Each year there is speculation that TV broadcaster ProSiebenSat.1 will finally be admitted to Germany’s DAX index of the 30 top publicly-listed companies.
Until now, nothing has happened. But there was clearly something afoot last week in meetings with the news media in Munich. No one said it directly, but the company’s managers, especially the chief executive, Thomas Ebeling, gave the impression that in March theirs would be the first media company to break into the leading index.
Unless something extraordinary happens soon, ProSieben will replace K+S, the German mining and raw materials company, as a DAX-30 company on March 21.
“There is a high probability that K+S will be removed from the DAX. ProSieben would most certainly be the successor.”
K+S, which manufactures fertilizers and salts, has been battered on the markets in recent months and its shares have been trading at a three-year low.
Criteria for membership on the DAX include stock-market revenues and market capitalization in broad-based ownership. In February, K+S was no longer even among the 45 largest companies, so the Deutsche Börse could technically use the fast-exit rule.
“There is a high probability that K+S will be removed from the DAX,” said Sophia Wurm, an analyst for Commerzbank. “ProSieben would most certainly be the successor.”
Entry into the DAX would be a happy moment in the company’s rollercoaster history.
In 2003, entrepreneur Haim Saban purchased the company for comparatively little money from the holdings of the insolvent Kirch Group. The family broadcasting group was burdened with debts from financial Investors, Permira and KKR, and almost overwhelmed by austerity measures.
A change for the better came when Mr. Ebeling, an industry outsider, was appointed CEO in 2009. During his tenure, the unpopular shareholders Permira and KKR left.
Mr. Ebeling also reworked the company to become less dependent on classic television revenues. By 2015, almost 40 percent of ProSieben’s revenues had nothing to do with TV advertising.
Instead, it grew into a 21st century mass media company — with investments in digital travel exchanges, price-comparison Portals and online retailers. It also has a music label and is active in sports management. Its agency Sam Sports’ clients include German national soccer team Defender, Jérôme Boateng.
The strategy has been successful. Last year proceeds rose by 13.4 percent to €3.26 billion – a record. And operating profits also reached an all-time high, rising by 9.2 percent to €925.5 million, or about $1 billion.
Remaining below the line was a surplus of €391 million. ProSieben intends to grow further in 2016, with targeted growth of more than 10 percent in proceeds.
Its share price reflects this positive development: Worth a mere 90 cents in spring 2009, its current value is more than €46, or about $50.
In 2015, ProSieben was also able to top its rival RTL in the core business of television advertising. Its own marketer, Seven One Media, had a market share of 44.4 percent, a solid 10.9 percentage points ahead of RTL subsidiary, IP Deutschland.
In the audience market, ProSieben increased its market share to 29.5 percent in the ad-relevant target group of 14- to 19-year-olds. This was due especially to flourishing niche broadcasters like Sixx, ProSieben Maxx and Sat.1 Gold. A documentary channel could come next.
But ProSieben intends to remain on the sidelines in the duel for broadcast rights for the national soccer league, the Bundesliga, beginning in 2017.
“Big sports broadcasting rights don’t make economic sense for us,” said Mr. Ebeling at the annual news conference.
Company management emphasized that not much will change upon entry into the DAX. ProSieben is already managed as if it were listed on the blue-chip index.
Kai-Hinrich Renner is Handelsblatt’s media reporter. To contact the author: firstname.lastname@example.org