ProSiebenSat.1 increasingly invests in sustainable growth / Q3 2018 in line with expectations

ProSiebenSat.1 increasingly invests in sustainable growth / Q3 2018 in line with expectations

Strategy update:

ProSiebenSat.1 aims to increase Group revenues from EUR 4 billion to EUR 6 billion and adjusted EBITDA from EUR 1 billion to EUR 1.5 billion in the mid-term

Investment in program, data and advertising technologies

Entertainment: focus on local content, digital reach, improved monetization

Red Arrow Studios: significantly more German productions for own Entertainment business

NuCom Group: mid-term revenue growth from EUR 0.8 billion to EUR 2 billion, driven by the four core brands Verivox, Parship Elite Group, Jochen Schweizer mydays and Flaconi

Investment focus / Financial outlook:

Increased investment in local content; simultaneous review and renegotiation of US studio contracts until year-end

ProSiebenSat.1 confirms mid-term capital market targets

Group adjusts dividend policy: future total shareholder return focus along various components, announcement of a share buyback

Third quarter of 2018:

Group revenues adjusted for consolidation and currency effects increase by 4%

Stable TV advertising revenues; Commerce (NuCom Group) and Content Production & Global Sales (Red Arrow Studios) segments with dynamic organic revenue growth

Group full-year revenues expected to decrease in the low-single-digit percentage range to around EUR 4 billion; adjusted for consolidation and currency effects, Group revenues expected to grow in the low-single-digit percentage range

Munich, November 7, 2018.

Max Conze, CEO of ProSiebenSat.1 Media SE, says: We are now initiating the necessary changes and investments to build a truly digital, diversified and fast growing ProSiebenSat.1. We are focusing on Entertainment that people love and commerce offers that people need. Thereby, we are consumer-centric and content and digital led. We are thus aiming to increase revenues from EUR 4 to 6 billion in the mid-term - with at least half of this coming from digital. Our strong Entertainment audience market shares as well as the double-digit growth at NuCom and Red Arrow Studios prove that we are on the right track. We have a clear growth plan and are executing it vigorously.

With a strategy update, the Group is addressing the opportunities and challenges of the changing media landscape while at the same time creating the conditions to generate sustainable growth for its shareholders. In the process, ProSiebenSat.1 is further driving its diversification and plans to significantly grow revenues outside the TV advertising business: ProSiebenSat.1 intends to increase Group revenues to EUR 6 billion over the next around five years (Q3 LTM 2018: EUR 4 billion) and adjusted EBITDA to EUR 1.5 billion (Q3 LTM 2018: EUR 1 billion). 50% of revenues are expected to come from the digital business (Q3 LTM 2018: 30%). At the same time, the Group aims to achieve an average annual total shareholder return of 10 to 15%. ProSiebenSat.1 will present the strategy update comprehensively at its Capital Markets Day on November 14.

The strategic priorities of the three pillars are clearly defined:

Entertainment: The focus is on local content, that is distributed across as many channels as possible, thereby significantly increasing and even better monetizing this total reach. In a next step, this reach shall become addressable and thus advertising optimally tailored to the respective viewer. In the mid-term, the Group aims for a revenue share of 25% of addressable advertising (Q3 LTM 2018: low-single-digit share). Therefore, an important investment focus is on data and advertising technologies.

Red Arrow Studios (Content Production & Global Sales): In order to increase the local program share on its own channels, the Group plans to grow Red Arrow Studios' share of local content commissioned by the Entertainment business from 13% today to more than 30% over the next around five years. At the same time, Red Arrow Studios will continue its international expansion focusing on the core US and UK markets. In the digital video business, the objective is to build Studio71 into the leading provider. ProSiebenSat.1 will continue to review strategic partnerships in this segment under the condition that they would increase the size and growth of the production business.

NuCom Group (Commerce): The goal of NuCom Group is to further expand leading market positions of its companies and to focus the portfolio on the four areas of consumer advice, matchmaking, experience & gift vouchers as well as beauty & lifestyle. ProSiebenSat.1 puts its emphasis on both organic growth and complementary selective acquisitions and leverages the partnership with General Atlantic, especially to further enhance the operational performance of the commerce companies. At the same time, NuCom Group continues to benefit from synergies in data and technology with the ProSiebenSat.1 Entertainment business. ProSiebenSat.1 aims to more than double its commerce revenues to EUR 2 billion in the next around five years (Q3 LTM 2018: EUR 0.8 billion), driven by the core brands Verivox, Parship Elite Group, Jochen Schweizer mydays and Flaconi.

Investment focus / Financial outlook: In order to set up a modern and future-ready Entertainment business, ProSiebenSat.1 will invest additionally in local content, the expansion of digital platforms and an improved monetization of reach from 2019 onwards. In consideration of offsetting cost efficiency measures as well as an expected moderate segment revenue increase, this will lead to an adjusted EBITDA decrease in the Entertainment segment in 2019.

In parallel to the increased local focus in its Entertainment content strategy, the Group is currently reviewing its existing US studio contracts. In this regard, ProSiebenSat.1 has approached the respective licensors in order to achieve relevant improvements in the scope o

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