
UHD ready
devices
2020
>25%
annual
growth rate
until 2020
FTA technology and
content in development
First mover with
assets on new devices
Thrilling quality – 4x
HD – driving
subscription uptake
Consumer benefit,
triggering reach &
monetization
90
4
Pay TV upside through product and distribution diversification
Existing Pay TV offering
| October 15, 2014
Pay TV growth strategies
Diversification
of distribution
Leverage new distribution ways, e.g., OTT
New offerings
Create new linear and OTT channels, reply to
special target groups and line-extended content of
strong TV shows, e.g., Promi Big Brother
New bundles
Generate additional revenues
with specific bundling approaches
Partnerships
Drive partnerships with content and platform
owners
91
4
New opportunities for outstanding entertainment offerings
Unmet Pay TV consumer needs
Basic Pay TV offering for satellite population
outside Sky
Affordable (single/unbundled) premium
channels
| October 15, 2014
92
Well on track to achieve 2018 CMD revenue growth targets
Achievement by Q2 2014 (LTM)
External revenues
[in EURm]
Key growth levers
• HD subscriber growth
~155
• Pay TV development
linear projection
of CMD target
+100
~ 55
• New distribution opportunities
(any place, time, device)
• Advanced team skills in sales,
product development and marketing
Distribution
2012
H1 2014 (LTM)
Remaining
target
Distribution
2018E
• Strong win-win cooperations with
our partners
Positive earnings contribution
Sources: P7S1 analysis
| October 15, 2014
93
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.
| October 15, 2014
94