Creating new growth CMD 2014 TV Operations Thomas Ebeling

Transcription

1 Creating new growth CMD 2014 TV Operations Thomas Ebeling ProSiebenSat.1 Media AG October 15, 2014 October 15,

2 Agenda Performance review & achievements Market dynamics TV operations Summary October 15,

3 P7S1 has a strong position in the German TV market Share of viewing Share of advertising [Audience share, in percent] % owned 50% owned [Gross values, in percent] % owned 100% owned 2014 YTD 2014 YTD October 15, Basis: All German TV households (Germany + EU), A 14-49; Mon-Sun, full day 3-3h; 2014 YTD: January 1, 2014 September 30, 2014/SoA YTD: January 1, 2014 September 28, Source: AGF in cooperation with GfK/TV Scope/ProSiebenSat.1 TV Deutschland Strategy & Operations/SoA: Nielsen Media Research/SevenOne Media, Sales Steering & Market Insights.

4 Growing and outperforming key competitor Audience shares [in percent] P7S1 growing market share and outperforming key competitor %pts 28.6 [Audience share in %pts vs. RTL Group] +3.8 Lead almost doubled FY 2014 LTM 2013 FY 2014 LTM October 15, Basis: All German TV households (Germany + EU), A 14-49; Mon-Sun, full day 3-3 h; RTL Group w/o RTL II; 2014 LTM: October 1, 2013 September 30, Source: AGF in cooperation with GfK/TV Scope/ProSiebenSat.1 TV Deutschland Strategy & Operations.

5 ProSieben with smallest gap ever vs. RTL SAT.1 with clear leadership vs. VOX Audience shares [In percent, A 14-49] ProSieben vs. RTL Audience shares [In percent, A 14-49] SAT.1 vs. VOX Q Q Q Q Q Q October 15, Basis: All German TV households (Germany + EU), A years; Mon-Sun, full day 3-3 h. Source: AGF in cooperation with GfK/TV Scope/ProSiebenSat.1 TV Deutschland Strategy & Operations.

6 Broad coverage of relevant target groups complementary to competition Target positioning by age and gender male old young female October 15, Basis: All German TV households (Germany + EU), A 14-49; Mon-Sun, full day 3-3 h, January 1, 2014 June 30, Source: AGF in cooperation with GfK/TV Scope/ProSiebenSat.1 TV Deutschland Strategy & Operations.

7 Our channels hold strong positions in their relevant target groups Channel Relevant target group [In years] F/M Audience share in relevant target groups [2014 YTD, in percent] 15.2 F/M F/M F F M October 15, Basis: All German TV households (Germany + EU), A 14-49; Mon-Sun, full day 3-3h; 2014 YTD: January 1, 2014 September 30, Source: AGF in cooperation with GfK/TV Scope/ProSiebenSat.1 TV Deutschland Strategy & Operations.

8 Key achievements since Capital Markets Day Expanded lead audience share in Germany (A 14-49) Maintained rating performance in fragmented/digitized market Fixed SAT.1 daytime New channel growth Created outstanding linear content Leading in TV 3.0 October 15,

9 Agenda Performance review & achievements Market dynamics TV operations Summary October 15,

10 TV will remain lead medium, having a tail wind from online/ digital 2 2 Online video market Online video market 1 TV/video consumption TV remains lead medium in reach and usage Online video will grow, drive total video usage and capture mobile increasing reach of TV formats Second screen benefits first screen New platforms and technologies drive viewing experience and offer additional ways of content exploitation No threat from price arbitrage for German TV driven through very different TV fundamentals P7S1 3 3 Content Content supply supply Increased competition for US content with global OTT players, however, key programs remain on FTA Significant variety of content via MCN can be leveraged for new TV formats low additional reach versus TV Better signal qualities and high resolution screens enrich TV experience 4 4 TV market TV market Fragmentation of channels slowing down and relevant set of TV channels will remain stable Only top formats & lighthouse with high ratings October 15,

11 1 TV remains the central fire place for German households TV market trends P7S1 projection Outlook TV and TV-related continues to dominate media consumption 185 min TV-related usage 1 (0% CAGR 13-18) Online video viewing 1 (+19% CAGR 13-18) 20 min TV remains the central fire place as the everyday lean-back medium 78% Prefer watching in company 4 Teenagers do not expect a decline in importance of TV 1 88% New TV screens/hardware make watching TV more stirring and people invest into new TVs 8m HDTVs sold in New screens make TV even more engaging 5 for 58% Growing VoD market with minimal impact on linear TV but replacing DVD market 196m EUR VoD market 2014 (+27% vs. PY) 3 VoD as percent of total video market 3 13% October 15, Source: 1 AGF/GfK Fernsehforschung, SevenOne Media Mediennutzungsstudie, comscore Video Metrix, SOM estimate (TV-related usage = TV viewing time (on big screen) + TV related content (online)); 2 gfu/bundesverband Technik des Einzelhandels e.v./ GfK; 3 GfK/Goldmedia forecast 2014; 4 Medienradar 5/2011, mindline media/sevenone Media, A 14-49; 5 Kartographie der TV-Wohnzimmer 2011 TNS/SevenOne Media; Note: figures in bubbles=2013.

12 1 Stable TV viewing time expected online video and TV-related content will drive total video usage Average daily usage in Germany Ad relevant target group A [In minutes, before planned panel adaptions] Total video usage TV viewing time CAGR CAGR % -1% Online video & TV-related content CAGR % E 2015E 2016E 2017E 2018E P7S1 projection October 15, Source: AGF/GfK Fernsehforschung, SevenOne Media Mediennutzungsstudie, comscore Video Metrix, SOM projection. Note: TV viewing time = viewing time on big screen (not incl. TV-related content online).

13 1 Potential TV panel adaptations TV panel extension with target groups Inclusion of German-speaking non EU foreigners (e.g. Turkish population) Increased coverage of actual TV viewing All screens: Live streaming in web browser and with DVB-T sticks (Q3 2015) Live streaming in mobile and smart TV apps (e.g., 7TV, Magine, Zattoo; Q1 2016) All usage situations in households: Complete coverage of 2 nd, 3 rd, TV sets Inclusion of second home households Source: SevenOne Media October 15,

14 1 Video remains the preferred medium for young target groups Average daily usage in Germany Young target group A [In minutes, before planned panel adaptions] Total video usage CAGR % TV viewing time Online video & TV-related content CAGR CAGR % +18% E 2015E 2016E 2017E 2018E P7S1 projection October 15, Source: AGF/GfK Fernsehforschung, SevenOne Media Mediennutzungsstudie, comscore Video Metrix, SOM projection.

15 1 Online video & TV-related content conquers mobile devices Daily reach of online videos on mobile devices [Tablets and smartphones, in percent] Watched videos on tablets and smartphones [At least one in a month, in percent] Tablet Smartphone 29 13% of all Germans watch online videos on mobile devices % of tablet users consume PayVoD content A A A Clips Catch-up Live stream Free movies VoD October 15, Left box Basis: 14-64y, n=1.139; Source: Media Activity Guide 2014; Right box Basis: 14-64y, n=829 Smartphone, n=228 Tablet; Source: TNS Convergence Monitor 2014.

16 1 also growing reach of TV formats Germany s next Topmodel season 9 vs. 8 Total video views Full episodes Short clips Live stream [In m] Season 8 Season % +15% +33% +31% October 15,

17 1 Second 1 screen retains TV viewing Parallel usage of TV and internet [In percent, A 14-49] P7 Connect retention rates [As factor, P7 Connect vs. TV] P7S1 conversion rates [In percent, TV to P7 Connect] +177% x x Ø TV viewing time Ø TV viewing time Germany s next Topmodel The Voice Germany s next Topmodel The Voice October 15, Source: Media Activity Guide 2014 (SevenOne Media, Forsa); AGF in cooperation with GfK/TV Scope; Google Analytics. 1 P7 Connect with x.x times longer usage than stand-alone TV viewing time; 2 Up to x.x% of TV viewers triggered to use P7 Connect during the show.

18 1 Market research proofs positive impact of second screen on first screen US citizens are increasingly integrating TV viewing and social media 25% were more aware of TV program due to their social media interactions 15% enjoyed TV more when social media was involved 11% watched more Live TV because social media was involved October 15, Source: Nielsen, 2014 (YoY comparison 2012/2013)

19 2 Germany clearly less vulnerable to disruption of linear TV than US (1/2) Pay TV penetration 1 Monthly spend per Pay TV HH 2 On-Demand TV penetration 3 Multi-screen video 84% ØUSD 79 17% 17% ØEUR19 5% penetration 4 45% 29% Connected TV penetration 5 46% 10% Digital affinity US (e.g., music streaming 6 ) 18% 5% Germany October 15, US: IHS 2014E; DE: VPRT 2 US,DE: IHS 2014E; ARPU; for Germany digital TV ARPU, excluding mandatory public licensing fee of 18 /month 3 US: GfK Over The Top TV 2014; DE: Digitalisierungsbericht Video consumption via non-tv set at least once per month; US: emarketer; DE: Digitalisierungsbericht Active connected TV sets; US: emarketer; DE: Digitalisierungsbericht Music streaming revenue share 2014E; US,DE: PWC Global Entertainment Outlook 2014

20 2 Germany clearly less vulnerable to disruption of linear TV than US (2/2) Ad break intensity No ad break regulations high intensity (15-20 min/h) and frequency Channel fragmentation Content quality in Free TV Power of domestic content and local hosts Basic TV package incl. >500 channels due to diversity of ethnical groups & interests High-quality & top sport content not in basic TV service Pay TV a Must Have Many creative, local authors and formats Highly regulated low intensity (max 12 min/h) and frequency Less fragmented/strong lighthouse channels due to lower social diversity >50 high/good quality channels in FTA w/ top US & sport content alongside private channels Few local Must See hosts licensing of international content and formats on FTA channels Studio contracts Broad syndication model FTA biggest, supported by holdbacks Language Native language Dubbed version Illegal viewing Commonly used especially streaming Limited due to German language dubbing most illegal content only in English Less impact through streaming on German ad-driven FTA market compared to US October 15,

21 2 Scandinavia with significantly higher affinity towards pay and digital compared to Germany Pay TV penetration 1 88% Scandinavia 17% Germany Monthly spend per Pay 2 TV HH ØEUR 42 ØEUR 19 penetration 23% 5% 3 On-Demand TV Connected TV penetration 4 26% 10% Digital affinity (e.g. music streaming 5 ) >60% 5% October 15, SCANDICS: IHS via IP Television Key Facts 2014 (SWE 87%; FIN 83%; NOR 90%; DEN 92%), DE: VPRT; 2 SCANDICS PWC (SWE 33 EUR; FIN 33 EUR; NOR 67 EUR; DEN 41 EUR), DE: IHS 2014E; ARPU; for Germany digital TV ARPU, excluding mandatory public licensing fee of 18 /month 3 SWE (for SCANDICS): GlobalWebIndex via Statista, Video-on-Demand Penetration Q1 2014, DE: Digitalisierungsbericht SCANDICS: IHS via IP Television 2014 (SWE 23%; FIN 19%; NOR 33%; DEN 31%), DE: Digitalisierungsbericht 2014 ; 5 Music streaming revenue share 2014E; SCANDICS, DE: PWC Global Entertainment Outlook 2014 (SWE 82%; FIN 39%; NOR 75%; DEN 46% )

22 2 since Scandinavian TV characteristics also significantly differ from Germany Channel fragmentation Content quality in Free TV Power of domestic content and local hosts Fragmented with respect to total population - strong intl and lighthouse channels Medium quality overall High-quality mainly in Primetime Local hosts very strong, less international content available on FTA channels Less fragmented/strong lighthouse channels due to lower social diversity >50 high/good quality channels in FTA w/ top US & sport content alongside private channels Few local Must See hosts licensing of international content and formats on FTA channels Studio contracts Less FTA relevance, limited holdbacks FTA biggest, supported by holdbacks Language Illegal viewing English version Commonly used especially streaming Dubbed version Limited due to German language dubbing most illegal content only in English Less impact through streaming on German ad-driven FTA market compared to Scandinavia October 15,

23 2 Strength of FTA limits potential for premium pay bundles Key Sports Events Top US Content Local Content Majority of mass market sports events covered by publics 1, RTL and ProSiebenSat.1 sky only covers premium rights for selected events (e.g., soccer premier league) Majority of Blockbuster movies and top US series secured by ProSiebenSat.1/RTL Pay TV monetization of US content not yet proven sky with very limited coverage Ad-based monetization for studios more important than Pay TV model in Germany German viewers prefer dubbed version Limited number of local stars Value proposition of Pay TV/sky relatively weaker in Germany especially for mass market October 15, Coverage regulated by State Broadcast Treats.

24 3 YouTube s monthly net reach in young target group on TV channel level [In m] Monthly net reach in target group A October 15, Basis: A years; Mon-Sun, full day 3-3 h; May Source: Double Play dataset, own calculations, AGF/GfK TV Scope.

25 3 but 1 high TV consumption of YouTube heavy users leads to very low additional reach TV viewing time of YouTube heavy user 1 [Viewing time in minutes per day] YouTube adds only 4% net reach to ProSieben [Net reach per month in m; A 14-29] % 10.8 A A YouTube heavy user & October 15, YouTube heavy user representing 80% of YouTube consumption Basis: A years & YouTube heavy user; Mon-Sun, full day 3-3 h; May 2014 Source: Double Play dataset, own calculation, AGF GfK TV Scope

26 4 Fragmentation of market slowing down we expect a relatively stable relevant set Broadcast stations received and in 'Relevant Set' E Ø number of receivable channels Ø number of Relevant Set channels (>80% of TV viewing time) October 15, Basis: All TV households Germany [D+EU]/Adults years 'Relevant Set': channels which account for least 80% of TV usage time. Source: AGF/GfK Fernsehforschung/TV Scope, SPSS/GfK, ProSiebenSAT1 TV Deutschland GmbH/Audience Research, 2018 P7S1 estimate.

27 Agenda Performance review & achievements Market dynamics TV operations Summary October 15,

28 Key strategies Operating a leading channel portfolio delivering superior value to advertisers Rational investment approach hit optimal cost per hour relative to revenues per hour; avoid unprofitable genres and achieve that up to 50 percent of our program hours are cost free Good genre split balance between consumer preferences and optimization of profits Balanced investment mix between lighthouse formats, serial quality TV and new innovative low-cost concepts Lead digital innovations to drive viewer loyalty and TV impact October 15,

29 Ten actions for successful strategy execution Shape fragmentation actively by growing small channels to critical share and launching new ones Mid-term programming strategy for each channel to capture broader and female audiences Create outstanding linear content to maintain leading position Balance lighthouse content, serial quality TV and low-cost innovative formats Secure access to US content at acceptable terms Secure distribution everywhere at lowest cost/maximize distribution income Maximize content utilization Execute on value based production and other cost efficiency measures Digitally enhance viewer experience by creating a viable second screen experience Best people, diverse teams, best creative process October 15,

30 Finance lighthouses through higher share of serial quality TV and low cost innovative formats Grid share (2018 vs. 2014) Higher share in grid Lower share in grid Lighthouse Drive share of serial blockbuster formats Serial quality TV Balance lighthouse investments Non-serial quality TV Decrease number of expensive one-offs Low cost innovative formats Introduce on more slots October 15,

31 Establish competitive but sustainable program mix with a broad channel portfolio Establish competitive but sustainable program mix Broad channel portfolio Licensing (US/international) (incl. documentary/ready-mades) Local lighthouse formats (incl. fiction) Serial quality formats such as quiz and game shows Content exchange/re-use management Local low cost innovative formats 40-60% 10-20% 10-20% 5-15% 5-15% One tier 1 channel for young viewers i.e., ProSieben One tier 1 channel for families i.e., SAT.1 One tier 2 channel i.e., kabel eins 4-6 well targeted niche channels e.g., ProSieben MAXX, sixx, SAT.1 Gold October 15,

32 For top US content, multi-year output deals secured with US major and leading independent studios Examples October 15,

33 Content exchange management means re-using existing content for new formats Content sources New formats Content Exchange Management + other existing formats + other new formats October 15, Content exchange management for K11 & Niedrig und Kuhnt planned.

34 Digitally enhance viewer experience by creating a viable second screen experience Key objectives of our second screen strategy Increase TV reach Enhance mobile monetization Foster digital profile of our TV channels October 15,

35 Show case 7 Connect Live stream Polling Social News Twitter October 15,

36 Execute value based production and other cost efficiency measures Execute on value based production targets Rebalance commissioned portfolio Produce as few as needed inefficient one-offs Minimize high-risk lighthouse investments without payback Increase share of (repeatable) serial quality TV Further optimize programming Maintain stock management Cost efficient big data content sourcing by Content Cloud Management System Push content sales for external clients Use innovative production facilities to produce low cost TV formats October 15,

37 Agenda Performance review & achievements Market dynamics TV operations Summary October 15,

38 Summary TV will remain lead medium TV everywhere is booming ProSiebenSat.1 with leading full day and prime time audience shares ProSiebenSat.1 well positioned to capture all segments of TV viewers driven by attractive channels and Blockbuster content Key strategies in place to further optimize efficiency of program investments and capture growth opportunities in online/digital October 15,

39 Creating new growth CMD 2014 TV Ad Sales Thomas Ebeling ProSiebenSat.1 Media AG October 15, 2014 October 15,

40 Agenda 1 Key achievements 2 The advertising power of TV 3 TV market with further significant growth potential 4 TV effectiveness further improved through natural fit with digital ad extensions October 15,

41 ProSiebenSat.1 with strong performance in 2014 YTD 2014 YTD 2013 TV ad market growth (net) ~ +2.5% ~ +1.3% TV share of advertising market (gross) 44.3% 43.1% Share of advertising ProSiebenSat.1 (gross) 44.6% 44.2% Net CPT ProSiebenSat.1 core channels EUR EUR October 15, YTD: (Jan.-Aug.) Source net TV ad market: SevenOne Media own estimate, Source gross: Nielsen Media Research, Source net CPT: AGF/GfK, TV Scope, own calculation

42 Key achievements of past years 1 Growing net TV ad market 2 Stable to slightly increasing share of advertising 3 P7S1 TV revenues outperforming market 4 Dynamic net price increase in past 5 years 5 Execution focused and innovative sales team with will to win October 15,

43 Focus on innovation, customer satisfaction and sales execution Innovative ad concepts Digital TV extension portfolio Sales execution 360 conception Sales concepts according to market needs Digital conception Customized concepts for TV & Online Branded Entertainment Integration between editorial contents Thematic ad breaks Special packaging & exclusive positioning Theme weeks/ days Tailor made programming for sponsoring Brand extension with TVSMILES Extends TV campaigns directly to mobile Retail extension with shopkick Offers customers rewards for visiting stores marktguru in Austria Digital freesheets HbbTV Brand engagement on first screen TV-Sync Optimized search advertising Pricing excellence Competitive gross price increases Targeting new customers New channels expand target groups TV/Online sales tandems 360 sales approach Great research High-impact research projects Source: SevenOne Media October 15,

44 Agenda 1 Key achievements 2 The advertising power of TV 3 TV market with further significant growth potential 4 TV effectiveness further improved through natural fit with digital ad extensions October 15,

45 The advertising power of TV 1 Combination of highest and fastest reach and strongest ad impact makes TV the most effective and efficient medium with highest ROI 2 Mass reach becomes increasingly important in fragmented media landscape 3 TV remains the mass medium with increasing relative reach Massive reach decline of print Complex and fragmented digital media landscape 4 Therefore solid price increase potential despite possible slight net reach reduction October 15,

46 The advertising power of TV 5 YouTube is not able to add incremental reach to TV campaigns because YouTube usage is highly concentrated on a small group of heavy users. 6 Facebook disappoints as a medium of dialogue with less than 1% of followers showing brandengagement 7 The growing use of second screen opens new opportunities for TV advertising with no loss of ad effectiveness 8 The role of TV in the Customer Journey is to select customers with brand relevance. Online search and internet research are directly driven by TV October 15,

47 TV the most effective and efficient medium Highest effectiveness Attractive pricing Advertising effectiveness (Aided advertising recall, index 100=without contact) Net CPT ranges (EUR) 50 TV InStream Video InPage / Display Print TV Newspapers Magazines Online October 15, Basis: n=200, years; 4 tested advertising campaigns per medium. Source: Eye Square 2012; SevenOne Media estimate; CPT = Cost per thousand.

48 TV price competitive in Germany vs. other European countries Ø Net-CPT (based on 20 seconds) Adults Index UK France Italy Germany Spain October 15, Source: 2013, Nielsen/ Auditel, Infoadex/ Sofres, DDS, ZAW/ AGF GfK, IREP/ Mediametrie

49 TV generates high long-term ROIs Based on 204 analyzed FMCG brands 2.65 Average long-term ROI 65% 43% of all analyzed brands long-term ROI >1 analyzed brands with long-term ROI >2 October 15, Long-term ROI: ROI after 5 years, ROI = ratio of additional sales revenues / TV ad spend. Source: GfK / SevenOne Media

50 Superior and stable level of TV reach and impact Reach Impact Score adults yrs Change Reach Impact Score Score % +20% +10% 0% -10% -20% -30% -40% +2% -18% +26% -19% -31% TV Radio Internet Newspaper Magazine Reach Impact Score = net reach (number of media users in %) staying time (Ø usage duration per media user in minutes) October 15, Based on Adults yrs Source: Media Usage Survey SevenOne Media 2008 / 2013 (SevenOne Media / mindline media)

51 TV dominates media consumption while digital is highly fragmented Monthly net reach and usage duration % Net Reach 14+ Internet Total Private TV TV Total 50% Usage Duration 14+ (hours per month) October 15, Basis: TV viewers 3+; internet users 6+; March Source: AGF in cooperation with GfK / TV Scope / Comscore MyMetrix (internet at home & work w/o mobile usage)

52 Agenda 1 Key achievements 2 The advertising power of TV 3 TV market with further significant growth potential 4 TV effectiveness further improved through natural fit with digital ad extensions October 15,

53 Print Solid TV ad market growth with higher upsides than risks Market potential 2018 vs [in EURm] Market base case Market upside Key risks 1 Net price increases to drive ad intensity 80 2 Print cannibalization structural effect New channels expand target groups Regional TV advertising Combined TV/Digital for free sheet market 50 6 Individualized TV targeting based on IP 25 7 Build new markets (e.g., betting) Attack fresh budgets (sales, HR, PR) 30 9 Increase placement/ new ad concepts Potential shift to Online Video (CAGR 1.7%) October 15,

54 1 US network channels tripled CPT despite viewing share cut in half growth potential for Germany CPT, viewing share Prime Time US-Networks Index: 1995=100 CPT, viewing share Prime Time Germany Index: 1995= CPT viewing share CPT viewing share October 15, Basis: Germany (SAT.1, ProSieben, RTL, kabel eins, Vox, RTLII, SUPER RTL, ARD, ZDF) Prime Time based on Adults years, USA (ABC, CBS, NBC) Source: TV Dimensions 2013, AGF in cooperation with GfK

55 2 Five levers to address print budgets Currently addressable market Structural effect: innovative TV offers New FTA channels: expand target groups Addressable through new measures Regional TV advertising Combined TV/Online offer for free sheet market (price promotion budgets) Individualized IP based TV targeting October 15,

56 2 TV share of total ad market will increase as relation between usage and ad spend continues to normalize Usage vs. net media mix Germany 2014 (in percent) Net media mix Germany, 2000, 2013, 2014E and 2018E (in percent) 4% 49% 66% 51% 49% 43% 37% 30% 25% 29% 30% 32% Usage TV Print Net media mix share E 2018E 1ppt increase in media mix equals ~EUR 60m for P7S1 October 15, Source net media mix: ZAW, since 2014 SevenOne Media estimate, excluding direct mail and directories, Online including display (banner and video), excluding search and affiliate Source: Media usage 2014 (n=1,501) Based on Adults 14+ yrs forsa, SevenOne Media

57 2 Lagging TV share in Germany offers large upside potential Share of advertising: TV vs Print 2013 (as percent of total media) 45,3 48,7 40,0 38,5 38,9 42,4 38,9 31,8 22,6 25,7 21,9 19,3 22,4 20,6 24,5 17,6 20,5 25,1 TV Print October 15, Source: Zenith Optimedia Advertising Expenditure Forecasts September 2014, harmonized on a near net basis / Total media incl. paid search/ affiliate and online

58 2 ~EUR 1.7bn net print spendings addressable for TV Print & direct mail gross advertising market 2013 (in EURbn) 12.0 Direct mail 27% 5.4 Magazines 33% Structural effect new channels 1.7 net Daily newspapers 39% 3.5 Total (gross) Not directly addressable 1 Price promotion/ free sheets 2 Regional Local Core TV market potential October 15, Including: direct mail (partly) addressed, Media, classified advertising, B2B, total spendings < EUR 200k, Tobacco, partly commercial advertising in daily newspapers; 2 Including: direct mail not addressed, commercial advertising (daily newspapers): commerce, mail order selling, building trade; Source: Nielsen Media Research (2013) / SOM Market Insights: own calculation

59 2 TV can address key reasons for print bookings Media planning Key reasons for print bookings Target group fit Additional net reach to other media Yearlong media plan with small budget P7S1 actions Complementary P7S1 TV channels/formats TV with fastest and highest net reach build-up TV in short flight with higher net reach Research General Multiple exposure in different media with better impact Image transfer from high gloss magazines and other advertisers Print is permanent and haptic No existing TV spot Useful for products in need of explanation Sampling possible Multiple TV exposures increases campaign recall and sympathy Image transfer from format or P7S1 s Topic Breaks for on air gloss TV with highest ROI SevenOne Media will support spot production New TV advertorial product TVSmiles TV extension allows for targeted sampling of products October 15,

60 3 Well targeted new channels widen P7S1 customer base sixx SAT.1 Gold ProSieben MAXX Source: SevenOne Media October 15,

61 3 Public broadcasters with EUR 300m net revenues potentially attractive target for new channels Structural shares in % (size of circles = net TV revenues absolute in EURbn) 45,00 High hh net income 40,00 Old 35,00 30,00 EUR 300m net revenues Young 25,00 20, Low 50 hh net income October 15, Basis: all TV households in Germany (GER+EU) / A 14+ yrs. (64,96m) / period: / Mon.-Sun. / 03:00-03:00 h; Indication: x-axis: Adults share of A14+: 52.2%; y-axis: household net income EUR 2,500+ share of A14+: 39.2%; Source: AGF in cooperation with GfK / TV Scope / SevenOne Media / Media Strategy & Analytics

62 4 Tapping regional ad budgets of new customer segments by testing regional ad technology model in selected markets Reason why Regional advertising market attractive with EUR 50m market potential Focus on tapping advertising budget of those new regional clients currently investing in print Status Regulatory and political obstacles get in the way of implementing regional TV advertising via cable distribution Alternatively push of national offers for regional customers Furthermore testing regional ad technology model in selected markets by driving technology enabled individual targeting that complies with all data protection requirements October 15,

63 5 Combined TV/Digital offer to target large free sheet budgets Example Austria National retailer s TV spot with few offers App might provide regional leaflets & offers to user (location based) October 15,

64 6 Pilots for individualized targeting with HbbTV split screen and switch-in product Red Button Cut-In Red Button Switch-In Attractive user potential: 10 million households with HbbTV connected TV sets Playout within specific content possible Pilot case for individual targeting in preparation Strict observation of data protection requirements October 15,

65 7 Strong potential for growth with betting customers Estimated revenue potential private TV ad market (in EURm) Betting New clients depending on granting of licences (delayed to 2015) Lottery Exclusive partnership with GKL Win new private clients Pokerschools Ongoing legal discussion 2013E 2014E 2015E 2016E 2017E 2018E October 15, Source: SevenOne Media estimate

66 8 Enlarging TV ad market by tapping non-media budgets Type of budget Platform/ad packages Sales budgets, trade marketing Ad allowance -packages HR/recruiting Employer Branding package Recruitment short breaks PR/Corporate communication TV advertorials Corporate short breaks October 15,

67 AdFactory targets 9 AdFactory established as the creative marketer of P7S1 to meet market needs Increase ad impact/de-commoditize TV advertising Strengthen direct relationship with advertisers Secure commitments & accelerate burn-down rate 4 Generate on top customer budgets 5 Attack fresh budgets 6 Develop new markets 7 Create new advertising inventory in addition to 12 minutes legally allowed October 15,

68 9 Premium prices for special creations and exclusive positions Split screen positions TV commercial uniquely positioned in a split screen during or close to the program Premium pricing: 30-50% surcharge Extra surcharges occur for additional customization Special thematic ad breaks Special packaging with perfect fit for luxurious brands Exclusive positioning as short break Premium pricing: 10-40% surcharge Highly exclusive October 15,

69 9 On-top budgets through product placement and branded entertainment Product placement Different integration levels during production Digital product placement, a subsequent integration in postproduction as a technical solution allowing short term placements On top of 12 minutes/on-top budgets Branded entertainment Advertisers TV show, owned media in free TV On top of 12 minutes Premium pricing On-top-investments Dauerwerbesendung October 15,

70 Agenda 1 Key achievements 2 The advertising power of TV 3 TV market with further significant growth potential 4 TV effectiveness further improved through natural fit with digital ad extensions October 15,

71 Digital apps extend sales funnel from TV spot to POS Branding/Image Activation Sales Funnel Awareness Leads Prospects Sales October 15,

72 TVSMILES able to extend TV spot to test drive lead generation conceptual Lead to configurator and test drive October 15,

73 Traffic generation is the key challenge for offline retailers shopkick with proven success On the couch In the shopping mall In the store INTENT TO BUY The new digital circular/freesheet for inspiration at home. IN-STORE TRAFFIC The shopping navigator: individual push notifications steer users to store. Shopkick with proven success in increasing store traffic & revenues % additional revenues within shopkick users for participating US retailers INCREMENTAL REVENUES Customers get rewarded with kicks for walk-ins and product scans. October 15,

74 HbbTV usage leads to high brand engagements and transactions Intensive usage of Hyundai -Microsite (36,300 clicks) Promotional space in startbar Red Button TV spots Microsite October 15,

75 Booming s TV-Sync improves CPO for Klebefieber Campaign briefing Increase sales in online shop Improve CPO Implementation TV-Sync optimization of SEA campaign parallel to TV flight Success Orders in online shop improved CPO with 15%, CPC with 41% October 15, Source: Google AdWords, Booming PIT; CPO: cost per order, CPC: cost per click Period: ,

76 Summary TV ad market with further growth potential mainly driven by gains from print and pricing opportunities within a stable ad market P7S1 with strong performance in continued outperforming of TV ad market Innovative ad concepts and stimulation of new markets drive share growth new digital TV extension portfolio in development October 15,

77 Creating new growth CMD 2014 Distribution Conrad Albert ProSiebenSat.1 Media AG October 15, 2014 October 15,

78 Executive Summary 2018 CMD target confirmation Since Q Distribution P&L with positive recurring EBITDA contribution We are ahead of pro rata CMD target for 2014 We will deliver our revenue target of EUR 155m by 2018 with further upside potential Distribution everywhere, anytime, on any device driving reach and revenues for linear and non-linear assets Distribution growth drivers Pay TV monetization growth through fostering existing and new offerings Technology development creating future products and monetization upsides October 15,

79 Key achievements Consumers willingness to pay to translate into estimated HD revenue CAGR of 15-20% 1 to 2018 Channels included in successfully monetizing SD and HD bundles Q year-on-year distribution revenue growth of 25% with high profitability 1 CAGR October 15,

80 Important market trends Growing willingness to pay for technology, quality and content enhancing consumers convenience Content platforms keener than ever and in need of competitive entertainment offerings Digitization of distribution and OTT delivers alternatives for consumers October 15,

81 Four key strategies 1 Our linear assets everywhere, anytime, on any device 2 Strive for 100% reach of our digital assets on all relevant devices 3 Monetization of technology HD and future technology growth potential 4 Strengthen and grow our Pay TV business October 15,

82 Distribution channels Assets 1 Broad distribution already secured FTA Pay TV October 15, Note: 7TV being both a distribution channel and digital app asset

83 1 Mobile distribution future driver of reach and monetization Own app for live stream, catch-up; marketing cooperation with major German mobile operator eplus From day one in mobile TV streaming app magine TV live stream on major German TV streaming app H Already ~350k mobile users of our TV livestream TV live stream for all T-Entertain customers October 15,

84 1 Clear path to grow mobile business Distribution Partners Win more telecommunication operators as partners Expand mobile streaming to more devices, e.g., Smart TVs Sales Offer special promotional/bundled offerings Drive deep tariff integration Outlook OTT goes mass market 1 October 15, German tablet and smartphone penetration to double by 2018; source: emarketer, 2013 vs. 2018

85 Distribution channels Devices 2 Ability to create reach for our digital assets Smart TVs Mobile devices Game consoles New devices, dongles, etc. 4) 3 ~90% of devices maxdome on 1st page 1 Apps available on > 95% devices 2 3 maxdome on >35% connected consoles maxdome launch partner on top 2 new devices October 15, First page placement on Smart TVs of Samsung, LG, Sony, Philips, Panasonic sold in 2014; 2 7TV Apps available from Android: 4.0, ios: 7.0, Windows Phone 8: WP 8.0; 3 Maxdome (already on PS3/PS4) & My Video app launch in Q3 on Xbox One with a connection Rate > 75%; 4 Amazon fire TV launch announced for Q4

86 2 Strive for 100% distribution of our assets Reach anywhere, anytime Availability on any device Create winwin partnerships with platforms from launchon Leverage big data Video Pay VoD Video Free VoD Music Games Weather Fitness Mobile before 2016 Tablet Smart TV Consoles Chromecast before 2016 before 2016 before 2016 before 2015 before 2015 before 2016 before 2016 before 2016 Fire TV before 2015 Driving advertising, transaction and subscription revenues October 15, Note: Deezer P7S1 minority participation, structured as warrant

87 3 Steady growth of HD subscribers HD FTA subscriber growth (m) Average sequential quarterly increase of +17% Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q October 15, Note: Subscribers refers to paying subscribers as reported by platform partners. Subject to subsequent adjustments if partners revise figures

88 3 Top actions to further grow HD take-up Product push activities 1 2 Free promotional periods: e.g., Christmas in HD Free HD periods and HD marketing during major sports events April 2014 Bundling 3 4 Bundle HD with platform partners and P7S1 assets, e.g., HD+, HD+ replay and maxdome Direct link from our websites to HD subscriptions TV power 5 6 Integrate banderoles on SD channels to create awareness for HD New HD spots for on air promotion including partner platforms Sales cooperations 7 8 Cooperations with CE industry, e.g., pre-installations on hardware, HD voucher integration Drive joint sales campaigns with distribution partners October 15,

89 3 We expect ~40% of technically addressable households to pay for HD in 2018 German HD subscriber growth [HH in m, EoP] ø ~300k quarterly net adds +49% delivered 18.9 ø ~240k quarterly net adds +15% to meet target 21.7 Households technically able to receive HD TV signal ,7 4,8 9,2 Households paying for HD TV 2011 Q E Continued double-digit subscriber growth Steadiness of revenues supported by low churn October 15, Source: TNS Infratest market research study commissioned by ProSiebenSat1 2013; P7S1 estimates; HH not paying for HD in 2018 composed of HH that consider free HD signal of public broadcasters sufficient, that are price-sensitive and unwilling to pay, that are late adopters or technically non-sophisticated

90 3 Technological evolution opening new business opportunities Quality Devices Future technologies Technology monetization Smart TVs as distribution platform >20m connected devices 2020 FTA technology and content in development 5.5-6m UHD ready devices 2020 >25% annual growth rate until 2020 First mover with assets on new devices Proven technical affinity of German consumers Reach and monetization levers through digital assets Thrilling quality 4x HD driving subscription uptake Consumer benefit, triggering reach & monetization Sources: IHS, P7S1 analysis October 15,

91 4 Pay TV upside through product and distribution diversification Existing Pay TV offering Pay TV growth strategies Diversification of distribution Leverage new distribution ways, e.g., OTT New offerings Create new linear and OTT channels, reply to special target groups and line-extended content of strong TV shows, e.g., Promi Big Brother New bundles Generate additional revenues with specific bundling approaches Partnerships Drive partnerships with content and platform owners October 15,

92 4 New opportunities for outstanding entertainment offerings Unmet Pay TV consumer needs Basic Pay TV offering for satellite population outside Sky Affordable (single/unbundled) premium channels October 15,

93 Well on track to achieve 2018 CMD revenue growth targets Achievement by Q (LTM) Key growth levers External revenues [in EURm] ~ 155 HD subscriber growth Pay TV development linear projection of CMD target +100 New distribution opportunities (any place, time, device) ~ 55 Advanced team skills in sales, product development and marketing Distribution 2012 H (LTM) Remaining target Distribution 2018E Strong win-win cooperations with our partners Positive earnings contribution Sources: P7S1 analysis October 15,

94 Disclaimer This presentation contains "forward looking statements" regarding ProSiebenSat.1 Media AG ("ProSiebenSat.1") or ProSiebenSat.1 Group, including opinions, estimates and projections regarding ProSiebenSat.1's or ProSiebenSat.1 Group's financial position, business strategy, plans and objectives of management and future operations. Such forward looking statements involve known and unknown risks, uncertainties and other important factors that could cause the actual results, performance or achievements of ProSiebenSat.1 or ProSiebenSat.1 Group to be materially different from future results, performance or achievements expressed or implied by such forward looking statements. These forward looking statements speak only as of the date of this presentation and are based on numerous assumptions which may or may not prove to be correct. No representation or warranty, expressed or implied, is made by ProSiebenSat.1 with respect to the fairness, completeness, correctness, reasonableness or accuracy of any information and opinions contained herein. The information in this presentation is subject to change without notice, it may be incomplete or condensed, and it may not contain all material information concerning ProSiebenSat.1 or ProSiebenSat.1 Group. ProSiebenSat.1 undertakes no obligation to publicly update or revise any forward looking statements or other information stated herein, whether as a result of new information, future events or otherwise. October 15,