ProSiebenSat.1 ends US output deals to increase focus on local programming

Quantum Leap (Source: NBC)

German media giant ProSiebenSat.1 has announced plans to terminate its remaining long-term US output deals, while confirming it will increase investment in local content to around €1.05bn ($1.15bn) next year.

The company said that reducing its licensing of US programming will benefit local formats as it intends to instead increase its focus on exclusive local content and seeks to position its streaming service Joyn as “the leading ad-financed entertainment platform for everyone in the German-speaking region.”

ProSiebenSat.1 revealed that in future it will acquire US licensed content on a “selective basis” but that the long-standing practice of extensive long-term output deals with Hollywood studios would end.

The broadcast group is behind local versions of formats such as The Masked Singer, The 1% Club, Uncovered and The Voice, while in February, the company inked a licensing deal with NBCUniversal Global Distribution for thousands of hours of US content, including newer shows like the Quantum Leap reboot and library titles The A-Team, Knight Rider and House.

The company’s executive board said that a review of the remaining US output deals would lead to impairment costs of up to €250m to pay for existing programming assets, and that it had made provisions for a further €90m to cover “onerous contracts for the acquisition of future programming assets” during Q4 2023.

Bert Habets (Source: ProSieben Sat.1)

Content spend increase

As first announced in October, ProSiebenSat.1’s local programming push will also see it invest around €80m more in German content in 2024, increasing its spend to around €1.05bn. The company said that this would strengthen the market share in linear TV and the growth of streamer Joyn, which has helped to offset advertising declines at the German giant’s broadcast operations this year.

It also aims to increase “the attractiveness” of its TV station portfolio with this step, especially during prime time hours on channels Sat.1 and ProSieben. The company said that the decision builds on recent successes in which local programming on both ProSiebenSat.1 channels and Joyn have achieved “above-average coverage.”

“In March, we presented a clear strategic plan: Entertainment as the core of ProSiebenSat.1, attractive local and live content to further strengthen our channels and Joyn as well as an improved and more diversified monetisation. Since then, we have set the right course,” said CEO Bert Habets, who expanded his remit to become chief of Seven.One Entertainment in October in a restructure that saw Sat.1 veteran Daniel Rosemann depart.

“The success of our programs in recent months clearly shows that our local programming offensive is paying off: Our viewers are watching more local content on all our channels and especially on Joyn. We are now taking the next strategic step and will invest significantly more in local content from 2024, offering our viewers a unique programming experience to serve very different media usage interests and, above all, to differentiate ourselves from the competitors of Joyn.”

The Masked Singer (Germany)

Financial outlook

The latest moves follow less-than-stellar results for the broadcaster in Q3, after which it said it expected full-year earnings to be at the lower end of the range forecast.

Advertising revenues declined by about 5% in the third quarter, with overall revenues dropping 3% to €888 million, a smaller decline than that experienced in the first half thanks in large part to growth in digital from Joyn. Digital advertising was up by 16%, boosted mostly by Joyn.

ProSiebenSat.1 said that the additional programming investments next year will have a negative impact on adjusted EBITDA in the entertainment segment in 2024, but will strengthen growth in the long-term. However, it expects a slight recovery in advertising revenues to help overall revenues to increase in 2024 and  adjusted EBITDA to remain stable compared to the current financial year.

The broadcaster said that neither the impairment charge nor the provision relating to the US output deals would have an impact on its adjusted key figures for the year 2023, including adjusted EBITDA.