Georg Kofler, the second biggest shareholder and chief executive since quitting as head of ProSiebenSat.1 at the beginning of last year, has pushed through a tough restructuring programme and increased the number of subscribers substantially. He and Permira renegotiated virtually all Premiere’s contracts to reflect the stagnant pay-television market, signing deals that depend on subscriber numbers.Premiere has made its programme packages more attractive, cutting the costs of some of the more basic packages. It has also cracked down on piracy.Turnover during the first six-months of 2003 was up 25 per cent on the same period last year, to B471 million, and subscriber numbers increased 12 per cent to 2.69 million. Kofler said he expects to report an annual turnover of B900 million, and a loss of less than B40 million for the full year.The company says that it will have
2.9 million subscribers by the end of the year, break even on more or less that figure during the first half of next year and reach a profit by 2005 with four million subscribers. “Premiere is gaining confidence and the company is no longer viewed negatively,” according to a senior television executive. “The public is beginning to trust Kofler.”There will be further cost-cutting, including, if Kofler gets his way, a much cheaper package of live Bundesliga rights. The present deal ends after this season. Premiere spends a third of its annual budget on the Bundesliga rights fees and production and, according to the executive, will seek to bring this down substantially, perhaps by a third.Many in the industry believe that Premiere’s forecasts are over-optimistic. The company needs four million subscribers if it is to start taking on the terrestrial channels but, some suggest, it will struggle just to reach breakeven. The country’s 33 “free” terrestrial or cable and satellite channels satisfy too many people for them to buy pay-television.“It will be very hard for Premiere to get that next million subscribers,” according to an industry expert. “In a way, the company has over-achieved in the first six months of this year. There is research to suggest that it will never get the four million it says it needs to become profitable.“People subscribe to Premiere only for the Bundesliga, but there are not four million people willing to do that.”The company needs to acquire further major sports rights exclusively, such as the 2006 World Cup, the Tour de France and Formula 1. But it is unlikely to get any of these exclusively. “Rights-holders can get a good price for events like these from the terrestrial channels. They don’t want to be exclusively on pay-television.”Stefan Weiss, media analyst at WestLB, says that Premiere has to accept that pay-television in Germany will never be the mass movement that British Sky Broadcasting has made it in the UK. “The company should get a cost base that allows it to be profitable with just three million or, maximum, three-and-a-half million subscribers.”Premiere has the exclusive live rights to all but four games a season from the Bundesliga 1, as part of a two-year, B296 million deal. It also has the rights for the German ice hockey league, US boxing and Formula 1 (shared with RTL).No cable competition:
Premiere, the former Kirch pay-television platform, is showing good signs of recovery under the ownership of the UK-based equity group Permira. Few expected the company to turn around its longstanding lacklustre performance so quickly and to report healthy half-year results.
