FRANKFURT (Reuters) - German broadcaster ProSiebenSat.1 Media said its earnings would fall mainly in the second and third quarters of 2019, as it expenses investments in its entertainment business.
But Munich-based ProSieben, which is diversifying into e-commerce to offset weakness in its core commercial TV business, stuck to its November guidance that revenues would grow by mid-single digits in 2019 with core profit margins of 22-25 percent.
CEO Max Conze, who joined in June from British home appliances maker Dyson, has shaken up the management but has yet to persuade investors he can compete with streaming giants like Netflix.
Shares in the media company, which reported flat fourth-quarter revenues, have fallen by more than a third since Conze took up his post. The stock was indicated to open up 1.7 percent.
Conze said in a statement that “2018 was not a year we can be satisfied with as the weakness in TV advertising was not yet sufficiently counter-balanced with digital and commerce growth.”
“Nevertheless, we kicked off the critical transformation to be a digital, diversified entertainment to commerce champion and the start into 2019 is showing encouraging signs of progress,” he said.
ProSieben, which is investing to refresh a catalog that had been heavy with U.S. serials, said it would expense the costs mainly in the first three quarters of 2019 with a focus on the second and third quarters, which would lead to “a pronounced decline in earnings.”
ProSieben confirmed guidance it gave investors in November for mid-single-digit percentage growth in revenues in 2019 and an adjusted earnings before interest, taxation, depreciation and amortization (EBITDA) margin of 22-25 percent.
Conze said he was focused on the launch of ProSieben’s joint video streaming venture with Discovery this summer, as well as other initiatives.
Reporting by Douglas Busvine; Editing by Tassilo Hummel and Edmund Blair
Our Standards: The Thomson Reuters Trust Principles.