Haim
Saban’s Pro7 Zeigt’s Allen
One
knew that Haim Saban’s new offices, located in the Century City section
of Los Angeles, were in an important building when Senator John Kerry was
seen visiting it to raise money for his U.S. presidential campaign. Indeed,
the 26-story building exudes wealth and, appropriately, security for the
facility is on par with that of the Federal Reserve.
Saban’s spacious offices on the top floor of the building are completely different
from his old digs two miles west, where he ran Saban Entertainment, a group of
production, distribution and cable network companies, which he founded in 1988,
five years after immigrating from France, where he ran a music business since
1973 -- the year in which he moved from Israel.
In 1995, Saban merged his company with Rupert Murdoch’s Fox Kids Network and,
in 2001, they sold the whole enchilada for $5.3 billion to the Walt Disney Corporation,
netting an estimated 42.65 billion each.
Although
the old Saban logo is still used, perhaps as a reminder of his early
endeavours, it is nowhere to be found in the new space. These offices
are austere and colorless, like those of any prestigious investment
firm. From there, the 59-year-old Saban, who normally goes to his
office in the afternoon, runs Saban Capital Group (SCG), which in
turn, owns Saban Entertainment Group (SEG), a private investment
firm specializing in media and entertainment. SCG owns and operates
a music company, Saban Music Group, while SEG makes both controlling
and minority investments in public and private entertainment companies.
SEG has investments in Good Times and is looking at cable channel
startups around the world.
Haim Saban is SCG’s chairman and CEO. President and COO is Adam Chesnoff. Joel
Andryc, a 16-year-old veteran of Saban Entertainment, is SEG’s chief creative
officer.
The reason Saban goes to his office in the afternoon is because his mornings
are spent dealing with his ProSiebenSat.1 Media investment in Germany, which
is nine hours ahead of California.
Asked why the ProSieben group, such a far-away investment and legacy,
was attractive to Haim Saban, it was Chesnoff that answered: “It’s
a fantastic group of assets. It controls 100 percent of their TV
stations, contrary to our main competitor, RTL, which has some TV
outlets in partnership with other companies.”
On his part, Haim Saban commented that, “we’re very happy with
the recent performance of ProSieben and we continue to feel very
good about the future of investment. Additionally, we are gratified
by the warm reception we have received in Germany.”
ProSiebenSat.1 now controls 29.5 percent of the German audience and an advertising
television market share of 42.5 percent.
The Munich-based ProSiebenSat.1 company is a group of four TV networks that SCG
bought from Bankrupted KirchMedia in August 2003.
Originally, SCG, through P7S1 Holdings, an offshore subsidiary, and six additional
financial partners, acquired for an estimated one billion euro 36 percent of
the share capital of ProSiebenSat.1, representing 72 percent of the voting rights.
Now, KirchMedia is in the process of relinquishing its remaining 14.7 percent
in ProSiebenSat.1 for an estimated 200 million euro, with 13 percent going to
SCG and 1.7 percent going to Alex Springer Verlag, which is increasing its stake
in ProSiebenSat.1 from 10.2 percent to 11.9 percent. The new structure will give
SCG and its six financial partners, which include Quadrangle Group, 88 percent
of voting right.
ProSiebenSat.1 AG was formed in 2000 by merging ProSieben Media AG and Sat.1.
The group’s four terrestrial TV networks -- Sat.1, ProSieben, Kabel1 and news
channel N24 -- has a combined workforce of 2,900 people between Munich and Berlin,
and is now publicly listed in Frankfurt’s MDAX, a market for medium-sized companies,
and traded at about 13 euro her share. The group now owns 48.4 percent of Euvia
Media, a company specializing in interactive channels.
Haim Saban goes to Germany eight to 10 times a year, especially for
the upfronts in Düsseldorff, where most of the media agencies are located, as well as
major advertisers like L’Oreal and Henkel. At the last upfronts, held on July
29, the Group pre-sold 85 percent of its inventory. However, CCO Joel Andryc
pointed out that “advertisers can change up to six weeks before broadcasts.”
The upfronts continued in Los Angeles, where Saban invited some of Germany’s
major advertising executives to his home in Beverly Hills to dine with former
U.S. President Bill Clinton.
According to the German Advertising Federation (ZAW), in 2003, television advertising
generated 3.81 billion euro, a 3.7 drop from the previous year. Nonetheless,
there were winners like public broadcaster ARD, which increased its ad revenues
by 3.2 percent to 141.04 million euro; RTL-2 grew four percent to 223,2 million
euro; Super RTL ad revenues increased by 5.6 percent to 91.7 million and Vox
was up six percent to 230.4 million.
Among the losers were public broadcaster ZDF, with a 4.2 percent drop to 111,23
million euro; RTL, whose ad revenues dropped 2.3 percent to 1,152.4 million euro;
ProSieben, with a 10 percent drop to 700.8 million; Sat.1, down 2.2 percent to
777.3 million; Kabel1, down 2.1 percent to 193.7 million. Other networks, such
as n-tv reached 26.5 million euro, down 32 percent, and N24 had first year revenues
of 18.6 million.
However, according to Guillame de Posch, ProSiebenSat.1’s CEO, the German advertising
market will grow an estimates two percent net for 2004. In the first six months
of 2004, the Group’s ad revenues were 932 million euro, or 55.3 percent of last
year’s total revenues. De Posch wants to increase the audience share of ProSieben’s
14-49 demos to 29.5 percent. To achieve this, the group will invest approximately
one billion euro in programming across the four networks. Programming mix is
50 percent imports and 50 percent domestic. The imports come mainly from the
U.S., while Europe is relied on for reality-format concepts. Reportedly, Saban
now controls one of the biggest single buyers of American product outside of
the U.S. The other is Harry Sloan’s SBS, which is said to have invested 41 billion
on U.S. output deals at the last L.A. Screenings.
Pro7 is a general-audience network aimed at the 14-49 demos that
general manager, Denaj Jocic, programs with movie blockbusters and
hip shows. Its new slogan, “We
love to entertain you,” is in English. The network’s major challenge is
to counter-program with RTL, the dominant network. Sat.1 is also a general-audience
TV network that general manager Roger Schawinski programs for a broader audience
in direct competition with RTL. Its slogan for the 2004-05 season is “Sat.1
zeigt’s allen” (“Sat.1 shows it all” ). Kabel1, whose general manager
is Andrea Bartl, specializes in classic series and movies, while N24 is a news
channel with some scheduled documentaries, headed by general manager Torsten
Rossman.
The German audience seems to appreciate big American blockbusters, proven by
high theater admission and the DVD boom, both driven by Hollywood movies.
For Germany, the “American connection” means that some home-grown
shows or formats from ProSiebenSat.1 will have wider distribution,
including exports to the U.S. television market. In addition, stated
Andryc, “Saban has helped the German TV market adapt to the new economic
realities of the business and has brought in a fresh approach and
a new management team to turn around the performance of ProSiebenSat.1
Media.” As far as the Group’s digital TV plans are concerned, Andryc
stated that, “Options
are still being reviewed and, also, the multiple channel concepts are under review.
In any case, no final decision can be made before antitrust authorities review
plans of Kabel Deutschland to become the monopolist cable provider in Germany.”
Kabel Deutschland is waiting for the German antitrust authority to
take over the country’s remaining regional cable-TV franchises: Ish
(North Rhine-Westphalia), Kabel BW (Baden Württemberg) and Iesy
(Hessen), reaching a total of 17 million subscribers.
However, said Andryc, “Interactivity will definitely become
another revenue source. Diversification of revenue streams and the
positioning of the Group for the digital future belongs to the long-term
strategic goals of ProSiebenSat.1 Group.”
And what about the future? SCG’s president, Adam Chenoff, would not comment on
ProSiebenSat.1’s next step. In other investment news, The New York Times recently
reported that Saban is “toying with the idea of buying The Jerusalem
Post from Hollinger International.” Israel, where he immigrated in 1956
from his native Egypt, is one of Haim Saban’s main interests, besides the U.S.
and business.
Not afraid of controversy, Saban also expressed an interest in buying the U.K.’s
ITV, while accusing the BBC of pro-Arab coverage.