INTERVIEW-UPDATE 1-ProSieben looks beyond TV to boost sales

Wed Oct 5, 2011 6:34am EDT

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By Nicola Leske and Peter Maushagen

FRANKFURT, Oct 5 (Reuters) - German commercial broadcaster ProSieben aims to generate 750 million euros ($996 million) in additional revenue by 2015 and reduce its dependency on the German TV advertising market by increasing its non-TV operations and expanding abroad.

Like other broadcasters, ProSieben is keen to broaden its offers amid fragmenting audiences and slumping ad revenues.

Growth in the German TV market, Europe's biggest, is expected to be flat this year although Chief Executive Thomas Ebeling told Reuters in an interview that he saw "more upside potential than downside potential".

He added that "2012 is not going to be anything to write home about either" but ProSieben's businesses would still grow.

Under Ebeling's watch the company has steadily pushed to lower its dependency on traditional advertising with pay-TV platforms, online games, production sales and channels for specific target groups such as Sixx which is geared toward the tastes of young women.

ProSieben is at pains to persuade analysts that it has a viable growth strategy, as some have expressed scepticism about its diversification plans.

By 2015, ProSieben hopes to generate half of its group revenue outside its traditional German TV advertising business, which currently contributes 70 percent to overall group revenue.

In its German-speaking TV operations ProSieben plans to increase sales by 250 million euros in the coming four years and it aims to raise revenue at its international TV businesses by 150 million euros during that time.

In the segment that the company calls digital and adjacent, which includes online activities, it plans to secure another 250 million euros in revenue by offering new revenue models for TV advertising space and boosting its online video and gaming strategy.

"TV is still a lead medium and we need to utilize that time to buy into new businesses, which enable us to diversify," Ebeling said.

That could mean buying small content providers abroad or starting a small production company with young talent.

ProSieben's content unit Red Arrow recently bought U.S. production house Fuse Entertainment, which produces series such as Burn Notice and The Killing.

"We are aware that we are not Fremantle yet but we are working on it," Ebeling said, referring to the production company arm of rival RTL Group AUDK.LU.

The CEO, who is a fan of U.S. series such as Mad Men and The Sopranos, ruled out any large acquisitions for the time being to bolster growth, arguing that few targets fit his criteria.

"An ideal target for us would be in a country that has real growth through its population and economy, ideally not credit financed, and is fairly valued," Ebeling said.

ProSieben is also betting that its advertising and branding power will bolster its position in talks it is holding with a number of major game production companies so it can offer so-called Triple A online strategy games.

"Online games are relatively independent of the economy ... you grow if you can offer great games and we are very confident that we will achieve that," Ebeling said.

Asked about plans to launch a catch-up TV platform with domestic competitor RTL Deutschland, which were scuppered by Germany's cartel watchdog, Ebeling said that they would consider going back to the cartel office with new proposals.

"Yes, we would like to see it happen but if it doesn't, life goes on."

The plans were rejected in March on grounds that a joint online TV platform would dominate too much of the market's TV advertising revenues.

ProSieben and RTL Deutschland, the German operation of pan-European broadcaster RTL Group, sought to create a platform that would enable users to view programmes up to seven days after their original broadcast free of charge, similar to Hulu in the United States.

($1 = 0.753 Euros)

(Editing by Helen Massy-Beresford)

((Nicola.Leske@thomsonreuters.com)(+49 69 7565 1214)(Reuters Messaging: nicola.leske.thomsonreuters.com@reuters.net)) Keywords: PROSIEBEN/STRATEGY

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