ProSiebenSat.1 loves to entertain you

BY SANDY STRASSER

(Published in The Produktkulturmagazin issue 3 2016)

Range meets ideas: it is with this innovative concept that ProSiebenSat.1 has become the number one media investor in Germany. By exchanging TV advertising time for company shares or revenue sharing, the media group has built an attractive e-commerce portfolio over the past few years, which today is one of its strongest growth drivers. Now, it has set its sights on assuming pole position in Europe. Dr Christian Wegner, Member of the Executive Board and Chief Officer Digital, provides insight which strategy is being deployed to achieve this goal and what role the topic of digital transformation plays. 

Dr Wegner, the term digital transformation has been omnipresent for several years now. And transformation is also affecting major corporations in particular. How is ProSiebenSat.1 dealing with this topic?

Our company is also undergoing a digital transformation process. Our digital business segment is the fastest-growing part of our company. We set the right course very early on and have invested in business segments with promising futures. Today, this is paying dividends. We have a good growth strategy, which we systematically implement. In the digital segment, we have bundled all those offerings we can generically expand our strong TV presence with. In this way, we show the world: digital transformation is working. Our group is the best example of how a national TV company has metamorphosed into a digital player.

Your company is the leading media investor in Germany. Its declared aim is to be also in the vanguard in Europe. Are you pursuing special majority and acquisition strategies with regards to your digital business?

Yes, our strategy comprises various approaches. One is acquisitions in form of majority shareholdings. Here, we also made larger acquisitions – such as Verivox and the pan-European online travel agency Etraveli – last year. Furthermore, we have introduced the topics of ‘media-for-equity’ and ‘media-for-revenue-share’ in Germany and have rolled them out internationally. This model is explicitly targeted at start-up companies that are generally unable to afford TV advertising. In principle, we are pursuing a 3-stage model. As the first step, we become involved with start-up companies by acquiring a minority share. With this, we aim to better get to know and understand the respective market and the business of the company at an early development stage. In the second step, we analyse whether TV advertising will promote growth and whether the management teams are working successfully. If this is the case, we increase our shareholding or take over the company in its entirety. Successful examples are mydays, Valmano, Amorelie and Flaconi. The final step is the potential international expansion, which we analyse on a case-by-case basis. This approach offers the advantage that portfolio measures come with considerably less uncertainty with regards to intrinsic value or integration. Our declared strategic objective is to successively globalise our digital business divisions.

What criteria are decisive with regards to potential holdings?

First, we have to settle two questions: Are we the ‘best owner’? And is the company managed by an experienced team that runs the business with passion? If we can answer these questions with a resounding ‘Yes’, we will invest. To this end, we’ll become involved above all in markets that cannot be so swiftly dominated by global players and that grow dynamically. Our aim is to grow in a profitable manner – through TV media, but also through various other synergies. We have achieved the greatest success with products in which the masses are interested, that require explanation and demand trust and emotionalisation. Here, our TV advertising is the best trigger. Our objective is to create new growth with media. 

In this regard, what countries are particularly relevant for you? 

We systematically scour the world for promising start-ups and have established scouting offices in San Francisco, New York, Tel Aviv, London and in Asia for this purpose. Once we have identified an interesting enterprise, we try to become involved in it by deploying our media-for-revenue or media-for-equity models. To this end, we set up a partnership to an international company, simultaneously enabling it to enter one of the most important markets in the world: Germany. With this, we transfer our successful investment model to the global market and are also able to establish ourselves as an international media investor. At the same time, this also allows us to bring innovative business models to Germany – such as Shopkick, for example. 

What relevance does TV advertising have for your e-commerce business? 

TV advertising is our magic potion. Television is the last major mass medium and remains the medium with the greatest potential for advertising success. Those wishing to quickly build range and promote awareness and sales will have to focus on TV as an advertising medium. Even the US-based global Internet players such as Google or Apple and those who wish to become one – for example, Netflix – are concentrating on TV advertising to promote their offerings. So we use the range and advertising power of television to transform products into successful and strong brands. However, TV advertising is also being further developed. Think about addressable concepts, product placement or content marketing, for instance. 

How important is it to form alliances with other companies in this broad field? 

Collaboration is synonymous with enhancing know-how, expertise and creativity. No German enterprise is able to drive important topics forward on its own. We should by all means collaborate in sub-areas, even if this means that we might be competitors in other areas. For this reason, we have initiated the ‘European Media Alliance’, comprising nine TV and media groups, including TF1 in France and Channel 4 in the United Kingdom. We are also promoting joint digital business models with Axel Springer SE, hence supporting Germany as a digital location. Within this context, both enterprises committed to the start-up sector very early. Together, we are better able to support this commitment. 

To what extent can your American counterparts serve as role models here? 

What we should learn and take from players in Silicon Valley is that the Silicon Valley community is a true community despite all the competition. It is this spirit that we now have to transfer to Germany. A greater willingness to collaborate and less fear of plagiarism. In Germany, we have the unique blend of a strong economy, high technology, an across-the-board highly-efficient education system and political stability. Our country is extremely attractive as a business location. However, there has to be more cooperation, more venture capital, greater size and greater relevance within the German market. This will allow our start-up sector to become competitive too. 

You are aiming to increase digital business sales to more than 1.5 billion euros by 2018. How do you plan achieving this target? 

We are growing organically, but are also strengthening our digital operations through acquisitions. First-time consolidations with regards to new shareholdings will contribute towards growth. The success achieved so far supports our strategy to continue expanding new business divisions. In ventures & digital commerce, we have made both strategic and purely financial investments. Here, we are unwilling to commit to a specific number of deals we would like to make each year. We have a total of around 60 partnerships with start-up companies in our portfolio, with 20 to 30 deals being added each year. In other words, we are striving towards occupying a leading position in all areas of the digital sector, where we are at least in the top three. 

What role will TV play in ten years? 

The power of linear television remains unbroken. Today, television as we understand it is actually far more than merely a TV screen in our living rooms. There are more devices – but these are ultimately just TV contents as well. Media usage will continue to further differentiate itself and, with the establishment of new TV channels, we will be actively helping to shape this development. There will be no ‘either-or’, but rather a ‘both-and’ philosophy. Although the individualisation of media usage will continue to intensify, major, high-reach events will not lose their fascination. By the way: today, television reaches more people than ever before thanks to digital evolution. 

To what extent will these developments change ProSiebenSat.1? 

We are currently in the process of transforming into a digital entertainment and e-commerce powerhouse. What is so beautiful about this is the fact that the TV sector and start-ups mutually benefit each other. For us, just how fast new ideas are developed and launched in the start-up world is both an incentive and an inspiration. We not only anticipate the changes in media usage, but also in the work processes within the media sector. Precisely, which disruptive trends are ultimately established is not defined by us, but by the users. Rather than chase after developments, our philosophy is to actively accompany them. ‘Creating new growth’ remains our leitmotif.

Against this backdrop, the ‘war for talent’ topic is undoubtedly something of a major concern for you.

Absolutely. We are dynamic and hence an interesting employer for all those who appreciate substantial room for manoeuvre and opportunities for creativity. Over the past five years, we have supported more than 20 company start-ups and strategic investments. In the last 24 months alone, we have filled several hundred vacancies in the digital segment. We have extremely flat hierarchies, are able to act and react swiftly and give our employees the opportunity to try things out and implement ideas. ProSiebenSat.1 employees are very open, communicative and passionate about their work. They want to be challenged with things that are exciting and fun. Those who demand these are precisely the people we are looking for. We want the very best people.

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DR CHRISTIAN WEGNER 

Dr Christian Wegner has been a Member of the Executive Board and Chief Officer Digital at ProSiebenSat.1 since 2011. Within the corporation, Christian – who has a doctorate in business administration – is responsible in particular for establishing and expanding a powerful digital ventures & commerce segment and is hence setting the course for the successful, long-term development of the group. 

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