UPDATE 1-ProSieben downbeat on 2008 ad market, shares slump
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FRANKFURT, April 25 (Reuters) - Shares in ProSiebenSat.1 (PSMG_p.DE) tumbled by more than a quarter on Friday after Germany's largest commercial broadcaster posted a sharp drop in quarterly core profit and gave a bleak outlook for 2008.
The shares fell 26.6 percent to 9.97 euros by 1250 GMT, making the Munich-based company the biggest loser in all the German indexes. In the past year, the stock has lost 48.2 percent in value, according to Reuters data.
ProSieben, which bought SBS Broadcasting last year for 3.3 billion euros ($5.15 billion), posted a 25 percent drop in first-quarter recurring core profit of 88.5 million euros as sales dropped 2 percent to 729 million.
Core profit at the German-speaking TV business fell 18 percent to 57.6 million euros.
As a consequence, its head of marketing and sales, Peter Christmann, announced his resignation.
Chief Executive Guillaume de Posch, who told Reuters in January he "felt positive about 2008", said in a conference call the company was prepared for a difficult second quarter and cautious in its outlook for 2008.
"Revenue in the German-speaking region will be down in the second quarter," De Posch said, adding the German TV advertising market was expected to be flat or no more than one percent up.
"In light of the first quarter, we will not be able to match that (industry figure)," De Posch added, although he expected the second half of the year "to be better, given no recession hits the German market".
NO SAT.1 SALE
The company blamed uncertainty among advertisers for the development due a new advertising sales model introduced at the end of 2007.
It introduced a new pricing model for media agencies and the advertising industry after being fined 120 million euros by Germany's cartel watchdog for anti-competitive practices in TV advertising along with Bertelsmann's RTL Group.
ProSieben also blamed a time-lag effect of weak ratings at its Sat.1 TV channel, which had affected advertising sales.
It plans to offset poor performance with lower administrative expenses and making better use of its programming inventory, aimed at cost cuts of 70 million euros this year.
Some analysts were sceptical, however, whether those measures would suffice.
"We somewhat doubt that more cost-cutting programmes and repeating old shows will improve the situation at Sat.1," Felix Braune at Cheuvreux said in a note.
De Posch said despite interest in Sat.1 from pay-TV broadcaster Premiere PREGn.DE he did not want to dispose of the struggling channel. "There are no talks whatsoever on selling Sat.1," he said.
ProSiebenSat.1 and SBS are majority owned by private equity firms KKR [KKR.UL] and Permira [PERM.UL]. These had pushed for the merger of the two to rival pan-European market leader RTL Group, owned by German media giant Bertelsmann [BERT.UL].
ProSiebenSat.1 and SBS broadcast a mix of entertainment, sport, news, documentaries and reality TV shows. They are active in 13 countries and own 26 TV channels, 24 pay-TV stations, and 22 radio networks. (Reporting by Nicola Leske; Editing by David Hulmes)
