ProSiebenSat.1 results ‘overshadowed’ by poor dating numbers

ProSiebenSat.1’s solid results from its media and entertainment and production businesses risks being overshadowed by the poor performance of its online dating business, according to analysts at Berenberg, who have given the German broadcaster a ‘hold’ rating.

ProSiebenSat.1’s latest quarterly numbers showed that company was benefiting from higher than expected growth in the fast-recovering German advertising market. The broadcaster saw ad growth of 18% across the German-speaking region despite weakness in the automotive sector that mirrored other markets.

However, Berenberg also noted that the lift in the advertising top line was offset by a 15% increase in programming costs that was also higher than expected, while adding that these costs are not expected to increase by the same magnitude in the fourth quarter.

The bigger problem for the broadcaster, in the view of Berenberg’s analysts, was the lack of growth in the dating business, previously seen as the “the jewel in the crown” for the group. The dating business is due to be separately listed by ProSiebenSat.1 next year.

“While profits were solid and the company increased EBITDA guidance…the response to the results was negative. This reflected concerns about the 2% organic decline of the dating business. On the face of it, the reaction is surprising given that H1 organic growth was also minus 2%, but the difference between the two numbers is that while the latter figure reflected the performance of the more traditional business of Parship, the Q3 result included the growth (or otherwise) of the theoretically faster growing Meet activities,” noted Berenberg.

Berenberg said that it had “ already assumed [the dating business] would attract a meaningful discount to the US-listed dating peers given lower growth, so this is not an incremental concern to us” but dropped its price target for the company to €16.60.