Berenberg: ProSiebenSat.1 faces ‘growing risks’ as ad recovery falters

Germany’s ProSiebenSat.1 faces growing risks from a challenged advertising market and other factors, with limited likelihood of an acquisition move by leading shareholder MediaForEurope (MFE) before next year, according to analysts at Berenberg.

According to Berenberg, while ProSiebenSat.1 turned in solid full-year results and upbeat guidance, the group faces a recovery in the advertising market in the German-speaking region that “is likely to falter given declining consumer confidence in the face of rising inflation and, of course, the conflict in Ukraine”.

Berenberg’s analysts argue that “ advertisers will likely become more cautious as consumers face more a more difficult environment” while “domestic economic growth may be constrained by the fact that the German economy is more geared towards the manufacturing industry (as opposed to services), which face either supply chain disruption or pressure from rising energy costs”.

According to Berenberg, ProSiebenSat.1’s e-commerce businesses also face strong headwinds, with an IPO of the company’s dating unit, ParshipMeet, unlikely at present.

Finally, says Berenberg, while ProSiebenSat.1’s share price may fall, making the company cheaper, MFE, which now owns over 25% of its stock, is not likely to make a full acquisition bid at present. MFE has this week launched a bid to take 100% control of Mediaset España, operator of the Telecinco channel in Spain, in which it currently has a 56% stake.

“We think management of MediaforEurope would look to consolidate Mediaset Espana first, and use this as a case study for the benefit of cross-border consolidation. The resulting benefits could then be used to persuade ProSiebenSat.1’s management to support a combination with an enlarged MediaforEurope.  This is a deal that we think is more likely in 2023 than in 2022,” Berenberg said.