Monday 30 December 2013

Analysis of ProSiebenSat.1 Media

A German media company

Company: ProSiebenSat.1 Media

Business: A German media company with the core business of commercial sales on their TV stations. They are divided into three segments: Broadcasting German Speaking (four TV channels: SAT.1, ProSieben, kabel eins, and sixx), Content Production & Global Sales (international program production and distribution) and finally Digital & Adjacent (Online Video, Online Games, Ventures & Commerce and Music).

Active: Main activity areas are Germany, Austria and Switzerland but are present in 12 countries world wide and try to establish themselves more in English speaking areas with especially their online activities and content production.

P/E: 26.6

contrarian values of P/E, P/B, ROE as well as dividend

The P/E of ProSiebenSat.1 is far too high for me with 26.6 and the P/B is even worse with 5.2 which gives a very clear no, no from Graham. Their earnings to sales are pretty ok with 13% and the ROE is excellent with almost 20%. The book to debt is bad with a ratio of 0.4 and in the last five years they have had a negative yearly growth of -5.1% which gives us a motivated P/E of 8 to 10 which means that the shares are highly overvalued by the market today. Last year they paid a crazy extra dividend of 15.7% which also represented 420% of their earnings which more or less emptied their bank accounts so that will not happen again.

Conclusion: This media company is definitely uninteresting not only according to me but also according to Graham. P/E, P/B and growth were bad and only the ROE was great especially since we can not account for the dividend that they paid out as a one time thing.

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