BERLIN (Reuters) - ProSiebenSat.1 Media PSMGn.DE on Friday reported a net loss in the second quarter as the coronavirus pandemic hammered advertising, but said it had the financial strength to ride out the crisis as it saw initial signs of recovery in July.
The German broadcaster has hunkered down under CEO Rainer Beaujean, who took over the top job in March just as coronavirus sent Europe into lockdown, knocking advertising revenue lower by 40% as marketers retrenched.
“In our core markets of Germany, Austria and Switzerland, the economic environment is beginning to brighten,” said Beaujean. The decline in ad revenues slowed to 20% in July and August is trending 10% lower, he added.
ProSieben shares traded 11.23% lower at 0805 GMT, with analysts at Citi saying core earnings had come in shy of expectations and calling its advertising recovery “lacklustre” compared to other European broadcasters.
The company became the focus of takeover speculation after Italy's Mediaset MS.MI, Czech investor Daniel Kretinsky and private equity firm KKR KKR.N all built stakes. No strategic talks are being held with Mediaset, Beaujean said.
Although the cost controls ordered by Beaujean have kept net debt stable at around 2.4 billion euros, a squeeze to core earnings has pushed up ProSieben’s leverage ratio to 3.6 times.
That's above management's target range of 1.5-2.5 times but ProSieben is well placed to repay a 600 million euro bond maturing next year and is financed through 2023, Beaujean told reporters. DE105548087=
ProSieben made a quarterly adjusted net loss of 52 million euros (47.10 million pounds), down from a year-earlier profit of 85 million euros. Core earnings declined by 89% on the back of a one-quarter slide in revenues.
ProSieben’s entertainment division suffered a 33% decline in revenue in the second quarter, mainly due to the advertising slump, while content arm Red Arrow Studios suffered a 32% slide as social distancing measures curbed productions.
Reporting by Douglas Busvine; Editing by Michelle Martin
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