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| October 15, 2014 1
ProSiebenSat.1 Media AG | October 15, 2014
Creating new growth CMD 2014 TV Operations – Thomas Ebeling
| October 15, 2014 2
Agenda
Performance review & achievements 1
Market dynamics 2
TV operations 3
Summary 4
| October 15, 2014 3
[Audience share, in percent]
Share of viewing Share of advertising
[Gross values, in percent]
P7S1 has a strong position in the German TV market
100%
owned
28.4
24.6
2014 YTD
30.9
100%
owned
50%
owned
36%
owned
2014 YTD
44.4
32.3
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, 2014.
Source: AGF in cooperation with GfK/TV Scope/ProSiebenSat.1 TV Deutschland Strategy & Operations/SoA: Nielsen Media Research/SevenOne Media, Sales Steering & Market Insights.
| October 15, 2014 4
Growing and outperforming key competitor
P7S1 growing market share…
28.1 28.6
2013 FY 2014 LTM
…and outperforming key competitor
+2.0
+3.8
∆ 2013 FY ∆ 2014 LTM
Lead almost
doubled
+1.8
[Audience share in %pts vs. RTL Group]
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, 2014.
Source: AGF in cooperation with GfK/TV Scope/ProSiebenSat.1 TV Deutschland Strategy & Operations.
Audience shares
[in percent]
+0.5%pts
| October 15, 2014 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
8
10
12
14
16
Q1 2014 Q2 2014 Q3 2014
SAT.1 vs. VOX
Audience shares
[In percent, A 14-49]
4
6
8
10
12
Q1 2014 Q2 2014 Q3 2014
Basis: All German TV households (Germany + EU), A 14-49 years; Mon-Sun, full day 3-3 h.
Source: AGF in cooperation with GfK/TV Scope/ProSiebenSat.1 TV Deutschland Strategy & Operations.
| October 15, 2014 6
Broad coverage of relevant target groups – complementary to
competition
male
female
old young
Target positioning by age and gender
Basis: All German TV households (Germany + EU), A 14-49; Mon-Sun, full day 3-3 h, January 1, 2014 – June 30, 2014.
Source: AGF in cooperation with GfK/TV Scope/ProSiebenSat.1 TV Deutschland Strategy & Operations.
| October 15, 2014 7
Relevant
target group [In years]
F/M 14-39
F 14-39
F 40-64
F/M 14-49
M 14-39
F/M 14-59
15.2
9.5
5.5
2.5
1.1
1.9
Audience share in relevant target groups
[2014 YTD, in percent] Channel
Our channels hold strong positions in their relevant target
groups
Basis: All German TV households (Germany + EU), A 14-49; Mon-Sun, full day 3-3h; 2014 YTD: January 1, 2014 – September 30, 2014.
Source: AGF in cooperation with GfK/TV Scope/ProSiebenSat.1 TV Deutschland Strategy & Operations.
| October 15, 2014 8
Key achievements since Capital Markets Day 2013
Expanded lead audience share in Germany (A 14-49)
Maintained rating performance in fragmented/digitized market
New channel growth
Leading in TV 3.0
Fixed SAT.1 daytime
Created outstanding linear content
✔ 1
2
3
4
5
6
✔
✔
✔
✔
✔
| October 15, 2014 9
Agenda
Performance review & achievements 1
Market dynamics 2
TV operations 3
Summary 4
| October 15, 2014 10
TV will remain lead medium, having a tail wind from online/
digital
Online video market
• 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
2 Online video market 2
Content 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
3 Content supply 3
TV market
• Fragmentation of channels slowing down and relevant set
of TV channels will remain stable
• Only top formats & lighthouse with high ratings
4 TV market 4
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
• Better signal qualities and
high resolution screens
enrich TV experience
TV/video consumption 1
P7S1
| October 15, 2014 11
TV remains the central fire place for German households
TV market trends – P7S1 projection Outlook
TV remains the central fire place as the everyday
lean-back medium
Teenagers do not
expect a decline in
importance of TV1
Prefer watching
in company4
New TV screens/hardware make watching TV more
stirring – and people invest into new TVs
New screens make TV
even more engaging5
HDTVs sold
in 20132
Growing VoD market with minimal impact on
linear TV – but replacing DVD market 196m
EUR VoD market 2014
(+27% vs. PY)3
TV and TV-related continues to dominate media
consumption 185 min
TV-related usage1
(0% CAGR 13-18)
Online video viewing1
(+19% CAGR 13-18)
78%
8m
88%
for
58%
20 min
13% VoD as percent of
total video market3
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.
1
| October 15, 2014 12
P7S1 projection
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 14-49 [In minutes, before planned panel adaptions]
2012 2013 2014E 2015E 2016E 2017E 2018E
0
40
80
120
160
200
240
+2%
-1%
CAGR
2013-2018
CAGR
2013-2018
+21% CAGR
2013-2018
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).
Total video
usage
TV viewing
time
Online video &
TV-related
content
1
| October 15, 2014 13
Increased coverage of actual TV viewing
Potential 2015-2018 TV panel adaptations
Live streaming in web browser and with DVB-T sticks (Q3 2015)
All screens:
Complete coverage of 2nd, 3rd, … TV sets
Inclusion of second home households
TV panel extension with target groups
Inclusion of German-speaking
non EU foreigners (e.g. Turkish
population)
Source: SevenOne Media
Live streaming in mobile and smart TV apps (e.g., 7TV, Magine, Zattoo; Q1 2016)
All usage situations in households:
1
| October 15, 2014 14
P7S1 projection
Video remains the preferred medium for young target groups
Average daily usage in Germany – Young target group A 14-29 [In minutes, before planned panel adaptions]
2012 2013 2014E 2015E 2016E 2017E 2018E
0
40
80
120
160
200
Total video
usage
TV viewing
time
+2%
-4%
CAGR
2013-2018
CAGR
2013-2018
Online video &
TV-related
content
+18% CAGR
2013-2018
Source: AGF/GfK Fernsehforschung, SevenOne Media Mediennutzungsstudie, comScore Video Metrix, SOM projection.
1
| October 15, 2014 15
Online video & TV-related content conquers mobile devices…
Daily reach of online videos on mobile devices Watched videos on tablets and smartphones
[Tablets and smartphones, in percent] [At least one in a month, in percent]
29
11
3
A 14-29 A 30-49 A 50-64
40
10 9 9 5
35
5 5 7 2
Tablet Smartphone
Clips Catch-up Live
stream
Free
movies VoD
13% of all Germans
watch online videos
on mobile devices 5% of tablet
users consume
PayVoD content
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.
1
| October 15, 2014 16
…also growing reach of TV formats
Total video views
Full episodes
Short clips
Live stream
+25%
+15%
+33%
+31%
Season 8 Season 9
22.4 27.9
10.3 11.8
10.8 14.4
1.3 1.7
[In m]
Germany’s next Topmodel season 9 vs. 8
1
| October 15, 2014 17
Second screen retains TV viewing 1
Parallel usage of TV and internet [In percent, A 14-49]
P7 Connect retention rates 20141
[As factor, P7 Connect vs. TV]
P7S1 conversion rates 20142
[In percent, TV to P7 Connect]
Germany‘s
next Topmodel
The
Voice
27
75
2003 2014
+177% x1.3 x1.2
4.4
1.7
Germany‘s
next Topmodel
The
Voice
Ø TV
viewing
time
Ø TV
viewing
time
100
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.
1
| October 15, 2014 18
Market research proofs positive impact of second screen on
first screen
were more aware of TV program due to their social media interactions
enjoyed TV more when social media was involved
watched more Live TV because social media was involved
25%
15%
11%
Source: Nielsen, 2014 (YoY comparison 2012/2013)
US citizens are increasingly integrating TV viewing and social media
1
| October 15, 2014 19
Germany clearly less vulnerable to disruption of linear TV than
US (1/2)
ØUSD 79
84% Pay TV
penetration1
Monthly spend per Pay
TV HH2 ØEUR19
17%
45%
17% On-Demand TV
penetration3
Multi-screen video penetration
4 29%
5%
46% Connected TV penetration
5 10%
18% Digital affinity
(e.g., music streaming6) 5%
1 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 2014 4 Video consumption via non-TV set at
least once per month; US: eMarketer; DE: Digitalisierungsbericht 2014 5 Active connected TV sets; US: eMarketer; DE: Digitalisierungsbericht 2014 6 Music streaming revenue share 2014E; US,DE: PWC Global Entertainment Outlook 2014
US Germany
2
| October 15, 2014 20
Germany clearly less vulnerable to disruption of linear TV than
US (2/2)
Channel fragmentation
Ad break intensity No ad break regulations –
high intensity (15-20 min/h) and frequency
Highly regulated – low intensity (max 12 min/h)
and frequency
Basic TV package incl. >500 channels –
due to diversity of ethnical groups & interests
Less fragmented/strong lighthouse channels
– due to lower social diversity
Content quality in Free TV
High-quality & top sport content not in
basic TV service – Pay TV a ‘Must Have’
>50 high/good quality channels in FTA w/ top
US & sport content alongside private channels
Language
Native language Dubbed version
Studio contracts
Broad syndication model FTA biggest, supported by holdbacks
Illegal viewing Commonly used – especially streaming Limited due to German language dubbing –
most illegal content only in English
Power of domestic content and local hosts
Many creative, local authors and formats Few local ‘Must See’ hosts – licensing of inter-
national content and formats on FTA channels
Less impact through streaming on German ad-driven FTA market compared to US
2
| October 15, 2014 21
Scandinavia with significantly higher affinity towards pay and
digital compared to Germany…
ØEUR 42
88% Pay TV penetration
1
Monthly spend per Pay
TV HH2
ØEUR 19
17%
23% On-Demand TV penetration
3 5%
26% Connected TV penetration
4 10%
>60% Digital affinity
(e.g. music streaming5) 5%
1 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 2014 4 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% )
Germany Scandinavia
2
| October 15, 2014 22
… since Scandinavian TV characteristics also significantly
differ from Germany
Less impact through streaming on German ad-driven FTA market compared to Scandinavia
Channel fragmentation
Content quality in Free TV
Language
Fragmented with respect to total popu-
lation - strong intl’ and lighthouse channels
Less fragmented/strong lighthouse channels
– due to lower social diversity
Medium quality overall – High-quality
mainly in Primetime
>50 high/good quality channels in FTA w/ top
US & sport content alongside private channels
Illegal viewing Commonly used –
especially streaming Limited due to German language dubbing –
most illegal content only in English
English version Dubbed version
Power of domestic content and local hosts
Local hosts very strong, less international
content available on FTA channels
Few local ‘Must See’ hosts – licensing of inter-
national content and formats on FTA channels
Studio contracts
Less FTA relevance, limited holdbacks FTA biggest, supported by holdbacks
2
| October 15, 2014 23
Strength of FTA limits potential for premium pay bundles
• Majority of mass market sports events covered by
publics1, RTL and ProSiebenSat.1
• sky only covers premium rights for selected events
(e.g., soccer premier league)
Key
Sports
Events
• 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
Top US
Content
• Limited number of local stars Local
Content
Value proposition
of Pay TV/sky
relatively weaker
in Germany –
especially for
mass market
1 Coverage regulated by State Broadcast Treats.
2
| October 15, 2014 24
YouTube’s monthly net reach in young target group on TV
channel level…
Monthly net reach in target group A 14-29
10.5 10.4 10.2 9.6 9.4 9.3
7.6
5.1
3.6
Basis: A 14-29 years; Mon-Sun, full day 3-3 h; May 2014.
Source: Double Play dataset, own calculations, AGF/GfK TV Scope.
[In m]
3
| October 15, 2014 25
…but high TV consumption of YouTube heavy users leads to
very low additional reach
1
TV viewing time of YouTube heavy user1 YouTube adds only 4% net reach to ProSieben
[Viewing time in minutes per day]
A 14-29 A 14-49 YouTube heavy
user
120
173 180 10.4 10.8 +4.0%
[Net reach per month in m; A 14-29]
&
1 YouTube heavy user representing 80% of YouTube consumption
Basis: A 14-29 years & YouTube heavy user; Mon-Sun, full day 3-3 h; May 2014 Source: Double Play dataset, own calculation, AGF GfK TV Scope
3
| October 15, 2014 26
Fragmentation of market slowing down – we expect a relatively
stable relevant set
Broadcast stations received and in 'Relevant Set'
41
52
63
73 77 80
85
5 6 6 6 6 6 7
2004 2006 2008 2010 2012 2014 2018E
Ø number of receivable channelsØ number of Relevant Set channels (>80% of TV viewing time)
Basis: All TV households Germany [D+EU]/Adults 14-49 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.
4
| October 15, 2014 27
Agenda
Performance review & achievements 1
Market dynamics 2
TV operations 3
Summary 4
| October 15, 2014 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
Balanced investment mix between lighthouse formats, serial quality TV and
new innovative low-cost concepts
Good genre split balance between consumer preferences and optimization of profits
Lead digital innovations to drive viewer loyalty and TV impact
| October 15, 2014 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
Balance lighthouse content, serial quality TV and low-cost innovative formats
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
1
2
4
6
7
8
9
Best people, diverse teams, best creative process 10
Create outstanding linear content to maintain leading position 3
Secure access to US content at acceptable terms 5
| October 15, 2014 30
Finance lighthouses through higher share of serial quality TV
and low cost innovative formats
Lighthouse
Serial quality TV
Non-serial quality TV
Low cost
innovative formats
Drive share of serial blockbuster formats
Balance lighthouse investments
Decrease number of expensive one-offs
Introduce on more slots
Grid share
(2018 vs. 2014)
Higher share in grid
Lower share in grid
| October 15, 2014 31
Local lighthouse formats
(incl. fiction)
Serial quality formats
such as quiz and game shows
Content exchange/re-use
management
Local low cost
innovative formats
Licensing (US/international)
(incl. documentary/ready-mades) 40-60%
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
One tier 1 channel for young viewers i.e., ProSieben
Establish competitive but
sustainable program mix Broad channel portfolio
10-20%
10-20%
5-15%
5-15%
Establish competitive but sustainable program mix with a
broad channel portfolio
| October 15, 2014 32
Examples
For top US content, multi-year output deals secured with US
major and leading independent studios
| October 15, 2014 33
Content exchange management means re-using existing
content for new formats
Content Exchange
Management
Content sources New formats
+ other existing formats + other new formats
Content exchange management for “K11” & “Niedrig und Kuhnt” planned.
| October 15, 2014 34
Digitally enhance viewer experience by creating a viable
second screen experience
Enhance mobile monetization
Foster digital profile of our TV channels
Increase TV reach ✔
✔
✔
Key objectives of our second screen strategy
| October 15, 2014 35
Show case “7 Connect”
Live stream
Social
News
Polling
| October 15, 2014 36
Execute on value based production targets
Rebalance commissioned portfolio
Minimize high-risk lighthouse investments without payback
Further optimize programming
Maintain stock management
Cost efficient big data content sourcing by Content Cloud Management System
Push content sales for external clients
1
2
4
6
7
8
9
Use innovative production facilities to produce low cost TV formats 10
Produce as few as needed inefficient one-offs 3
Increase share of (repeatable) serial quality TV 5
Execute value based production and other cost efficiency
measures
| October 15, 2014 37
Agenda
Performance review & achievements 1
Market dynamics 2
TV operations 3
Summary 4
| October 15, 2014 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, 2014 39
ProSiebenSat.1 Media AG | October 15, 2014
Creating new growth CMD 2014 TV Ad Sales – Thomas Ebeling
| October 15, 2014 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, 2014 41
ProSiebenSat.1 with strong performance in 2014
YTD 2014 YTD 2013
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 10.92 EUR 10.32
TV ad market growth (net) ~ +2.5%
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
~ +1.3%
| October 15, 2014 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, 2014 43
Innovative ad concepts Sales execution Digital TV extension portfolio
Focus on innovation, customer satisfaction and sales
execution
Source: SevenOne Media
Digital conception Customized concepts for TV & Online
360° conception Sales concepts according to market needs
Branded Entertainment Integration between editorial contents
Thematic ad breaks Special packaging & exclusive positioning
Theme weeks/ days Tailor made programming for sponsoring
Retail extension with shopkick Offers customers rewards for visiting stores
Brand extension with TVSMILES Extends TV campaigns directly to mobile
marktguru in Austria Digital freesheets
HbbTV Brand engagement on first screen
TV-Sync Optimized search advertising
Targeting new customers New channels expand target groups
Pricing excellence Competitive gross price increases
TV/Online sales tandems 360° sales approach
Great research High-impact research projects
| October 15, 2014 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, 2014 45
The advertising power of TV
Combination of highest and fastest reach and strongest ad impact makes TV the most effective and
efficient medium with highest ROI 1
Mass reach becomes increasingly important in fragmented media landscape 2
TV remains the mass medium with increasing relative reach
• Massive reach decline of print
• Complex and fragmented digital media landscape
3
Therefore solid price increase potential despite possible slight net reach reduction 4
| October 15, 2014 46
The advertising power of TV
YouTube is not able to add incremental reach to TV campaigns because YouTube usage is highly
concentrated on a small group of heavy users. 5
Facebook disappoints as a medium of dialogue with less than 1% of followers showing brand-
engagement 6
The growing use of second screen opens new opportunities for TV advertising with no loss of ad
effectiveness
7
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 8
| October 15, 2014 47
Attractive pricing Highest effectiveness
TV the most effective and efficient medium
166
190
367
442
0 100 200 300 400 500
InPage / Display
InStream Video
TV
Magazines Newspapers
50
15
Online
25
0.5
TV
15
5
40
10
Advertising effectiveness
(Aided advertising recall, index 100=without contact)
Net CPT ranges
(EUR)
Basis: n=200, 14-64 years; 4 tested advertising campaigns per medium.
Source: Eye Square 2012; SevenOne Media estimate; CPT = Cost per thousand.
| October 15, 2014 48
TV price competitive in Germany vs. other European
countries
142
111 103 100
63
UK France Italy Germany Spain
0
20
40
60
80
100
120
140
160
Ø Net-CPT (based on 20 seconds) Adults
Index
Source: 2013, Nielsen/ Auditel, Infoadex/ Sofres, DDS, ZAW/ AGF GfK, IREP/ Mediametrie
| October 15, 2014 49
TV generates high long-term ROIs
65% of all analyzed brands
long-term ROI >1
43% analyzed brands with
long-term ROI >2
Based on 204 analyzed FMCG brands
2.65 Average
long-term ROI
Long-term ROI: ROI after 5 years, ROI = ratio of additional sales revenues / TV ad spend.
Source: GfK / SevenOne Media
| October 15, 2014 50
Change “Reach Impact Score” “Reach Impact Score” adults 14-49 yrs
Superior and stable level of TV reach and impact
198 202
157
129
90 113
20 16 12 8
2008 2013
0
50
100
150
200
250
TV Radio Internet Newspaper Magazine
+2%
-18%
+26%
-19%
-31% -40%
-30%
-20%
-10%
0%
+10%
+20%
+30%
Score
Reach Impact Score = net reach (number of media users in %) × staying time (Ø usage duration per media user in minutes)
Based on Adults 14-49 yrs
Source: Media Usage Survey SevenOne Media 2008 / 2013 (SevenOne Media / mindline media)
| October 15, 2014 51
TV
Total Internet
Total
Usage Duration 14+
(hours per month)
50%
100% Net Reach 14+
Private
TV
140 130 120 110 100 90 80 70 60 50 40 30 20 10 0
Monthly net reach and usage duration 2014
TV dominates media consumption while digital is highly
fragmented
Basis: TV viewers 3+; internet users 6+; March 2014.
Source: AGF in cooperation with GfK / TV Scope / Comscore MyMetrix (internet at home & work w/o mobile usage)
| October 15, 2014 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, 2014 53
Market potential 2018 vs. 2012 [in EURm]
Net price increases to drive ad intensity
Print cannibalization – structural effect
New channels – expand target groups
Regional TV advertising
Combined TV/Digital for free sheet market
Individualized TV targeting based on IP
Build new markets (e.g., betting)
Attack fresh budgets (sales, HR, PR)
Increase placement/ new ad concepts
Potential shift to Online Video
Market base case
80
170
30
50
75
30
30
-65
Market upside
50
50
25
Key risks
-10
-40
-25
Solid TV ad market growth with higher upsides than risks P
rin
t
2
3
4
5
6
7
8
9
10
1
∑ 400
(CAGR 1.7%)
∑ 125 ∑ -75
| October 15, 2014 54
1
50
100
150
200
250
300
CPT viewing share
US network channels‘ tripled CPT despite viewing share cut in
half − growth potential for Germany
CPT, viewing share Prime Time‚ Germany
Index: 1995=100
1995 2000 2005 2010 2012
CPT, viewing share Prime Time‚ US-Networks
Index: 1995=100
1995 2000 2005 2010 2012
50
100
150
200
250
300
CPT viewing share
Basis: Germany (SAT.1, ProSieben, RTL, kabel eins, Vox, RTLII, SUPER RTL, ARD, ZDF) Prime Time based on Adults 14-49 years, USA (ABC, CBS, NBC)
Source: TV Dimensions 2013, AGF in cooperation with GfK
| October 15, 2014 55
Currently
addressable
market
Five levers to address print budgets
• 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
2
| October 15, 2014 56
Net media mix Germany,
2000, 2013, 2014E and 2018E (in percent)
Usage vs. net media mix Germany 2014
(in percent)
TV share of total ad market will increase – as relation
between usage and ad spend continues to normalize
25% 29% 30% 32%
66% 51% 49% 43%
2000 2013 2014E 2018E
37% 30%
4%
49%
Usage Net mediamix share
1ppt increase in media mix equals
~EUR 60m for P7S1
2
TV Print
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
| October 15, 2014 57
Lagging TV share in Germany offers large upside potential
22,6
31,8
48,7
40,0
25,7
38,5 38,9 42,4
38,9
45,3
21,9 19,3 22,4 20,6 24,5
17,6
20,5 25,1
Share of advertising: TV vs Print 2013
(as percent of total media)
2
TV Print
Source: Zenith Optimedia Advertising Expenditure Forecasts September 2014, harmonized on a near net basis / Total media incl. paid search/ affiliate and online
| October 15, 2014 58
2
Print & direct mail gross advertising market 2013 (in EURbn)
~EUR 1.7bn net print spendings addressable for TV
Total
(gross)
39%
33%
27%
Daily
newspapers
Magazines
Direct mail
Core TV market
potential
Local Regional Price promotion/
free sheets2
Not directly addressable1
5.4
2.3 0.4 0.4
3.5
Structural
effect
new channels
1.7 net
12.0
1Including: direct mail (partly) addressed, Media, classified advertising, B2B, total spendings < EUR 200k, Tobacco, partly commercial advertising in daily newspapers; 2Including: direct mail
not addressed, commercial advertising (daily newspapers): commerce, mail order selling, building trade; Source: Nielsen Media Research (2013) / SOM Market Insights: own calculation
| October 15, 2014 59
P7S1 actions
• Complementary P7S1 TV channels/formats
• TV with fastest and highest net reach build-up
• TV in short flight with higher net reach
• 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
Key reasons for print bookings
• Target group fit
• Additional net reach to other media
• Yearlong media plan with small budget
• 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
TV can address key reasons for print bookings
Media
planning
Research
General
2
| October 15, 2014 60
sixx ProSieben MAXX SAT.1 Gold
Well targeted new channels widen P7S1 customer base 3
Source: SevenOne Media
| October 15, 2014 61
3
Structural shares
in % (size of circles = net TV revenues absolute in EURbn)
20,00
25,00
30,00
35,00
40,00
45,00
0 10 20 30 40 50 60 70 80 90 100
Public broadcasters with EUR 300m net revenues potentially
attractive target for new channels
High hh net income
Young Old
Low hh net
income
Basis: all TV households in Germany (GER+EU) / A 14+ yrs. (64,96m) / period: 01.01.-31.12.2013 / Mon.-Sun. / 03:00-03:00 h; Indication: x-axis: Adults 14-49 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
EUR 300m
net revenues
| October 15, 2014 62
4
Tapping regional ad budgets of new customer segments by
testing regional ad technology model in selected markets
• Regional advertising market attractive with EUR 50m market
potential
• Focus on tapping advertising budget of those new
regional clients currently investing in print
• 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
Reason
why
Status
| October 15, 2014 63
5
Combined TV/Digital offer to target large free sheet
budgets
National retailer’s TV
spot with few offers
App might provide
regional leaflets & offers to
user (location based)
Example Austria
| October 15, 2014 64
Red Button Cut-In Red Button Switch-In
Pilots for individualized targeting with HbbTV split
screen and switch-in product
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
6
| October 15, 2014 65
7
Betting
New clients depending on granting of
licences (delayed to 2015)
Lottery
Exclusive partnership with GKL
Win new private clients
Pokerschools
Ongoing legal discussion
Estimated revenue potential private TV ad market
28
48
84
99 104 104
2013E 2014E 2015E 2016E 2017E 2018E
Strong potential for growth with betting customers
Source: SevenOne Media estimate
(in EURm)
| October 15, 2014 66
Platform/ad packages
• “Ad allowance”-packages
• Employer Branding package
• Recruitment short breaks
• TV advertorials
• Corporate short breaks
Type of budget
8
Enlarging TV ad market by tapping non-media budgets
Sales budgets,
trade marketing
HR/recruiting
PR/Corporate
communication
| October 15, 2014 67
9
AdFactory established as the creative marketer of P7S1 to
meet market needs
Secure commitments & accelerate burn-down rate 3
4 Generate on top customer budgets
5 Attack fresh budgets
Increase ad impact/de-commoditize TV advertising 1
Strengthen direct relationship with advertisers 2
6 Develop new markets
7 Create new advertising inventory in addition to 12 minutes legally allowed
Ad
Facto
ry t
arg
ets
| October 15, 2014 68
Split screen positions Special thematic ad breaks
9
Premium prices for special creations and exclusive positions
• Special packaging with perfect fit for
luxurious brands
• Exclusive positioning as short break
• Premium pricing: 10-40% surcharge
• Highly exclusive
• 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
| October 15, 2014 69
Product placement Branded entertainment
9
On-top budgets through product placement and
branded entertainment
• “Advertisers TV show”, owned media in
free TV
• On top of 12 minutes
• Premium pricing
• On-top-investments
• 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
Dauerwerbesendung
| October 15, 2014 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, 2014 71
Branding/Image Activation
Digital apps extend sales funnel from TV spot to POS
Awareness Leads Prospects Sales Sales Funnel
| October 15, 2014 72
TVSMILES able to extend TV spot to test drive lead generation
Lead to configurator and test drive
conceptual
| October 15, 2014 73
On the couch In the shopping mall In the store
Traffic generation is the key challenge for offline retailers –
shopkick with proven success
The new digital
circular/freesheet for
inspiration at home.
INTENT TO BUY
IN-STORE TRAFFIC
The shopping navigator:
individual push
notifications steer users
to store.
INCREMENTAL
REVENUES
Customers get
rewarded with kicks for
walk-ins and product
scans.
Shopkick with proven success in increasing store traffic & revenues – 50-100% additional revenues within shopkick users for participating US retailers
| October 15, 2014 74
HbbTV usage leads to high brand engagements and
transactions
Intensive usage of “Hyundai”-Microsite (36,300 clicks)
Promotional space in startbar Microsite Red Button TV spots
| October 15, 2014 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%
Source: Google AdWords, Booming PIT; CPO: cost per order, CPC: cost per click
Period: 31.07.-10.08.2014, 11.08.-21.08.2014
| October 15, 2014 76
Summary
1 TV ad market with further growth potential – mainly driven by gains from
print and pricing opportunities within a stable ad market
2 P7S1 with strong performance in 2010-2014 –
continued outperforming of TV ad market
3 Innovative ad concepts and stimulation of new markets drive share growth –
new digital TV extension portfolio in development
| October 15, 2014 77
ProSiebenSat.1 Media AG | October 15, 2014
Creating new growth CMD 2014 Distribution – Conrad Albert
| October 15, 2014 78
Executive Summary
2018 CMD target
confirmation
Distribution growth drivers
Since Q4 2012 Distribution P&L with positive recurring EBITDA contribution
We will deliver our revenue target of EUR 155m by 2018
with further upside potential
We are ahead of pro rata CMD target for 2014
Distribution everywhere, anytime, on any device –
driving reach and revenues for linear and non-linear assets
Technology development creating future products and monetization upsides
Pay TV monetization growth through fostering existing and new offerings
| October 15, 2014 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
Q2 2014 year-on-year distribution revenue growth of
25% with high profitability
1 CAGR 2013-2018
| October 15, 2014 80
Important market trends
Digitization –
of distribution and OTT delivers
alternatives for consumers
Growing willingness to pay –
for technology, quality and
content – enhancing
consumers’ convenience
Content –
platforms keener than ever and
in need of competitive
entertainment offerings
| October 15, 2014 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, 2014 82
FTA Pay TV
Broad distribution already secured A
ss
ets
D
istr
ibu
tio
n
ch
an
ne
ls
Note: 7TV being both a distribution channel and digital app asset
1
| October 15, 2014 83
Mobile distribution – future driver of reach and monetization
TV live stream for all T-Entertain customers
TV live stream on major German TV streaming app
From day one in mobile TV streaming app magine
Own app for live stream, catch-up; marketing
cooperation with major German mobile operator eplus
H1 2014
Already
~350k mobile users of our
TV livestream
1
| October 15, 2014 84
Clear path to grow mobile business 1
Outlook – OTT goes mass market1
• Win more telecommunication operators as partners
• Expand mobile streaming to more devices, e.g., Smart TVs
• Offer special promotional/bundled offerings
• Drive deep tariff integration
Distribution
Partners
Sales
1 German tablet and smartphone penetration to double by 2018; source: eMarketer, 2013 vs. 2018
| October 15, 2014 85
New devices, dongles, etc.
Smart TVs
Ability to create reach for our digital assets D
evic
es
D
istr
ibu
tio
n
ch
an
ne
ls
~90%
of devices –
maxdome
on 1st
page1
maxdome
– launch
partner on
top 2 new
devices
Mobile devices
Apps
available
on > 95%
devices2
Game consoles
maxdome
on >35%
connected
consoles
1 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
2
4)
3
3
| October 15, 2014 86
Mobile Consoles Smart TV Tablet
Games
Video
Pay VoD
Video
Free VoD
Music
Weather
Fitness
Chromecast
before
2015
Fire TV
• Reach
anywhere,
anytime
• Availability
on any device
• Create win-
win partner-
ships with
platforms
from launch-
on
• Leverage big
data
Driving
advertising,
transaction and
subscription
revenues
Strive for 100% distribution of our assets 2
Note: Deezer – P7S1 minority participation, structured as warrant
before
2015
before
2016
before
2016
before
2016
before
2016
before
2016
before
2015
before
2016
before
2016
| October 15, 2014 87
HD FTA subscriber growth (m)
1.2 1.8
2.3 2.8
3.3 3.7 3.9
4.2 4.6
Q3 Q2 Q1 Q1 Q4 Q3 Q2 Q1 Q4 Q2
2012 2013 2014
Steady growth of HD subscribers
4.8
Average sequential quarterly
increase of +17%
Note: „Subscribers“ refers to paying subscribers as reported by platform partners. Subject to subsequent adjustments if partners revise figures
3
| October 15, 2014 88
Top actions to further grow HD take-up
Bundling Bundle HD with platform partners and P7S1 assets, e.g., HD+, HD+ replay and maxdome
Direct link from our websites to HD subscriptions 4
3
TV power Integrate banderoles on SD channels to create awareness for HD
New HD spots for on air promotion including partner platforms 6
5
Sales co-
operations
Cooperations with CE industry, e.g., pre-installations on hardware, HD voucher integration
Drive joint sales campaigns with distribution partners 8
7
Product push
activities
Free promotional periods: e.g., ‘Christmas in HD’
Free HD periods and HD marketing during major sports events 2
1
April 2014
3
| October 15, 2014 89
We expect ~40% of technically addressable households to pay
for HD in 2018
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
3
German HD subscriber growth 2011-2018
4,89,2
0,7
+15% 21.7
12.7
18.9 +49%
ø ~300k
quarterly net
adds delivered
2018E
Households
technically
able to receive
HD TV signal
Q2 2014 2011
Households
paying for HD
TV
• Continued double-digit subscriber growth
• Steadiness of revenues supported by low churn
[HH in m, EoP]
ø ~240k quarterly
net adds to meet
target
| October 15, 2014 90
Devices
Smart TVs as
distribution platform
Reach and
monetization levers
through digital assets
Future technologies
Technological evolution opening new business opportunities
FTA technology and
content in development
First mover with
assets on new devices
>20m connected
devices
2020
>25% annual
growth rate
until 2020
Quality
Technology monetization
Proven technical
affinity of German
consumers
Thrilling quality – 4x
HD – driving
subscription uptake
Consumer benefit,
triggering reach &
monetization
5.5-6m UHD ready
devices
2020
Sources: IHS, P7S1 analysis
3
| October 15, 2014 91
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
Pay TV upside through product and distribution diversification 4
| October 15, 2014 92
New opportunities for outstanding entertainment offerings 4
Basic Pay TV offering for satellite population
outside Sky
Affordable (single/unbundled) premium
channels
Unmet Pay TV consumer needs
| October 15, 2014 93
Achievement by Q2 2014 (LTM) Key growth levers
55
155
Well on track to achieve 2018 CMD revenue growth targets
linear projection
of CMD target
External revenues
[in EURm]
Distribution
2018E
Remaining
target
H1 2014 (LTM) Distribution
2012
• HD subscriber growth
• Pay TV development
• New distribution opportunities
(any place, time, device)
• Advanced team skills in sales,
product development and marketing
• Strong win-win cooperations with
our partners
Positive earnings contribution
+100
~
~
Sources: P7S1 analysis
| October 15, 2014 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.
