Broadcast giant turns away from ads

30 October 2009

MUNICH: ProSiebenSat1, the European broadcast giant, is aiming to increase the amount of revenue it derives from pay-TV, and to branch out in a number of other areas, as it seeks to lessen its dependence on advertising.

At a recent conference in Munich, Thomas Ebeling, the company's chief executive, said "I believe consumers are willing to pay for entertainment."

While Prosieben will continue to rely on commercial funding for its channels in Germany, its home market, until 2014 at the earliest, Ebeling said it will also "have to evaluate how markets have been developed" by that date.

ProSiebenSat1 currently operates 20 free-to-air channels in 12 countries across Europe, giving it a reach of some 78 million households in the region, leaving it behind only RTL Group, which is part-owned by Bertelsmann, on this measure.

Its is hoping to improve the share of revenues coming from sources other than advertising from 15% at present to 30% by 2014, and is exploring the ways in which it can achieve this goal.

"We can imagine delivering content to cable network or mobile network providers, allowing them to sell [this content] to their customers," Ebeling argued.

"We have a huge content library and not all of the content fits the structure of our existing channels," he continued, adding that the possibility of introducing more niche, subscriber-only digital channels was another option under consideration.

Overall, Ebeling predicted TV adspend in Germany would witness a decline in the 14% to 15% range this year, although the situation is likely to improve in Q4, with next year delivering results somewhere between a decrease of 5% and an uptick of 2%.

Carat, the media network, has predicted that advertising expenditure levels will decline by 11% in Western European in 2009, although Germany is expected to be one of the more resilient markets in the region.

Data sourced from Wall Street Journal; additional content by Warc staff