ProSiebenSat.1 ‘must deliver’ on targeted advertising strategy

German commercial broadcaster ProSiebenSat.1must “deliver on its ambitions to accelerate growth in its non-traditional linear advertising business” to convince investors, according to analysts at Berenberg.

According to the analysts, the company’s stock price already reflects the risk of further downgrades after a difficult year. However, Berenberg sees a likelihood of “robust demand for targeted TV advertising”, even though “it will take time to see the effect of this new business line in the financials”.

In a generally positive assessment of the commercial broadcaster’s prospects, Berenberg’s analysts said that a softening in advertising sales in Q4 was unsurprising, given the downward direction of the German economy, but noted that ProSiebenSat.1 had nevertheless delivered adjusted EBITDA ahead of guidance, margins on the company’s entertainment business had increased thanks to tight cost control, it said.

Giving the broadcaster’s stock a buy recommendation, Berenberg also noted that fears of its indebtedness were overstated, given that no debt is scheduled to mature until 2021.

ProSiebenSat.1 CEO Max Conze recently admitted that 2018 was “not a year we can be satisfied with” after the company posted a full-year revenue decline of 2% to €4.009 billion and a dip in EBITDA of 4% to €1.013 billion.