ProSiebenSat.1 is one of the most successful media companies. We are diversifying our portfolio around the core business of free TV and have connected TV and digital brands. This enables us to offer content across different media and market products universally. In order to make use of this potential even more consistently, we combine our TV and Digital Entertainment business and have been reporting in three segments since 2018.
Business Activities and Segments
Corporate Profile and Market Position
ProSiebenSat.1 Group is one of the most successful media companies in Europe. Advertising-financed free TV is the Group’s core business. Here, the Group is a leading player on the German TV market. At the same time, the Group is pushing ahead with its digital transformation and diversifying its portfolio. To achieve this, the Company is making use of its wide TV reach and leveraging synergies by linking television with digital entertainment offerings. Already today, ProSiebenSat.1 is Germany’s leading video marketer on the Internet and one of the most successful providers of digital entertainment.
Our aim is to offer viewers and users entertainment on all screens and thus to serve various media usage interests. However, digitalization is not only changing and increasing video usage, but other areas as well. For instance, digital media is also influencing purchasing behavior: consumers are making purchase decisions online. This is why ProSiebenSat.1 has built up a Commerce & Ventures business area in recent years, which comprises online platforms that are suitable for marketing on our channels. This entertainment and commerce portfolio is supplemented by an international production and distribution network (Segment Content Production & Global Sales). (Fig. 033)
ProSiebenSat.1’s largest revenue market is Germany, where it also has its main headquarters. The Group also runs TV stations in Austria and Switzerland. Red Arrow is international; an overview of the production and distribution network with all relevant sales markets and locations can be found under .
Segments and Brand Portfolio
TV is the most widely used medium in Germany. At the same time, the digital trend is enabling new revenue models. ProSiebenSat.1 Group therefore pursues a diversification strategy with the aim of strengthening the core business of advertising-financed television and generating additional revenues outside of the TV advertising business. In order to accelerate this transformation, the Group has been organized into the three segments Entertainment, Content Production & Global Sales and Commerce since January 2018. With this, the former Broadcasting German-speaking and Digital Entertainment segments were combined, among others. For the past financial year 2017, the Group reports on the Company’s performance in the following four segments. (Fig. 033)
Broadcasting German-speaking segment: TV activities in Germany, Austria and Switzerland are allocated to the Broadcasting German-speaking segment. As well as the advertising-financed free TV brands accompanying the main stations SAT.1 and ProSieben, these also include the basic pay and TV stations.
Every day, the free TV stations reach around 45 million TV households in Germany, Austria and Switzerland. The portfolios of these individual countries are characterized by a coordinated TV offering that covers a broad range of target groups in the audience and advertising market (Fig. 034). Germany is the most important revenue market; the Group is market leader in Germany with its sales subsidiaries SevenOne Media and SevenOne AdFactory. The two sales companies support advertising customers and agencies by finding ideas and concepts and implementing them across platforms.
Digital Entertainment segment: The Group bundles its online video business activities in the Digital Entertainment segment. This includes the pay- (PayVoD) portal maxdome, the digital studio Studio71, the business with ad-video-on-Demand (AdVoD) portals and the areas of and data. We also operate our own record label and are active in the areas of artist management, music and live entertainment.
The Group is continuously developing new forms of advertisement and designing campaigns that incorporate various online platforms and distribution channels based on the main medium of TV. Such cross-media solutions allow the Group to increase the return on investment (ROI) of advertising campaigns and combine the reach of TV with the advantages of digital media. This integrated approach is a key competitive factor, which we will make greater use of in the future by merging the Broadcasting German-speaking and Digital Entertainment segments since January 2018. ,
Digital Ventures & Commerce segment: Raising brand awareness quickly is a decisive competitive factor, especially for young companies in an early stage of development. We therefore use our wide reach in TV and on digital platforms to enhance our portfolio with commerce platforms. We tap into new market segments and finance our growth in line with the “reach meets ideas” principle. Our commerce portfolio has now become our largest revenue growth driver and is making a significant contribution to the expansion of the digital business.
Over the last three years, ProSiebenSat.1 has increasingly made major acquisitions in the commerce sector, including the majority interests in Verivox, PARSHIP ELITE and Jochen Schweizer. In parallel, the Group is expanding its portfolio with media services or acquiring minority interests in businesses. Every investment decision is based on the potential synergy identified: ProSiebenSat.1 primarily invests in companies that can be marketed effectively with TV advertising and complement the existing portfolio synergistically. The Group therefore bundles its partnerships into themed .”
Content Production & Global Sales segment: Red Arrow Entertainment Group complements the value-adding processes. The company develops, produces and sells programs for ProSiebenSat.1 Group stations and for third parties. Red Arrow is a global company, but it focuses on the US. In addition to high revenues, the US is also relevant for Red Arrow because TV content in English can be sold most easily around the world. In 2017, Red Arrow has expanded ist production and distribution network through strategic acquisitions. ,
035 / Reporting on the Basis of Continuing Operations
Unless otherwise indicated, the analysis of the earnings, financial position and performance of the Group is based on continuing operations. This reflects the performance indicators relevant to ProSiebenSat.1. In accordance with IFRS 5, the earnings contributions that arise in connection with disposals are not included in the individual items of the income statement; they are shown separately as the “Result from discontinued operations.” This also applies to the statement of cash flows, where the corresponding cash flows are presented as “Cash flow from discontinued operations.”
Management and Control
ProSiebenSat.1 Group is managed centrally by ProSiebenSat.1 Media SE. The organizational structure at Group level did not change materially in 2017, either structurally or legally. ProSiebenSat.1 Media SE is listed in Germany at the stock exchange in Frankfurt am Main and at the stock exchange in Luxembourg (Bourse de Luxembourg). The Company has three governing bodies: the Annual General Meeting, the Executive Board (managing body) and the Supervisory Board (supervisory body). The decision-making powers of these governing bodies are strictly demarcated from each other.
- The shareholders of ProSiebenSat.1 Media SE exercise their rights of joint administration and oversight at the Annual General Meeting. Each share grants the same legal rights and obligations in addition to one vote each at the Annual General Meeting.
- The Executive Board is responsible for the overall performance of ProSiebenSat.1 Group, and has both professional and disciplinary authority over the managers of the business segments and holding company units.
- The Supervisory Board monitors and advises the Executive Board on its conduct of business, and is thus directly involved in all corporate decisions of major importance.
The basic rules for this dual management and supervisory system are defined in the articles of incorporation of ProSiebenSat.1 Media SE and in the rules of procedure for the Executive Board and Supervisory Board. The articles of incorporation also define the corporate objective. In accordance with Article 18 (2) of the Company’s articles of incorporation, this may be changed by a majority resolution of the Annual General Meeting if at least half of share capital is represented when the resolution is passed (Section 59 (2) SE Regulation and Section 51 Sentence 1 of the German SE Implementation Act (SE-Ausführungsgesetz — SEAG)). Otherwise, this requires a resolution by a majority of two thirds of the votes cast, provided that the law does not provide or permit a larger majority (Section 59 (1) SE Regulation). However, changes to the corporate objective still require a majority of at least three quarters of the valid votes cast in accordance with Section 179 (2) Sentence 1 of the German Stock Corporation Act (AktG) in conjunction with Section 59 (1) and (2) SE Regulation and Section 51 Sentence 2 SEAG. ,
Corporate Structure and Investments
The economic development of ProSiebenSat.1 Group is determined primarily by the subsidiaries, held both directly and indirectly. ProSiebenSat.1 Media SE is the Group’s holding company. In this function, its tasks include central financing, Group risk management and the ongoing development of the corporate strategy. These Consolidated Financial Statements include ProSiebenSat.1 Media SE and all significant subsidiaries — meaning entities in which ProSiebenSat.1 Media SE directly or indirectly holds a majority of voting rights, or whose relevant activities it is otherwise able to control. (Fig. 038)
The Group has an integrated portfolio that is also reflected in the investment structure. For example, ProSiebenSat.1 Media SE holds 100% of the shares in ProSiebenSat.1 TV Deutschland GmbH. The free TV stations of ProSiebenSat.1 and the channels (ProSiebenSat.1 Pay TV GmbH) work under its umbrella. ProSiebenSat.1 also indirectly holds a 100% stake in the sales companies SevenOne Media GmbH and SevenOne AdFactory GmbH. This results in advantages with regard to the stations’ programming and the sale of advertising time.