Segments and Brand Portfolio

The operating units are responsible for the operational implementation of the strategy and are divided into three operating reporting segments. They are strategically, economically and technically interrelated and are managed centrally by ProSiebenSat.1 Media AG.

Segments of the ProSiebenSat.1 Group

Broadcasting German-speaking Segment

The TV activities in Germany, Austria and Switzerland are allocated to the Broadcasting German-speaking segment. With a population of over 81 million, Germany is Europe’s largest TV market. ProSiebenSat.1 is no. 1 in the TV advertising market here with its sales subsidiaries SevenOne Media and SevenOne AdFactory. Alongside innovative and customized sales concepts, the wide reach and brand awareness of the ProSiebenSat.1 stations are key to the success of the Group. In total, the ProSiebenSat.1 Group operates seven full TV programs and twelve advertising or program windows in Germany, Austria and Switzerland. The portfolios of the individual countries feature complementary, coordinated television stations, which cover a broad range of target groups in the audience and advertising market.

In addition to the traditional free TV business, the ProSiebenSat.1 Group’s HD and basic pay TV stations are also reported in the Broadcasting German-speaking segment. The Group operates three basic pay TV channels: SAT.1 emotions, ProSieben FUN and kabel eins CLASSICS. The Group also participates in technical service fees that cable network, satellite, and IPTV operators generate from the distribution of ProSiebenSat.1 stations in HD quality. The ProSiebenSat.1 Group has hereby established a business area with long term, recurring revenues and further strengthened its independence from the TV advertising market, which is highly senstive to economic fluctuation.

Digital & Adjacent Segment

The Digital & Adjacent segment is the strongest growth driver of the ProSiebenSat.1 Group. It bundles the business units Digital Entertainment, Digital Commerce and Adjacent. The Group leverages the advertising power and reach of its free TV stations to develop products and offerings from these areas into successful brands. The Group thus benefits not only from synergies between the TV and digital business, but also within the segment Digital & Adjacent.

Digital Entertainment. The ProSiebenSat.1 Group markets over 50 proprietary online and mobile platforms such as the websites of the TV stations and MyVideo as well as offerings from third parties. With a gross market share of 48.6 % on instream video advertising and 4.2 billion video views in 2014, the Group is also Germany’s leading seller of video content on the internet. In addition, the ProSiebenSat.1 Group operates Germany’s biggest video-on-demand portal, maxdome, which offers nearly 60,000 on-demand titles. In recent years, the Group also founded its own multi-channel network (MCN), Studio71, with which the media group produces, aggregates and distributes web content. Due to the acquisition of Aeria Games Europe GmbH, a publisher specializing in online and mobile games, the ProSiebenSat.1 Group expanded its existing games business with new target groups in 2014 and is now one of the top three publishers in Europe.

Digital Commerce. The ProSiebenSat.1 Group bundles its ventures activities in the Digital Commerce unit. At the end of the 2014 financial year, the portfolio contained about 60 investments and partnerships. The companies primarily come from e-commerce, while their product ranges show high affinity with TV as a medium. With regard to strategic investments, the ProSiebenSat.1 Group bundled its travel business under one roof by founding ProSieben Travel GmbH in spring 2014, and was therefore able to increase revenues. Similarly to the travel vertical, the Group has identified additional e-commerce industries like “Beauty & Accessories” (Flaconi, Valmano, etc.), “Home & Living” (moebel.de), and “Fashion & Lifestyle” (e.g. Stylight), which also offer ProSiebenSat.1 attractive synergy and revenue potential. The Group expands its portfolio both through traditional investments in majority interests and through its media-for-equity and media-for-revenue-share models within the SevenVentures GmbH. With these models, the Group provides media services to promising internet companies and uses its high reach to develop strong brands in the online segment. Start-up companies in turn provide ProSiebenSat.1 with a share in their value creation.

Adjacent. Starwatch Entertainment GmbH bundles Music, Live Entertainment, Events, Ticketing, and Artist Management in the Adjacent unit within the ProSiebenSat.1 Group. Last year the Company was involved in 56 % of the top 100 albums in Germany via its record label Starwatch Entertainment. The music activities with extensive marketing and cooperation models are complemented by an own ticketing platform as well as the event agency MMP. ProSiebenSat.1 represents the extensive value chain of a record label with tickets, artist management and live events/concerts. With SAM Sports the Company additionally founded a sport management agency in 2014.

Content Production & Global Sales Segment

The Content Production & Global Sales segment covers the ProSiebenSat.1 Group’s international program production and distribution business. The two units are bundled under the Red Arrow Entertainment Group. The company is ranked in the top 10 of the most successful independent production companies in the world and in the top 5 of sales companies. Last year, Red Arrow sold TV formats in more than 200 countries and expanded its English-speaking fiction portfolio consequently. In 2014, the Group gained more than 70 % of its revenues in English-speaking markets (USA: 55 %, GB: 18 %). At the same time, the company extended the production business for platform operators to gain access to an increasing procurement market. The Red Arrow subsidary Fabrik Entertainment produced “Bosch”, the first in-house production of a drama series for the video-on-demand platform Amazon Prime of the online retailer Amazon. Another huge success in 2014 was the in-house created format “Married at First Sight”, which has been sold in 20 countries. Red Arrow Entertainment Group is represented in seven countries with 13 production companies, with own sales offices in Unterföhring, Los Angeles and Hong Kong.

Segment structure of the ProSiebenSat.1 Group