PROSPECTUS DATED April 4, 2014
EUR [] [] % Notes due 2021 Issue Price: [•] % ProSiebenSat.1 Media AG (the "Issuer") will issue on or about April 15, 2014 (the "Issue Date") EUR [●] [●] % Notes due 2021 (the "Notes") in the denomination of EUR 1,000 each. The Notes will bear interest from and including April 15, 2014 to, but excluding, April 15, 2021 at a rate of [●] % per annum, payable annually in arrears on 15 April of each year, commencing on April 15, 2015.
The obligations under the Notes will constitute unsubordinated and unsecured obligations of the Issuer, ranking pari passu among themselves and pari passu with all other unsubordinated and unsecured obligations of the Issuer, unless such obligations are accorded priority under mandatory provisions of statutory law. The Notes will be governed by the laws of the Federal Republic of Germany ("Germany").
The Notes will be redeemed at par on April 15, 2021 the ("Maturity Date").The Notes may be redeemed, at the option of the Issuer, in whole but not in part, (i) at a price equal to their principal amount outstanding plus any accrued and unpaid interest upon the occurrence of certain changes in applicable tax laws or if 75 % or more of the initial aggregate principal amount of the Notes has been redeemed following the occurrence of a Change of Control Event (as defined herein) or if the redemption date does not fall earlier than 90 days prior to the Maturity Date and (ii) at their Early Call Redemption Amount (as defined herein).
The issue price, the aggregate principal amount, the number of Notes, the interest rate, the issue proceeds and the yield of the Notes will be included in the Pricing Notice (as defined in the section Subscription, Sale and Offer of the Notes below) which will be published on the website of the Luxembourg Stock Exchange (www.bourse.lu) on or prior to the Issue Date of the Notes.
This prospectus in respect of the Notes (the "Prospectus") constitutes a prospectus within the meaning of Article 5.3 of Directive 2003/71/EC of the European Parliament and of the Council of November 4, 2003, as amended, inter alia, by Directive 2010/73/EU, on the prospectus to be published when securities are offered to the public or admitted to trading (the "Prospectus Directive"). This Prospectus will be published in electronic form together with all documents incorporated by reference on the website of the Luxembourg Stock Exchange (www.bourse.lu) and will be available free of charge at the registered office of the Issuer.
This Prospectus has been approved by the Commission de Surveillance du Secteur Financier, Luxembourg ("CSSF") in its capacity as competent authority under the Luxembourg Act dated July 10, 2005 relating to prospectuses for securities (Loi du 10 juillet 2005 relative aux prospectus pour valeurs mobilieres), as amended (the "Luxembourg Prospectus Law"). By approving this Prospectus, the CSSF assumes no responsibility and gives no undertaking as to the economic and financial soundness of the transaction or the quality or solvency of the Issuer in line with the provisions of article 7 (7) of the Luxembourg Prospectus Law.
The Issuer has requested the CSSF to provide the competent authority in Germany, the Bundesanstalt für Finanzdienstleistungsaufsicht ("BaFin"), the competent authority in The Netherlands, the Netherlands Authority for the Financial Markets (Autoriteit Financiële Markten, "AFM") and the competent authority in Austria, the Finanzmarktaufsicht, with a certificate of approval pursuant to Article 18 of the Prospectus Directive attesting that this Prospectus has been drawn up in accordance with national law implementing the Prospectus Directive (the "Notification").
Application has been made to the Luxembourg Stock Exchange for the Notes to be listed on the official list of the Luxembourg Stock Exchange (the "Official List") and to be admitted to trading on the Luxembourg Stock Exchange's regulated market. The Luxembourg Stock Exchange's regulated market is a regulated market for the purposes of Directive 2004/39/EC of the European Parliament and of the Council of April 21, 2004 on markets in financial instruments.
The Notes have been assigned the following securities codes: ISIN DE000A11QFA7, Common Code 105548087 and WKN A11QFA. Global Coordinators
BNP PARIBAS Commerzbank Crédit Agricole CIB ING The Royal Bank of Scotland
Bookrunners
Bayerische DNB Markets Mitsubishi UFJ Société Générale SEB UniCredit Bank Landesbank Securities Corporate & Investment Banking
The Global Coordinators and the Bookrunners together, the "Joint Bookrunners".
Co-Manager
SMBC Nikko
RESPONSIBILITY STATEMENT
The Issuer accepts responsibility for the information contained in this Prospectus and hereby declares that, having taken all reasonable care to ensure that such is the case, the information contained in this Prospectus is, to the best of its knowledge, in accordance with the facts and contains no omission likely to affect the import of such information.
The Issuer further confirms that (i) this Prospectus contains all relevant information with respect to the Issuer and its consolidated subsidiaries (the "ProSiebenSat.1 Group" or the "Group") and to the Notes which is material in the context of the issue and offering of the Notes, including all relevant information which is necessary to enable investors and their investment advisers to make an informed assessment of the assets and liabilities, financial position, profits and losses, and prospects of the Issuer and the ProSiebenSat.1 Group and of the rights attached to the Notes; (ii) the statements contained in this Prospectus relating to the Issuer, the ProSiebenSat.1 Group and the Notes are in every material respect true and accurate and not misleading; (iii) any opinions and intentions expressed herein are honestly held and based on reasonable assumptions; (iv) there are no other facts in relation to the Issuer, the ProSiebenSat.1 Group or the Notes the omission of which would, in the context of the issue and offering of the Notes, make any statement in the Prospectus misleading in any material respect; and (v) reasonable enquiries have been made by the Issuer to ascertain such facts and to verify the accuracy of all such information and statements.
CONSENT
The Issuer consents to the use of the Prospectus for subsequent resale or final placement of the Notes by all financial intermediaries, subject to the following conditions: (i) the use of the Prospectus is strictly limited to the period from on the later of April 10, 2014 and the date of publication of the Pricing Notice following its publication to April 17, 2014; (ii) all offering and/or resale activities (including, but not limited to, all related information, marketing and distribution activities) ("Resale Activities") taken by the relevant financial intermediary must comply with: (x) all applicable laws (including all laws applicable to Resale Activities in the jurisdictions where the respective investors and/or potential investors are located or resident when they are approached by, or have access to, Resale Activities) and (y) all requirements and selling restrictions described in this Prospectus; (iii) the use of the Prospectus is limited to the following jurisdictions: Luxembourg, Germany, Austria and The Netherlands; and (iv) all Resale Activities must be accompanied by the direct hand-over of the Prospectus in its up-to-date form, including all amendments, supplements, additional information, as available at the website of the Luxembourg Stock Exchange (www.bourse.lu) (the "Up-to-date Prospectus"). The Issuer accepts the responsibility for the content of the Prospectus also with respect to subsequent resale or final placement of securities by any financial intermediary which was given this consent to use the Prospectus. At the time of the offer made by any financial intermediary, investors must be provided with the Up-to-date Prospectus (including the terms and conditions of the offer) by that financial intermediary. Further, all financial intermediaries using the Prospectus must state on their website that each of them uses the Prospectus in accordance with the consent and the conditions attached thereto.
NOTICE
No person is or has been authorized to give any information or to make any representation other than those contained in this Prospectus and, if given or made, such information or representation must not be relied upon as having been authorized by or on behalf of the Issuer or the Managers (as defined in the section "Subscription, Sale and Offer of the Notes").
This Prospectus should be read in conjunction with any supplement hereto and with any other documents incorporated herein by reference. Neither this Prospectus nor any other information supplied in connection with the offering of the Notes (a) is intended to provide the basis of any credit or other evaluation or (b) should be considered as a recommendation by the Issuer or any Manager that any recipient of this Prospectus, or of any other information supplied in connection with the offering of the Notes, should purchase any Notes. Each investor contemplating the purchase of any Notes should make its own independent investigation of the financial condition and affairs, and its own appraisal of the creditworthiness, of the Issuer. This Prospectus does not constitute an offer of Notes or an invitation by or on behalf of the Issuer or the Managers to purchase any Notes. Neither this Prospectus nor any other information supplied in connection with the Notes should be
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considered as a recommendation by the Issuer or the Managers to a recipient hereof and thereof that such recipient should purchase any Notes.
This Prospectus reflects the status as of its date. The offering, sale and delivery of the Notes and the distribution of the Prospectus may not be taken as an implication that the information contained herein is accurate and complete subsequent to the date hereof or that there has been no adverse change in the financial condition of the Issuer since the date hereof.
To the extent permitted by the laws of any relevant jurisdiction, neither any Manager nor any of its respective affiliates accepts responsibility for the accuracy and completeness of the information contained in this Prospectus or any other document incorporated by reference. The Managers have not independently verified the information contained herein and assume no responsibility for the accuracy and completeness of such information.
This Prospectus does not constitute, and may not be used for the purposes of, an offer or solicitation by anyone in any jurisdiction in which such offer or solicitation is not authorized or to any person to whom it is unlawful to make such offer or solicitation.
The distribution of this Prospectus and the offering, sale and delivery of the Notes in certain jurisdictions may be restricted by law. Persons into whose possession this Prospectus comes are required to inform themselves about and to observe any such restrictions. For a description of the restrictions applicable in the European Economic Area, the United States of America and the United Kingdom, see "Subscription, Sale and Offer of the Notes - Selling Restrictions". In particular, the Notes have not been and will not be registered under the United States Securities Act of 1933, as amended (the "Securities Act") and are subject to United States tax law requirements. Subject to certain exceptions, the Notes may not be offered, sold or delivered within the United States of America or to U.S. persons. In addition, until 40 days after the commencement of the offering of the Notes, an offer or sale of Notes within the United States by any dealer (whether or not participating in the offering) may violate the registration requirements of the Securities Act.
Interests in the temporary global note will be exchangeable for interests in a permanent global note on or after a date which is no earlier than 40 days after (but not including) the Issue Date upon certification as to non-U.S. beneficial ownership.
The legally binding language of this Prospectus is English. Any part of the Prospectus in German language constitutes a translation, except for the Conditions of Issue in respect of which German is the legally binding language.
In this Prospectus all references to "euro", "EUR" or "Euro" are to the currency introduced at the start of the third stage of the European economic and monetary union, and as defined in Article 2 of Council Regulation (EC) No. 974/98 of May 3, 1998 on the introduction of the Euro, as amended.
IN CONNECTION WITH THIS OFFERING, COMMERZBANK AKTIENGESELLSCHAFT (THE "STABILIZING MANAGER") (OR PERSONS ACTING ON BEHALF OF THE STABILIZING MANAGER) MAY OVER-ALLOT NOTES OR EFFECT TRANSACTIONS WITH A VIEW TO SUPPORTING THE MARKET PRICE OF THE NOTES AT A LEVEL HIGHER THAN THAT WHICH MIGHT OTHERWISE PREVAIL. HOWEVER, THERE IS NO ASSURANCE THAT THE STABILIZING MANAGER (OR PERSONS ACTING ON BEHALF OF THE STABILIZING MANAGER) WILL UNDERTAKE STABILIZATION ACTION. ANY STABILIZATION ACTION MAY BEGIN ON OR AFTER THE DATE ON WHICH ADEQUATE PUBLIC DISCLOSURE OF THE FINAL TERMS OF THE OFFER OF THE NOTES IS MADE AND, IF BEGUN, MAY BE ENDED AT ANY TIME, BUT IT MUST END NO LATER THAN THE EARLIER OF 30 DAYS AFTER THE ISSUE DATE OF THE NOTES AND 60 DAYS AFTER THE DATE OF THE ALLOTMENT OF THE NOTES. ANY STABILIZATION ACTION OR OVER- ALLOTMENT MUST BE CONDUCTED BY THE STABILIZING MANAGER (OR PERSONS ACTING ON BEHALF OF THE STABILIZING MANAGER) IN ACCORDANCE WITH ALL APPLICABLE LAWS AND RULES.
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FORWARD-LOOKING STATEMENTS
This Prospectus contains certain forward-looking statements, including statements using the words "believes", "anticipates", "intends", "expects" or other similar terms. This applies in particular to statements under the caption "General Information on the Issuer and the ProSiebenSat.1 Group" and statements elsewhere in this Prospectus relating to, among other things, the future financial performance, plans and expectations regarding developments in the business of the ProSiebenSat.1 Group. These forward-looking statements are subject to a number of risks, uncertainties, assumptions and other factors that may cause the actual results, including the financial position and profitability of the ProSiebenSat.1 Group, to be materially different from or worse than those expressed or implied by these forward-looking statements. The Issuer does not assume any obligation to update such forward-looking statements and to adapt them to future events or developments.
PRESENTATION OF FINANCIAL AND OTHER INFORMATION
The consolidated financial statements of the Issuer as of and for the years ended December 31, 2013 and December 31, 2012 incorporated by reference in this Prospectus, have been prepared in accordance with International Financial Reporting Standards ("IFRS") as adopted by the European Union ("EU") and have been audited by KPMG AG Wirtschaftsprüfungsgesellschaft.
Individual figures (including percentages) appearing in this Prospectus have been rounded according to standard business practice. Figures rounded in this manner may not necessarily add up to the totals contained in a given table. However, actual values, and not the figures rounded according to standard business practice, were used in calculating the percentages indicated in the text. Therefore, in certain cases, the percentage figures appearing in the text may differ from the percentages that would be obtained based on values which have been rounded.
This Prospectus contains non-IFRS measures and ratios, including recurring EBITDA, EBITDA, net debt and leverage ratios that are not required by, or presented in accordance with, IFRS as adopted by the EU. The ProSiebenSat.1 Group presents non-IFRS measures because they are used by management in monitoring its business and because it believes that they and similar measures are frequently used by securities analysts, investors and other interested parties in evaluating companies in the ProSiebenSat.1 Group's industry. The definitions of the non-IFRS measures as used by the ProSiebenSat.1 Group are included elsewhere in this Prospectus. The non-IFRS measures may not be comparable to other similarly titled measures of other companies and have limitations as analytical tools and should not be considered in isolation or as a substitute for analysis of the ProSiebenSat.1 Group's operating results as reported under IFRS. Non-IFRS measures and ratios such as recurring EBITDA, EBITDA, net debt and leverage ratios are not measurements of its performance or liquidity under IFRS and should not be considered as alternatives to profit for the year or any other performance measures derived in accordance with IFRS or any other generally accepted accounting principles or as alternatives to cash flow from operating, investing or financing activities.
PRESENTATION OF INDUSTRY AND MARKET DATA
This Prospectus contains a number of references to data and studies prepared by third parties on such topics as the development of the television and other markets in which the Issuer operates, and related matters. Certain economic and industry data, market data and market forecasts set forth in this Prospectus were extracted from data and studies prepared by third parties.
This information has been accurately reproduced and as far as the Issuer is aware and is able to ascertain from information published by such third parties, no facts have been omitted that would render the reproduced information inaccurate or misleading. Investors are nevertheless advised to consider the information derived from third parties with caution. Market studies are often based on information or assumptions that may not be accurate or appropriate or may not reflect current market conditions, and their methodology is inherently predictive and speculative. Such data is based on market research, which itself is based on sampling and subjective judgments by both the researchers and the respondents, including judgments about what types of products and transactions should be included in the relevant market. Therefore, investors should note that certain estimates of the Issuer are based on such third-party market studies. The Issuer has not independently verified the figures, market data or other information on which third parties have based their studies, and therefore accept no liability that the information derived from third parties contained in this Prospectus is correct.
Unless a different source is explicitly indicated, all information is derived from internal sources of the Issuer. Estimates with respect to the value of advertising markets in which the Group operates, the advertising revenue of its competitors and the Group's share in the advertising markets are based on internal research for which different external sources (including data from media buying agencies and advertisers) and market insight were iv
used. Independent research companies (e.g., ZAW or Nielsen Media Research in Germany) regularly measure and publish the value of the advertising market and market shares based on input from the market participants.
Numerical data regarding the audience of the Group's TV stations and those of its competitors, as well as the visitors of its websites (expressed mainly in terms of unique users) are produced and published by independent research organizations (e.g., GfK in Germany). Such independent research organizations will typically disclose data for all participants above a certain materiality threshold. This allows the Issuer to assess the Group's relative position in the market.
Digital media use is often fragmented and cannot always be fully captured by research. Therefore, the Issuer must to a certain extent rely on estimates to measure the use of the new media, which can be based on a mix of external sources and projections, as well as data from its own technical platforms.
The Issuer believes that its estimates of market and other data and the information it has derived from such data is helpful for analyzing the industry in which the Group operates. While the own estimates of the Issuer have not been reviewed or verified externally and no warranty is given for the accuracy of these estimates or the information derived therefrom, the Issuer nevertheless believes that they are reliable. The estimates of the Issuer may differ from estimates made by competitors of the Group or from future studies conducted by market research institutes or other independent sources.
In particular the following sources were used in the preparation of this Prospectus:
– Arbeitsgemeinschaft für Fernsehforschung (AGF) in cooperation with Gesellschaft für Konsumforschung (GfK), report and statistics, "TV Scope 5.0", table: market share of channels, last updated June 19, 2013 ("AGF in cooperation with GfK, TV Scope 5.0"); – Arbeitsgemeinschaft Online Forschung e.V. (AGOF) "internet facts 2012 2013" ("AGOF, Internet Facts 2012-2013"); – Arbeitsgemeinschaft Teletest (AGTT), GfK TELETEST, Evogenius Reporting ("AGTT, GfK TELETEST, Evogenius Reporting");
– Astra TV Monitor 2013, TNS Infratest ("Astra TV Monitor 2013, TNS Infratest");
– Bundesverband des Deutschen Versandhandels (bvh), press release "Interaktiver Handel 2013: Massive Umsatzsteigerungen für die Branche – E-Commerce-Anteil knapp unter der 40 Milliarden Euro-Grenze" dated February 18, 2014 ("bvh, Press Release dated February 18, 2014");
– comScore, Inc., Video Metrix ("comScore, Video Metrix"); – Deutsche Telekom AG, annual report 2013 ("Deutsche Telekom AG, Annual Report 2013"); – Die Medienanstalten, Digitalisierungsbericht 2013 ("Die Medienanstalten, Digitalisierungsbericht 2013"); – Digital Fernsehen, article "Studie: Vollständige Digitalisierung des TV verzögert sich" dated April 12, 2012 ("Digital Fernsehen, Studie: Vollständige Digitalisierung des TV verzögert sich"); – German Federal and State Statistical Offices (Statistische Ämter des Bundes und der Länder), Demografischer Wandel in Deutschland, Heft 1, Bevölkerungs- und Haushaltsentwicklung im Bund und in den Ländern, updated March 2011 ("Regional Statistical Office, Population and Population Density");
– GfK January – December 2013 - The digital video market ("GfK January - December 2013 - The digital video market");
– Mediapulse AG, Switzerland, TV Panel, InfoSys data ("Mediapulse TV Panel"); – Nielsen Media Research GmbH, Data, "German Gross TV Advertising Market; Period January to December 2012", June 11, 2013 ("Nielsen Media Research"); – Bundesverband Digitale Wirtschaft, Internet mit neun Prozent Netto- Wachstum bei Display-Werbung in 2013 das am stärksten wachsende Werbemedium, dated March 27, 2014 ("BVDW/OVK");
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– ProSiebenSat.1 TV Deutschland GmbH, "Relevant Set" report, July 2012 ("ProSiebenSat.1 TV Deutschland, Relevant Set"); – PriceWaterhouseCoopers (PwC), Report, "German Entertainment and Media Outlook 2012-2016" ("PwC, German Entertainment and Media Outlook 2012-2016"); – PriceWaterhouseCoopers (PwC), Report, "Global Entertainment and Media Outlook 2013-2017" ("PwC, Global Entertainment and Media Outlook 2013-2017");
– SevenOne Media/mindline media 2013 ("SevenOne Media/mindline media 2013");
– Sky Deutschland AG, Preliminary Quarterly Report Q4 and Annual Report 2013 ("Sky Deutschland AG, Preliminary Quarterly Report Q4 and Annual Report 2013");
– Zenith Optimedia Group Limited, Report, "Executive summary: Advertising Expenditure Forecasts June 2013", June 2013 ("Zenith Optimedia June 2013");
– Zenith Optimedia Group Limited, Report, "Executive summary: Advertising Expenditure Forecasts December 2013", December 2013 ("Zenith Optimedia December 2013");
– Zentralverband der deutschen Werbewirtschaft e.V. (ZAW), ZAW Jahrbuch "Werbung in Deutschland 2012" ("ZAW, Werbung in Deutschland 2012"); and
– Zentralverband der deutschen Werbewirtschaft e.V. (ZAW), ZAW Jahrbuch "Werbung in Deutschland 2013" ("ZAW, Werbung in Deutschland 2013").
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TABLE OF CONTENTS
SUMMARY ...... 1 RISK FACTORS ...... 32 USE OF PROCEEDS ...... 60 GENERAL INFORMATION ON THE ISSUER AND THE PROSIEBENSAT.1 GROUP ...... 61 BUSINESS OF THE PROSIEBENSAT.1 GROUP ...... 84 MARKET OVERVIEW AND COMPETITION ...... 95 CONDITIONS OF ISSUE ...... 102 TAXATION ...... 127 SUBSCRIPTION, SALE AND OFFER OF THE NOTES ...... 136 GENERAL INFORMATION / INCORPORATION BY REFERENCE ...... 140 NAMES AND ADDRESSES ...... 142
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SUMMARY
Summaries are made up of disclosure requirements known as "Elements". These elements are numbered in Sections A -E (A.1 - E.7).
This summary contains all the Elements required to be included in a summary for this type of securities and Issuer. Because some Elements are not required to be addressed, there may be gaps in the numbering sequence of the Elements.
Even though an Element may be required to be inserted in the summary because of the type of securities and Issuer, it is possible that no relevant information can be given regarding the Element. In this case a short description of the Element is included in the summary with the mention of "not applicable".
Section A - Introduction and warnings
Element Description of Disclosure Requirements Element
A.1 Warnings This summary should be read as an introduction to this Prospectus.
Any decision to invest in the Notes should be based on consideration of this Prospectus as a whole by the investor.
Where a claim relating to the information contained in this Prospectus is brought before a court, the plaintiff investor might, under the national legislation of its member state to the Agreement on the European Economic Area (EEA), have to bear the costs of translating this Prospectus before the legal proceedings are initiated.
Civil liability attaches only to those persons who have tabled this summary including any translation thereof, but only if this summary is misleading, inaccurate or inconsistent when read together with the other parts of this Prospectus or it does not provide, when read together with the other parts of this Prospectus, key information in order to aid investors when considering whether to invest in the Notes.
A.2 Consent of the use of The Issuer consents to the use of the Prospectus by all financial intermediaries the Prospectus (general consent) and accepts responsibility for the content of the Prospectus also with respect to subsequent resale or final placement of the Notes by any financial intermediary.
Indication of the period The subsequent resale or final placement of Notes by financial intermediaries can for which consent is be made during the period from on the later of April 10, 2014 and the date of the given publication of the Pricing Notice following its publication to April 17, 2014.
Conditions attached to All offering and/or resale activities (including, but not limited to, all related the consent information, marketing and distribution activities) ("Resale Activities") taken by the relevant financial intermediary must comply with: (i) all applicable laws (including all laws applicable to Resale Activities in the jurisdictions where the respective investors and/or potential investors are located or resident when they are approached by, or have access to, Resale Activities) and (ii) all requirements and selling restrictions described in this Prospectus.
Financial intermediaries may use the Prospectus for subsequent resale or final placement of the Notes in Luxembourg, Germany, Austria and The Netherlands.
All Resale Activities must be accompanied by the direct hand-over of the Prospectus in its up-to-date form, including all amendments, supplements, additional information, as available at the website of the Luxembourg Stock Exchange (www.bourse.lu) (the "Up-to-date Prospectus").
At the time of the offer made by any financial intermediary investors must be provided with the Up-to-date Prospectus (including the terms and conditions of the offer) by the relevant financial intermediary.
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Further, all financial intermediaries must state on their website that each of them uses the Prospectus in accordance with the consent and the conditions attached thereto.
Section B – Issuer
Element Description of Disclosure Requirements Element
B.1 Legal and commercial The legal name of the Issuer is ProSiebenSat.1 Media AG ("ProSiebenSat.1 name Media AG" or the "Issuer", and together with its consolidated subsidiaries, the "Group" or the "ProSiebenSat.1 Group" ) and the commercial name is ProSiebenSat.1 Media AG or ProSiebenSat.1.
B.2 Domicile, legal form, ProSiebenSat.1 Media AG is a German stock corporation (Aktiengesellschaft) legislation, country of incorporated in Germany and governed by German law and registered in the incorporation commercial register (Handelsregister) of the local court (Amtsgericht) of Munich under HRB 124169. ProSiebenSat.1 Media AG is domiciled in the Federal Republic of Germany and its registered and head office is at Medienallee 7, 85774 Unterföhring, Germany (telephone number +49 (0) 89 9507-10).
B.4b Known trends affecting The television and media industry is undergoing profound changes, which can the Issuer and the also be observed in each of the markets in which members of the Group operate. industries in which it These changes center around the digitalization of content, its distribution and operates consumption and are driven by technological developments, new business models and lower barriers to entry for new market participants. The Issuer believes that the following trends affect the activities of the Issuer and the Group and have a significant impact on the television and media industry:
- The market for audiovisual media entertainment is marked by increasing fragmentation and competition. - Traditional TV will remain a mass entertainment medium. - Social TV and second screen usage will support and complement traditional television. - TV content and brands can be leveraged in the online video market. - The effectiveness of advertising on television compared to other media will further support the relevance of television in the media mix. - Content providers will continue to depend on linear TV as a distribution platform to monetize their content despite the rise of online video. - Demand for premium television services will continue to rise. - Traditional broadcasters will have to be able to address targeted audiences, to continuously adapt to demographic trends or offer programming to niche target groups. - Advertising financed television, digital entertainment offerings and convergent TV viewing measurement will grow more sophisticated. - Digital entertainment growth will continue to be driven by the roll out of new services, changing consumer preferences and innovative distribution models. - E-commerce will continue to grow dynamically and increasingly replace stationary sales of products and services; brands and reach will be the determining competitive advantages.
- The market for content production will remain highly fragmented and will continue to be influenced by growing demand for niche programming and cyclicality of hit formats.
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B.5 Description of the ProSiebenSat.1 Media AG is the holding company of the Group. As of the date Group and the Issuer's of the Prospectus, the Issuer has around 133 direct and indirect fully consolidated position within the subsidiaries. The following chart sets forth a summary of important subsidiaries Group of the Issuer, all of which are wholly owned by the Issuer, as of the date of the Prospectus:
B.9 Profit forecast or Not applicable. No profit forecast or estimate is made by the Issuer. estimate
B.10 Qualification in the Not applicable. KPMG AG Wirtschaftsprüfungsgesellschaft issued unqualified audit report on the audit reports on the consolidated financial statements of the Issuer for the years historical financial ended December 31, 2013 and December 31, 2012, respectively. information
B.12 Selected historical key The following tables show selected financial information of the ProSiebenSat.1 financial information Group derived from the Issuer's audited consolidated financial statements as of and for the years ended December 31, 2013 and December 31, 2012.
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Consolidated Income Statement Data For the year ended December 31, 2013 2012 (EUR in millions)* (audited) Continuing Operations Revenues ...... 2,605.3 2,356.2 Cost of sales ...... (1,431.8) (1,266.4) Gross profit ...... 1,173.5 1,089.8 Selling expenses ...... (243.5) (229.9) Administrative expenses ...... (285.7) (243.9) Other operating expenses ...... (0.8) (28.6) Other operating income ...... 25.4 13.4 Operating profit (EBIT) ...... 668.9 600.9 Interest and similar income ...... 6.5 3.0 Interest and similar expenses ...... (135.0) (156.2) Interest result ...... (128.5) (153.2) Income from investments accounted for using the equity method ...... 5.1 10.3 Other financial result ...... (18.6) (1.5) Financial result ...... (142.0) (144.4) Profit before income taxes ...... 526.9 456.5 Income taxes ...... (162.2) (127.4) Profit for the period from continuing operations .. 364.6 329.1 Discontinued Operations Profit from discontinued operations (net of income taxes) (47.6) (30.2) Profit for the period ...... 317.0 298.8 Attributable to shareholders of ProSiebenSat.1 Media AG ...... 312.1 295.0 Non-controlling interests ...... 4.9 3.9
* Columns may not add due to rounding and the omission of certain line items.
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Condensed Consolidated Balance Sheet Data As of December 31,
2013 2012
(EUR in millions)*
(audited)
Intangible assets...... 1,164.5 1,062.6 Property, plant and equipment ...... 204.8 198.7 Investments accounted for using the equity method ...... 15.9 5.3 Programming assets ...... 1,064.6 1,110.7 Other non-current assets ...... 85.6 89.9 Total non-current assets ...... 2,535.4 2,467.1 Programming assets ...... 137.1 166.2 Inventories ...... 1.3 0.7 Other current assets ...... 417.8 404.9 Cash and cash equivalents ...... 395.7 702.3 Assets held for sale ...... 68.8 1,671.4 Total current assets ...... 1,020.7 2,945.5 Total assets ...... 3,556.0 5,412.6 Subscribed capital ...... 218.8 218.8 Capital reserves ...... 585.7 581.6 Consolidated equity generated ...... (55.8) 833.4(1) Treasury Shares ...... (37.6) (47.4) Other equity(2) ...... (137.3) (90.7)(1) Total equity attributable to shareholders of ProSiebenSat.1 Media AG ...... 573.9 1,495.8 Non-controlling interests ...... 10.2 5.0 Total equity ...... 584.1 1,500.8 Non-current financial liabilities ...... 2,088.5 2,659.2 Other non-current liabilities ...... 4.4 4.4 Non-current provisions ...... 19.3 18.1 Deferred tax liabilities ...... 81.5 66.7 Total non-current liabilities ...... 2,193.7 2,748.4 Current financial liabilities ...... 438.0 589.1 Other current liabilities ...... 223.2 202.6 Current provisions ...... 76.9 73.1 Liabilities associated with assets held for sale ...... 40.2 298.6 Total current liabilities ...... 778.3 1,163.4 Total equity and liabilities ...... 3,556.0 5,412.6
* Columns may not add due to rounding and the omission of certain line items.
(1) Figures were extracted from the 2013 audited consolidated financial statements. In 2013, the ProSiebenSat.1 Group applied IAS 19 "Employee benefits" (revised 2011) for the first time. Under the revised standard, actuarial gains and losses are recognized as remeasurements in other comprehensive income without being reclassified to profit and loss in future periods. Since the ProSiebenSat.1 Group previously recognized these gains or losses in profit and loss when they occurred, the retrospective application of IAS 19 (revised 2011) resulted in an increase of consolidated equity generated as of December 31, 2012, from EUR 829.6 million as reported in the audited 2012 consolidated financial statements by EUR 3.8 million to EUR 833.4 million as reported as comparative figure in the 2013 audited consolidated financial statements. Correspondingly, other equity decreased by EUR 3.8 million from EUR -86.9 million as reported in the audited 2012 consolidated financial statements to EUR -90.7 million as reported as comparative figure in the 2013 audited consolidated financial statements.
(2) Includes balance sheet items Accumulated other comprehensive income from continuing operations, Accumulated other comprehensive income associated with assets and liabilities held for sale, and Other equity.
Prospects of the There has been no material adverse change in the prospects of the Issuer Issuer since December 31, 2013.
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Significant changes in Not applicable. There have been no significant changes in the financial or the financial or trading trading position of the Issuer since December 31, 2013. position of the Issuer
B.13 Recent events in On February 25, 2014, the Group closed the disposal of its Hungarian the business broadcasting activities and in April 2014 the Group closed the disposal of its activities of the Romanian TV activities. Closing of the disposal of the Group's Romanian Issuer radio activities is expected for the second quarter of 2014. In March 2014, the ProSiebenSat.1 Group acquired a 20 % stake in Collective Digital Studios (CDS), a multichannel network based in the United States. Furthermore, the Issuer acquired a majority interest in Half Yard Productions, a US based TV production company to further strengthen its content production business and acquired Aeria Games Europe through its online games subsidiary ProSiebenSat.1 Games GmbH to strengthen its online games business. In April 2014, the Swiss streaming provider Zattoo and the ProSiebenSat.1 Group entered into an agreement for the transmission of linear TV broadcasts of its core TV stations ProSieben, SAT.1, kabel eins, sixx, SAT.1 Gold und ProSieben MAXX via the internet and mobile network.
The Issuer intends to pay a dividend of EUR 1.47 per common registered share of the Issuer for fiscal year 2013. The payment of such dividend is subject to the approval of the shareholders of the Issuer in the annual general shareholders' meeting of the Issuer.
B.14 Dependence upon Not applicable. See Element B5: The Issuer is the parent company of the other entities within Group and is not dependent on other entities within the Group. the group
B.15 Principal activities The principal activities of the ProSiebenSat.1 Group, are the free-TV business, digital entertainment and commerce activities, content production and sales business.
The ProSiebenSat.1 Group considers itself one of the leading media corporations in Europe reaching around 42 million TV households with TV stations in Germany, Austria and Switzerland. The Group's operations encompass its core free-TV business (including leading TV stations ProSieben and SAT.1) and a broad spectrum of digital entertainment activities including online video and online games operations. Through media and cash investments in its Digital Commerce unit, the Group is building its portfolio of participations in dedicated e-commerce clusters and in business ventures. The Group also operates music and other related activities. Further, the Group owns an international production and sales network with 15 production companies in nine countries. The ProSiebenSat.1 Group, which as of December 31, 2013 employs around 3,600 people (calculated on the basis of full time equivalents) in more than 12 countries, pursues a growth strategy with the goal of becoming a "broadcasting, digital entertainment and commerce powerhouse".
The Group's continuing operations are organized in three operating segments: Broadcasting German-speaking, Digital & Adjacent and Content Production & Global Sales, all of which are strategically, economically and technically interrelated and managed by ProSiebenSat.1 Media AG.
Broadcasting German-speaking. The Issuer allocates the Group wide television activities to the Broadcasting German-speaking segment, which accounted for 81.7 % of consolidated revenues from the Group's continuing operations in 2012 and 76.7 % in 2013. With a population of around 80 million, Germany is Europe's largest TV market. The ProSiebenSat.1 Group, acting through its sales subsidiary SevenOne Media, is the leader in the German TV advertising market with a market share (based on gross television advertising revenue) of approximately 43 % in 2012 and 44 % in 2013 (source: Nielsen Media Research). With complementary programming across the Group's portfolio of advertising funded TV stations (ProSieben, SAT.1, kabel eins, sixx, SAT.1 Gold and ProSieben MAXX), the ProSiebenSat.1 Group addresses the commercially most relevant TV
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audience segments in Germany, offering both advertising customers and viewers a comprehensive range of TV stations and targeted programming. Within the Group's television activities, the distribution business with high- definition (HD) television and a number of basic pay-TV stations is gaining importance as an additional revenue source. The ProSiebenSat.1 Group considers the launch of additional TV stations for free-to-air transmission and expansion of its basic pay-TV offering in Germany. In Austria and German-speaking Switzerland, the Group operates its core German free-TV stations (except for SAT.1 Gold and ProSieben MAXX, which are currently not offered in Austria and Switzerland) with local advertising and mostly also local program windows. The ProSiebenSat.1 Group also operates a pure Austrian station, PULS 4.
Digital & Adjacent. The Digital & Adjacent segment, currently the Group's strongest revenue growth driver, accounting for 14.2 % of consolidated revenues from continuing operations in 2012 and 18.6 % in 2013. The segment bundles the Digital Entertainment units (e.g., online video and online games), the Digital Commerce units (e.g., the media-for-revenue and media-for-equity business and the travel portfolio) and the Adjacent units (including the music, licensing and live entertainment business). The Group leverages the content, audience reach and cross promotion power of its TV stations to develop products in the digital entertainment and commerce sphere and to build its adjacent business with distinct brands. A key element of this strategy is the use of unsold TV advertising inventory of its free-TV stations to cross promote its Digital & Adjacent activities. The Digital Entertainment operations include the video-on-demand platforms maxdome and MyVideo, an advertising financed online network (ProSiebenSat.1 Networld) and a multi-channel network Studio71 for its online video business (leveraging its web only production business) and the online games activities. Through SevenVentures, through which the Group operates a significant part of its Digital Commerce business, the Group provides media services to promising start-up companies and receives a revenue and/or equity participation in return. Another important part of the Digital Commerce business of the Group are the travel activities operated under the umbrella of ProSieben Travel GmbH. In the area of licensing, the Group is active in marketing and licensing of its own rights, as well as third party rights. The Group's music business within its Digital & Adjacent unit is operated by Starwatch Entertainment, which also comprises ancillary businesses such as a live entertainment business and artist management.
Content Production & Global Sales. The Content Production & Global Sales segment covers the Group's international content production and sales business (Red Arrow Entertainment Group) and accounted for 4.1 % of consolidated revenues from continuing operations in 2012 and 4.8 % in 2013. With Red Arrow Entertainment Group, the ProSiebenSat.1 Group participates in the entire TV value chain, from development and production to selling television programs. The segment's investment portfolio has been built over the last three years, most recently through acquisitions in key English-speaking markets. Management believes that this expansion, resulting in a portfolio of currently 15 companies controlled by the ProSiebenSat.1 Group across nine countries, has positioned the Group very well for both fiction and non-fiction production in Germany and internationally.
Over the last three years, as part of its strategic plan to focus on the German- speaking markets and develop its digital entertainment, digital commerce and adjacent activities in the Group's core markets, the ProSiebenSat.1 Group has sold its television, radio and print media businesses in Belgium, The Netherlands and Northern Europe, and has sold the Group's Central and Eastern European ("CEE") broadcasting operations (closing of the disposal of the Romanian radio activities is expected for the second quarter of 2014). These businesses were/are reported as assets held for sale and as discontinued operations in the Issuer's consolidated financial statements.
In fiscal year 2012, the ProSiebenSat.1 Group generated revenues of EUR 2,356.2 million and recurring EBITDA of EUR 744.8 million, in each case on the basis of continuing operations. In fiscal year 2013, consolidated revenues amounted to EUR 2,605.3 million and recurring EBITDA was 7
EUR 790.3 million, in each case based on continuing operations.
B.16 Major shareholders As of the date of the Prospectus, the Issuer had been notified under the German Securities Trading Act (Wertpapierhandelsgesetz, "WpHG") of the following shareholdings in the Issuer that exceed 10 % of the share capital of the Issuer: BlackRock, Inc. and The Capital Group Companies, Inc.
B.17 Credit ratings assigned Not applicable. The Issuer and its debt securities are not rated. to the Issuer or its debt securities
Section C – Securities
Element Description of Disclosure Requirements Element
C.1 Type and class of The fixed interest bearing Notes are bearer securities and are unsecured and securities being unsubordinated. offered/security identification number Security codes: ISIN: DE000A11QFA7, Common Code: 105548087 and WKN: A11QFA.
C.2 Currency of the Notes The currency of the Notes is Euro.
C.5 Restrictions on free Not applicable. There are no restrictions on free transferability of Notes. transferability
C.8 Rights attached to The Notes shall bear interest on their principal amount and unless previously securities/ranking of the redeemed in whole or in part or purchased and cancelled, the Notes shall be securities/limitations to redeemed at their principal amount on April 15, 2021 (the "Maturity the rights attached to Date"). the securities Status of the Notes (Ranking):
The Notes constitute unsubordinated, unsecured obligations of the Issuer ranking pari passu among themselves and pari passu with all other unsecured and unsubordinated obligations of the Issuer, unless such obligations are accorded priority under mandatory provisions of statutory law.
Early Redemption for Taxation Reasons:
Early redemption of the Notes for reasons of taxation will be permitted, in whole but not in part, at the principal amount thereof plus interest accrued to (but excluding) the date of such redemption, if as a result of any change in, or amendment to, the laws or regulations affecting taxation or the obligation to pay duties of any kind of any jurisdiction from or through which payment on the Notes is made or in which the Issuer is organised or otherwise considered to be resident or conducts business for tax purposes, the Issuer will become obligated to pay additional amounts on the Notes.
Change of Control:
The Conditions of Issue provide that each Holder of Notes will have the right to require the Issuer to redeem all of the Notes held by such Holder in an amount equal to the then outstanding principal amount of such Notes plus any accrued and unpaid interest thereon, if a change of control has occurred and, within 120 days (inclusive) after the occurrence of the relevant change of control, a rating downgrade has occurred (the "Change of Control Event").
If 75 % or more of the aggregate principal amount of the Notes then outstanding have been redeemed following the occurrence of a Change of Control Event, the Issuer may redeem, at its option, all (but not only part) of
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the remaining Notes at a redemption price equal to the principal amount thereof plus interest accrued to (but excluding) the date of such redemption.
Early Redemption at the Option of the Issuer:
The Issuer may, on not less than 60 days' nor more than 90 days' prior notice of redemption given to the Holders of the Notes, redeem, at its option, the Notes, in whole but not in part, at a certain early call redemption amount.
The Issuer may, on not less than 30 days' nor more than 60 days' prior notice of redemption given to the Holders, redeem, at its option, the Notes, in whole but not in part, at the principal amount thereof plus interest accrued to (but excluding) the date of such redemption, provided that such redemption date does not fall earlier than 90 days prior to the Maturity Date.
Negative Pledge:
The Issuer undertakes not to provide any security interest for any capital market indebtedness without at the same time letting the Holders share pari passu in such security interest or giving to the Holders an equivalent security interest, subject to certain exceptions. The Issuer undertakes, subject to certain exceptions, to procure (unless this is legally impossible or illegal) that none of its material subsidiaries will provide security interests over their assets to secure capital market indebtedness without at the same time letting the Holders share pari passu in such security interest or giving to the Holders an equivalent security interest.
Events of Default:
The Conditions of Issue provide for events of default, inter alia, in the case of non-payment, breach of other obligation, cessation of payment and insolvency or liquidation. The Conditions of Issue further contain a cross acceleration clause as an event of default in relation to non-payment of financial indebtedness equal to or in excess of EUR 50,000,000 where such default continues for more than thirty (30) days after the Issuer has received notice thereof from a Holder through the Principal Paying Agent, unless the Issuer contests its relevant payment obligation in good faith.
Termination:
Each Holder is entitled to declare his Notes due and demand immediate redemption thereof at par plus accrued interest (if any) to the date of repayment, if an event of default occurs and is continuing. If an event of default in the case of non-payment, cessation of payment, insolvency or liquidation occurs, the Notes held by a Holder will become due and payable immediately without further action or notice. If any other event of default occurs, the Notes held by a Holder will only be redeemable, if Holders of at least 10 % in aggregate principal amount of the then outstanding Notes declare the Notes due and demand immediate redemption thereof.
Resolutions of Holders:
In accordance with the Act on Issues of Debt Securities (Gesetz über Schuldverschreibungen aus Gesamtemissionen - "SchVG"), the Notes contain provisions pursuant to which Holders may consent to amend the Conditions of Issue (with the consent of the Issuer) and to decide upon certain other matters regarding the Notes. Resolutions of Holders properly adopted are binding upon all Holders. Resolutions providing for material amendments to the Conditions of Issue require a majority of at least 75 % of the voting rights participating in the vote. Resolutions regarding other amendments are passed by a simple majority of the votes cast.
C.9 Interest/Due dates/Yield See Element C.8. The Notes will bear interest from and including April 15, 2014 to, but excluding, April 15, 2021 at a rate of [●] % per annum, payable annually in arrears on 15 April of each year, commencing on April 15, 2015.
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The yield of the Notes is [●] % per annum.
C.10 Derivative component Not applicable. See Element C.9. The Notes have no derivative component in interest payment when paying interest.
C.11 Admission to trading of Application has been made for the Notes to be admitted to trading on the securities regulated market of the Luxembourg Stock Exchange and to be listed on the official list of the Luxembourg Stock Exchange.
Section D – Risks
Element Description of Disclosure Requirements Element
D.2 Information on the key The following contains a summary of certain risks, which may materially risks of the Issuer adversely affect the business, financial position, cash flows and results of operations of the Issuer and its ability to meet its obligations under the Notes: Risks Related to the Business of the ProSiebenSat.1 Group and the Industry and Markets in which the ProSiebenSat.1 Group operates
- The operating results of the ProSiebenSat.1 Group are highly dependent on revenues from the sale of TV advertising space. Advertising revenues are strongly influenced by economic conditions and any deterioration of such conditions can cause the revenues and profits of the ProSiebenSat.1 Group to decline significantly. - The Group is focused on the German-speaking markets Germany, Austria and Switzerland. It is therefore dependent on the economic conditions in these countries. - The development of the ProSiebenSat.1 Group's TV advertising revenues, the key source of revenues of the ProSiebenSat.1 Group, depends on the general reach of linear TV broadcasts in the Group's markets, which may decline in the future. The ProSiebenSat.1 Group is therefore vulnerable to changes in technology (e.g., the ongoing transition to digital broadcasting and other technological changes with new forms of audiovisual media distribution) and viewer habits. - Rapid changes in technology and failure to respond to technological developments may adversely affect the business of the ProSiebenSat.1 Group. - The ProSiebenSat.1 Group operates in very competitive television advertising markets, where factors like the development of audience shares, pricing of advertising space and the public funding available to some of the Group's competitors may impair its ability to increase or even maintain its current level of advertising sales and pricing. - The ProSiebenSat.1 Group benefits from being an audience market leader or holding significant audience shares and the loss of such a position in relevant audience target groups or audience shares in general could have significant negative effects on its advertising revenues. - The standards and methods of measuring television audiences, as well as the composition of audience panels, may change in a way that could negatively impact the Group's ability to convert audience share into advertising revenue. - The demographic development in the Group's markets, which is marked by an aging and shrinking population, could impact the size of commercially relevant target audiences, as well as the audience reach and share of the Group's TV stations. - The ProSiebenSat.1 Group's launch of additional TV stations may
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not be successful. - The ProSiebenSat.1 Group is dependent on a steady supply of attractive programming content which is provided by only a limited number of international, particularly U.S., production companies, and which may become more expensive to acquire, if available at all. - The Group may be required to change the programming mix on its TV stations, which could have negative effects on its profitability. - The market power of advertising agencies affects the ability of the ProSiebenSat.1 Group to raise or maintain prices or to reduce the discount levels inherent in the sector. - The Group's results are strongly influenced by a large fixed cost base and, in contrast thereto, low visibility and significant volatility in its revenues, in particular with respect to advertising revenues. - Publicly owned and funded competitors of the ProSiebenSat.1 Group in Germany are subject to limitations in broadcasting advertisements. Regulatory changes permitting such public broadcasters to air more advertisements may further increase available advertising space, creating pressure on demand for and pricing of the ProSiebenSat.1 Group's advertising space. - The valuation of programming assets is subject to uncertainties. - The ProSiebenSat.1 Group's television broadcasting operations depend on sufficient technical reach via satellite and cable networks, as well as entry into transmission agreements on commercially reasonable terms. - The development of the ProSiebenSat.1 Group's distribution business depends on market developments, consumer acceptance and continued cooperation with satellite and cable network operators. - A substantial part of the Group's revenues, cash flows and expenses are subject to seasonality. - The ProSiebenSat.1 Group's digital entertainment, digital commerce and adjacent business activities are subject to a high degree of competition and low market-entry barriers. They are also strongly influenced by the development of the Group's linear TV business. - The strategy of the ProSiebenSat.1 Group for the growth of its digital entertainment, digital commerce and adjacent business may fail. Significant investments may lead to increased capital requirements; the growth strategy may have negative effects on the Group's profitability. - Growing content piracy may affect the Group's ability to retain and expand its audiences and users, in particular with regard to its video-on-demand and online gaming offerings. - Distribution of the Group's digital content via the internet does not currently result in costs beyond hosting and streaming costs. Additional fees may be charged by internet infrastructure or service providers in the future. - The ProSiebenSat.1 Group is subject to various risks from the outsourcing of services.
- The Group is subject to risks of outages or malfunctions of its data processing systems, unauthorized network intrusions, broadcasting service interruptions and data theft. - The Group is generally exposed to risks in relation to business acquisitions and cooperations, including with respect to contracted put rights on the part of sellers of the businesses. - The Group may be exposed to considerable liabilities in the context of divestments, including certain indemnification obligations
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relating to the disposal of its businesses in Belgium, The Netherlands, Northern Europe and Central and Eastern Europe. - The Group's assets are to a large extent composed of goodwill and other identifiable intangible assets, which may become subject to impairments. Financial assets held by the Group may also become subject to impairments. - The Group could be adversely affected by labor disputes and other union activity. - The ProSiebenSat.1 Group's insurance coverage may be inadequate. - The ability to recruit, retain and develop qualified personnel is critical to success and growth of the ProSiebenSat.1 Group. - Bandwidth capacity limitations or cost increases for consumers may negatively affect the growth of digital content consumption, such as online video and games. - The Group's content production and sales business operates in a very competitive environment and requires large upfront investments which may prove unsuccessful. - An increasing number of TV stations available via linear TV broadcasts could result in lower audience shares for the Group and greater fragmentation of its target audiences. - The ProSiebenSat.1 Group is exposed to risks with respect to the management of its organization and adherence to compliance- related standards and regulations. - The forecasts made by the Issuer on the development of its business and its earnings may turn out to be incorrect and the Issuer may be unable to achieve the goals set out in its mid-term revenue- growth plan. Legal, Regulatory and Taxation Risks of the ProSiebenSat.1 Group
- The ProSiebenSat.1 Group's business operations are dependent on broadcasting licenses issued by the competent authorities. - Supervisory and regulatory restrictions and changes in the relevant legal and regulatory environment could adversely affect the Group's business activities. - Changes in laws governing intellectual property may be disadvantageous to the Group's business. - The ProSiebenSat.1 Group is exposed to allegations of intellectual property infringement, and the Group may have to defend third parties' infringement of its intellectual property rights. - The ProSiebenSat.1 Group's business conduct, strategic cooperations and acquisitions are subject to regulatory restrictions. Such restrictions have led to interventions by authorities and civil litigation in the past and may do so in the future. - The Group is subject to risks from current or future legal and administrative proceedings.
- The ProSiebenSat.1 Group is exposed to risks in relation to tax audits and certain transactions. Moreover, the Group is exposed to risks in relation to its tax structure and changes in tax laws. Risks Related to the Financial Position of the Issuer and the ProSiebenSat.1 Group
- The debt service obligations of the Issuer and the ProSiebenSat.1 Group could materially adversely affect their business, as well as their financial flexibility, financial condition, results of operations, cash flows and liquidity. - The current dividend policy of the Issuer may limit its ability to
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meet its debt service obligations. - The contractual terms and conditions of the Existing Credit Facilities Agreement and the New Credit Facilities Agreement impose restrictions on the business of the Issuer and its subsidiaries. Certain subsidiaries of the Issuer serve as collateral for the obligations under the Existing Credit Facilities Agreement. - A change of control may entail significant negative consequences for the Group. - The facilities under the Existing Credit Facilities Agreement and the New Credit Facilities Agreement have a shorter maturity than the Notes. A refinancing of such facilities may not be possible. - Exposure to rising interest rates and negative market values of derivatives transactions. - Exposure to fluctuating currency exchange rates. - Any uncertainty in global financial markets could adversely affect the Group's access to and cost of financing. It may also increase risks in relation to the Group's counterparty exposure and investment propensity of its customers. - Changes in accounting standards, methods or practices may have a negative impact on the Group's financial position and reported results.
D.3 Information on the key An investment in the Notes involves certain risks associated with the risks of the securities characteristics of the Notes which could lead to substantial losses the Holders would have to bear in the case of selling their Notes or with regard to receiving interest payments and repayment of principal. Those risks include the following:
- Notes may not be a suitable investment for all investors. - The Issuer's ability to fulfill its obligations under the Notes depends upon the future financial and operating performance of the ProSiebenSat.1 Group. - The Notes are effectively subordinated to the obligations under the Existing Credit Facilities Agreement and the related hedging transactions. - Borrowings not classified as Capital Market Indebtedness are excluded from the negative pledge, therefore the Issuer is under no obligation to grant the Holders an equal or rateable security. - The market value of the Notes could decrease if the creditworthiness of the ProSiebenSat.1 Group worsens or the market participants' estimation of the creditworthiness of corporate debtors in general or of debtors operating in the same business as the ProSiebenSat.1 Group adversely changes. - The Notes will be redeemed on the Maturity Date. The Issuer is under no obligation to redeem the Notes at any time before this date and the Holders have no right to call for their redemption except upon the occurrence of certain events. Furthermore, the Issuer is, subject to certain conditions, entitled to redeem the Notes prior to their stated maturity in which case the Holders might suffer a lower than expected yield and might not be able to reinvest the funds on the same terms. - A principal shareholder may exercise significant influence on the Issuer, without the Holders having the right to call for early redemption of the Notes. - There is no restriction under the Conditions of Issue on the amount of debt which the Issuer may issue ranking equal to the obligations under or in connection with the Notes. - Application has been made for the Notes to be admitted to trading on the EU-regulated market segment of the Luxembourg Stock
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Exchange and to be listed on the official list of the Luxembourg Stock Exchange. There can, however, be no assurance that a liquid secondary market for the Notes will develop and that Holders will be able to sell their Notes. - It cannot be ruled out that the price of the Notes may fall, for example as a result of changes in the current interest rate on the capital market (market interest rate), as the market interest rate fluctuates. - The Euro-denominated Notes could represent a currency risk for a Holder if the Euro represents a foreign currency to such Holder; in addition governments and competent authorities could impose exchange controls in the future. - Because the Global Notes are held by Clearstream, investors will have to rely on their procedures for transfer, payment and communication with the Issuer. - The market price of the Notes may change unfavorably for the Holders. - In case of certain Events of Default, the Notes held by a Holder will only be redeemable if Holders of at least 10 % in aggregate principal amount of Notes declare the Notes due and payable. - A Holder is subject to the risk of being outvoted and of losing rights towards the Issuer against his will in the case that the Holders agree to amendments of the Conditions of Issue by majority vote.
Section E – Offer
Element Description of Disclosure Requirements Element
E.2b Reasons for the offer The Issuer intends to use the gross proceeds of the issue of the Notes to and use of proceeds prepay in part the indebtedness outstanding under the senior secured facilities agreement (the "Existing Credit Facilities Agreement") entered into by, inter alia, the Issuer and certain of its subsidiaries on June 26, 2007, as last amended and restated on May 30, 2013, together with any accrued interests and any other amounts thereunder.
E.3 Terms and conditions of The Notes will be offered in Austria, Germany, Luxembourg and the the offer Netherlands during an offer period which is expected to commence on or about April 10, 2014 to, and including, April 15, 2014, subject to a shortening or extension of the offer period.
The Issue Price, the aggregate principal amount of Notes to be issued, the number of Notes, the interest rate, the issue proceeds and the yield of the Notes will be included in the Pricing Notice which will be published on the website of the Luxembourg Stock Exchange (www.bourse.lu) on or prior to the Issue Date of the Notes.
There are no conditions to which the offer is subject. Investors may submit their offers to buy Notes, using the information system Bloomberg or any other commonly used information systems. In the case of an order prior to the determination of the pricing details, the investors shall specify at which price they would be prepared to purchase which amount of Notes. Following determination and notification of the pricing details the Managers will offer the Notes in Austria, Germany, Luxembourg and The Netherlands. Each investor who has submitted an order in relation to the Notes and whose order is accepted by the Global Coordinators will receive a confirmation by electronic mail, fax or through commonly used information systems setting out its respective allotment of Notes. Before an investor receives a confirmation from the Global Coordinators that its offer to purchase Notes has been accepted, the investor may reduce or withdraw its purchase order.
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Delivery and payment of the Notes will be made within three business days after the date of pricing of the Notes and the confirmation of the allotment to investors. The Notes so purchased will be delivered via book-entry through the Clearing System and their depository banks against payment of the Issue Price.
E.4 Material interests in the Not applicable. There are no interests of natural and legal persons other than offer the Issuer involved in the issue, including conflicting ones that are material to the issue.
E.7 Estimated expenses Not applicable. The Issuer will not charge any costs, expenses or taxes directly to any investor.
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GERMAN TRANSLATION OF THE SUMMARY OF THE PROSPECTUS
ZUSAMMENFASSUNG DES PROSPEKTS
Zusammenfassungen bestehen aus geforderten Angaben, die als "Punkte" bezeichnet sind. Diese Punkte sind in den Abschnitten A – E (A.1 – E. 7) fortlaufend nummeriert.
Diese Zusammenfassung enthält alle Punkte, die für die vorliegende Art von Wertpapieren und diese Emittentin in eine Zusammenfassung aufzunehmen sind. Da einige Punkte nicht behandelt werden müssen, können in der Reihenfolge der Nummerierung Lücken auftreten.
Selbst wenn ein Punkt wegen der Art der Wertpapiere und der Emittentin in die Zusammenfassung aufgenommen werden muss, ist es möglich, dass in Bezug auf diesen Punkt keine relevanten Informationen gegeben werden können. In diesem Fall enthält die Zusammenfassung eine kurze Beschreibung des Punkts mit dem Hinweis "entfällt".
Abschnitt A – Einleitung und Warnhinweise
Punkt Beschreibung Geforderte Angaben
A.1 Warnhinweise Die Zusammenfassung sollte als Einleitung zu diesem Prospekt verstanden werden.
Ein Anleger sollte bei jeder Entscheidung, in die Schuldverschreibungen zu investieren, sich auf den Prospekt als Ganzes stützen.
Ein Anleger, der wegen der in dem Prospekt enthaltenen Angaben Klage einreichen will, muss möglicherweise nach den nationalen Rechtsvorschriften seines Mitgliedstaats zum Vertrag über den Europäischen Wirtschaftsraum (EWR) für die Übersetzung des Prospekts aufkommen, bevor das Verfahren eingeleitet werden kann.
Anleger sollten beachten, dass zivilrechtlich nur diejenigen Personen haften, die die Zusammenfassung samt etwaiger Übersetzungen vorgelegt und übermittelt haben, und dies auch nur für den Fall, dass die Zusammenfassung verglichen mit den anderen Teilen des Prospekts irreführend, unrichtig oder inkohärent ist oder verglichen mit den anderen Teilen des Prospekts wesentliche Angaben, die in Bezug auf Anlagen in die Schuldverschreibungen für die Anleger eine Entscheidungshilfe darstellen, vermissen lassen.
A.2 Zustimmung zur Die Emittentin stimmt der Verwendung des Prospekts durch alle Verwendung des Finanzintermediäre zu (generelle Zustimmung) und übernimmt die Prospekts Verantwortung für den Inhalt des Prospekts auch für die spätere Weiterveräußerung oder endgültige Platzierung der Schuldverschreibungen durch einen Finanzintermediär.
Angabe des Zeitraums, Die spätere Weiterveräußerung oder endgültige Platzierung der für den die Schuldverschreibungen durch Finanzintermediäre kann während des Zeitraums Zustimmung erteilt ab dem 10. April 2014, frühestens jedoch ab dem Tag der Veröffentlichung der wird Preisfestsetzungsmitteilung (ab dem Zeitpunkt ihrer Veröffentlichung), bis zum 17. April 2014 erfolgen.
Bedingungen, an die Sämtliche Aktivitäten, die der betreffende Finanzintermediär im Zusammenhang die Zustimmung mit dem Angebot sowie der Weiterveräußerung wahrnimmt (einschließlich, gebunden ist jedoch nicht beschränkt auf, Marketing- und Vertriebsaktivitäten sowie das Ermöglichen des Zugangs zu betreffenden Informationen) ("Weiterveräußerungsaktivitäten"), müssen (i) in Übereinstimmung mit allen anwendbaren gesetzlichen Regelungen (einschließlich der Regelungen, die in dem Land Anwendung finden, in dem die betreffenden potentiellen Investoren, zum Zeitpunkt, in dem die Weiterveräußerungsaktivitäten ihnen gegenüber ausgeübt werden, ihren Aufenthalts- bzw. Wohnsitz haben) erfolgen; und (ii) allen im Prospekt beschriebenen Anforderungen und Verkaufsbeschränkungen entsprechen.
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Finanzintermediäre können diesen Prospekt für die spätere Weiterveräußerung oder endgültige Platzierung der Schuldverschreibungen in Luxemburg, Deutschland, Österreich und den Niederlanden verwenden.
Im Rahmen sämtlicher Weiterveräußerungsaktivitäten muss der Prospekt in seiner aktuellen Fassung, einschließlich sämtlicher etwaiger Änderungen, Nachträge und zusätzlicher Informationen, die auf der Internetseite der Luxemburger Wertpapierbörse (www.bourse.lu) ("Aktueller Prospekt") abrufbar sind, unmittelbar zur Verfügung gestellt werden.
Zum Zeitpunkt der Durchführung des Angebots durch jegliche Finanzintermediäre sind dem jeweiligen Anleger der Aktuelle Prospekt (einschließlich der Angebotsbedingungen) durch den jeweiligen Finanzintermediär zur Verfügung stellen.
Zudem hat jeder den Prospekt verwendende Finanzintermediär auf seiner jeweiligen Internetseite anzugeben, dass er den Prospekt mit Zustimmung und gemäß den Bedingungen verwendet, an die die Zustimmung gebunden ist.
Abschnitt B – Emittentin
Punkt Beschreibung Geforderte Angaben
B.1 Gesetzliche und Die rechtliche Bezeichnung der Emittentin ist ProSiebenSat.1 Media AG kommerzielle ("ProSiebenSat.1 Media AG" oder die "Emittentin", und gemeinsam mit ihren Bezeichnung konsolidierten Tochtergesellschaften, die "Gruppe" oder die "ProSiebenSat.1 Gruppe") und ihre kommerzielle Bezeichnung ist ProSiebenSat.1 Media AG oder ProSiebenSat.1.
B.2 Sitz, Rechtsform, ProSiebenSat.1 Media AG ist eine deutsche Aktiengesellschaft und unterliegt geltendes Recht und deutschem Recht und ist eingetragen im Handelsregister beim Amtsgericht Land der Gründung München unter der Nummer HRB 124169. ProSiebenSat.1 Media AG hat ihren Sitz in der Bundesrepublik Deutschland mit eingetragenem Geschäftssitz in der Medienallee 7, 85774 Unterföhring, Deutschland, (Telefonnummer: +49 (0) 89 9507-10).
B.4b Bereits bekannte Die Fernseh- und Medienbranche unterliegt einem grundlegenden Wandel, der Trends, die sich auf die auch in jedem der Märkte, in denen Mitglieder der Gruppe aktiv sind, zu Emittentin und die beobachten ist. Dieser Wandel ergibt sich aus der Digitalisierung der Branchen, in denen sie Programminhalte, ihrer Distribution und dem Konsumverhalten und wird von tätig ist, auswirken technologischen Entwicklungen, neuartigen Geschäftsmodellen und niedrigeren Eintrittsbarrieren für neue Marktteilnehmer getrieben. Die Emittentin geht davon aus, dass die folgenden Trends ihre Aktivitäten und die der Gruppe beeinflussen und eine erhebliche Auswirkung auf die Fernseh- und Medienindustrie haben:
- Der Markt für audiovisuelle Medienunterhaltung ist durch zunehmende Fragmentierung und zunehmenden Wettbewerb gekennzeichnet. - Herkömmliches Fernsehen wird ein Massenmedium bleiben. - Social TV und die Nutzung alternativer Empfangsgeräte wird die herkömmliche Fernsehnutzung unterstützen und ergänzen. - Die Fernsehinhalte und -marken können in den Online Video-Markt verlängert und dort verwertet werden. - Die Wirksamkeit von Fernsehwerbung im Vergleich zu Werbung in anderen Medien wird die Bedeutung des Fernsehens im Media-Mix weiterhin stützen. - Anbieter von Programminhalten werden für die wirtschaftliche Verwertung ihrer Inhalte trotz der wachsenden Bedeutung von Online Video weiterhin vom linearen Fernsehen als Vertriebsplattform abhängen. - Die Nachfrage nach Premium Angeboten im Bereich des Fernsehens wird weiter zunehmen.
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- Herkömmliche Broadcasting-Anbieter werden in der Lage sein müssen, bestimmte Zielgruppen zu erreichen, sich fortwährend demografischen Trends anzupassen oder Nischenzielgruppen Programme anzubieten. - Werbefinanziertes Fernsehen, digitale Unterhaltungsangebote sowie konvergente Fernsehzuschauermessungen werden sich zunehmend weiterentwickeln. - Das Wachstum im Bereich digitale Unterhaltung wird weiterhin von der Einführung neuer Angebote, sich verändernden Verbrauchergewohnheiten und innovativen Vertriebsmodellen getrieben sein. - E-Commerce (d. h. elektronischer Handel, im Folgenden "E- Commerce") wird weiterhin rasant wachsen und zunehmend an die Stelle des stationären Vertriebs von Waren und Dienstleistungen treten. Marken und Reichweite werden die entscheidenden Wettbewerbsvorteile darstellen. - Der Markt für die Produktion von Programminhalten wird stark fragmentiert bleiben und wird weiterhin von der wachsenden Nachfrage nach Nischenprogrammen und der Zyklizität erfolgreicher Programmformate beeinflusst werden.
B.5 Beschreibung der Die ProSiebenSat.1 Media AG ist die Dachgesellschaft der Gruppe. Zum Datum Gruppe und der des Prospekts hat die Emittentin ca. 133 unmittelbare und mittelbare Stellung der Emittentin vollkonsolidierte Tochtergesellschaften. Die untenstehende Grafik stellt eine innerhalb dieser Gruppe Übersicht über wichtige Tochtergesellschaften der Emittentin dar, von denen zum Datum des Prospekts alle hundertprozentige Tochtergesellschaften sind:
B.9 Gewinnprognosen und - Entfällt. Die Emittentin veröffentlicht keine Gewinnprognose oder schätzungen Gewinnschätzung.
B.10 Einschränkungen im Entfällt. KPMG AG Wirtschaftsprüfungsgesellschaft hat jeweils einen Bestätigungsvermerk zu uneingeschränkten Bestätigungsvermerk zu den Konzernabschlüssen der den historischen Emittentin für die jeweils zum 31. Dezember endenden Geschäftsjahre 2013 und Finanzinformationen 2012 erstellt.
B.12 Ausgewählte Die folgenden Tabellen zeigen ausgewählte Finanzinformationen über die wesentliche historische ProSiebenSat.1 Gruppe, abgeleitet von den geprüften Konzernabschlüssen der Finanzinformationen Emittentin für die jeweils zum 31. Dezember endenden Geschäftsjahre 2013 und 2012.
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Konzerngewinn- und Verlustrechnung
Für das Geschäftsjahr endend am 31. Dezember 2013 2012 (EUR in Mio.)* (geprüft) Fortgeführte Aktivitäten Umsatzerlöse ...... 2,605.3 2,356.2 Umsatzkosten ...... (1,431.8) (1,266.4) Bruttoergebnis vom Umsatz ...... 1,173.5 1,089.8 Vertriebskosten ...... (243.5) (229.9) Verwaltungskosten ...... (285.7) (243.9) Sonstige betriebliche Aufwendungen ...... (0.8) (28.6) Sonstiger betrieblicher Ertrag ...... 25.4 13.4 Betriebsergebnis (EBIT) ...... 668.9 600.9 Zinsen und ähnliche Erträge...... 6.5 3.0 Zinsen und ähnliche Aufwendungen ...... (135.0) (156.2) Zinsergebnis ...... (128.5) (153.2) Ergebnis aus at-Equity bewerteten Anteilen ...... 5.1 10.3 Sonstiges Finanzergebnis ...... (18.6) (1.5) Finanzergebnis ...... (142.0) (144.4) Ergebnis von Steuern ...... 526.9 456.5 Ertragsteuern ...... (162.2) (127.4) Konzernergebnis fortgeführter Aktivitäten ...... 364.6 329.1 Nicht-fortgeführte Aktivitäten Ergebnis nicht-fortgeführter Aktivitäten nach Ertragssteuern ...... (47.6) (30.2) Konzernergebnis ...... 317.0 298.8 Den Anteilseignern der ProSiebenSat.1 Media AG zuzurechnendes Ergebnis ...... 312.1 295.0 Ergebnisanteil anderer Gesellschafter ...... 4.9 3.9
* Abweichungen der Summe sind durch Rundungsdifferenzen und die Auslassung einzelner Positionen zu begründen.
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Ausgewählte Informationen der Konzernbilanz Zum 31. Dezember
2013 2012
(EUR in Mio.)*
(geprüft)
Immaterielle Vermögenswerte ...... 1,164.5 1,062.6 Sachanlagen ...... 204.8 198.7 At-Equity bewertete Anteile ...... 15.9 5.3 Programmvermögen ...... 1,064.6 1,110.7 Sonstige langfristige Vermögenswerte ...... 85.6 89.9 Summe langfristiger Vermögenswerte ...... 2,535.4 2,467.1 Programmvermögen ...... 137.1 166.2 Vorräte ...... 1.3 0.7 Sonstige kurzfristige Vermögenswerte ...... 417.8 404.9 Zahlungsmittel und Zahlungsmitteläquivalente...... 395.7 702.3 Zur Veräußerung gehaltene Vermögenswerte ...... 68.8 1,671.4 Summe kurzfristiger Vermögenswerte ...... 1,020.7 2,945.5 Bilanzsumme ...... 3,556.0 5,412.6 Gezeichnetes Kapital ...... 218.8 218.8 Kapitalrücklage ...... 585.7 581.6 Erwirtschaftetes Konzerneigenkapital ...... (55.8) 833.4(1) Eigene Anteile ...... (37.6) (47.4) Sonstiges Eigenkapital(2) ...... (137.3) (90.7)(1) Den Anteilseignern der ProSiebenSat.1 Media AG zustehendes Eigenkapital ...... 573.9 1,495.8 Anteile anderer Gesellschafter ...... 10.2 5.0 Summe Eigenkapital ...... 584.1 1,500.8 Langfristige finanzielleVerbindlichkeiten ...... 2,088.5 2,659.2 Übrige langfristige Verbindlichkeiten ...... 4.4 4.4 Langfristige Rückstellungen ...... 19.3 18.1 Latente Ertragsteuerschulden ...... 81.5 66.7 Summe langfristiger Verbindlichkeiten und Rückstellungen ...... 2,193.7 2,748.4 Kurzfristige finanzielle Verbindlichkeiten ...... 438.0 589.1 Übrige kurzfristige Verbindlichkeiten ...... 223.2 202.6 Kurzfristige Rückstellungen ...... 76.9 73.1 Verbindlichkeiten im Zusammenhang mit zur Veräußerung gehaltenen Vermögenswerten ...... 40.2 298.6 Summe kurzfristiger Verbindlichkeiten und Rückstellungen ...... 778.3 1,163.4 Bilanzsumme ...... 3,556.0 5,412.6
* Abweichungen der Summe sind durch Rundungsdifferenzen und die Auslassung einzelner Positionen zu begründen.
(1) Die Zahlen wurden dem geprüften Konzernabschluss für 2013 entnommen. In 2013 hat die ProSiebenSat.1 Gruppe erstmals die Regelungen des IAS 19 "Employee benefits" (revised 2011) angewendet. Entsprechend des geänderten Standards werden versicherungsmathematische Gewinne und Verluste als Neubewertung im sonstigen Gesamtergebnis erfasst und in Folgeperioden nicht in der Gewinn- und Verlustrechnung erfasst. Da die ProSiebenSat.1 Gruppe bisher diese Gewinne und Verluste sofort ergebniswirksam erfasst hatte, führte die rückwirkende Anwendung des IAS 19 (revised 2011) zu einer Erhöhung des Erwirtschafteten Konzerneigenkapitals zum 31. Dezember 2012 von EUR 829,6 Mio., wie es im geprüften Konzernabschluss 2012 ausgewiesen wurde, um EUR 3,8 Mio. auf EUR 833,4 Mio., wie es als Vergleichszahl im geprüften Konzernabschluss 2013 ausgewiesen wird. Das Sonstige Eigenkapital verminderte sich korrespondierend um EUR 3,8 Mio. von EUR -86,9 Mio., wie es im geprüften Konzernabschluss 2012 ausgewiesen wurde, auf EUR -90,7 Mio., wie es als Vergleichszahl im geprüften Konzernabschluss 2013 ausgewiesen wird.
(2) Enthält die Bilanzpositionen kumuliertes übriges Eigenkapital aus fortgeführten Aktivitäten, kumuliertes übriges Eigenkapital im Zusammenhang mit zur Veräußerung gehaltenen Vermögenswerten und Schulden sowie sonstiges Eigenkapital.
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Aussichten der Es gab keine wesentlichen nachteiligen Entwicklungen in den Aussichten der Emittentin Emittentin seit dem 31. Dezember 2013.
Signifikante Entfällt. Es gab keine signifikanten Veränderungen in der Finanzlage oder Veränderungen der Handelsposition der Emittentin seit dem 31. Dezember 2013. Finanzlage oder Handelsposition der Emittentin
B.13 Ereignisse aus der Am 25. Februar 2014 wurde der Verkauf der ungarischen Fernsehaktivitäten jüngsten Zeit der durch die Gruppe vollzogen und im April 2014 hat die Gruppe den Verkauf der Geschäftstätigkeit der rumänischen Fernsehaktivitäten vollzogen. Der Vollzug des Verkaufs der Emittentin rumänischen Radioaktivitäten durch die Gruppe wird für das zweite Quartal 2014 erwartet. Im März 2014 hat die ProSiebenSat.1 Gruppe eine Beteiligung von 20 % an den Collective Digital Studios (CDS), einem Multi-Channel-Network in den Vereinigten Staaten erworben. Weiterhin hat die Emittentin eine Mehrheitsbeteiligung an der in den Vereinigten Staaten ansässigen TV Produktionsfirma, Half Yard Productions, erworben, um ihr Geschäft mit der Produktion von Programminhalten weiter zu stärken, und die Emittentin hat durch ihre Tochter ProSiebenSat.1 Games GmbH, die im Bereich der Online- Games (d.h. Online-Spiele, im Folgenden "Online Games") tätig ist, die Aeria Games Europe erworben. Hierdurch soll der Bereich Online Games gestärkt werden. Im April 2014 haben der schweizer Streaming Dienst Zattoo und die ProSiebenSat.1 Gruppe eine Vereinbarung hinsichtlich der Übertragung des linearen Fernsehens ihrer zum Kernbereich gehörenden TV Sender ProSieben, SAT.1, kabel eins, sixx, SAT.1 Gold und ProSieben MAXX über das Internet und Mobilfunknetz abgeschlossen.
Die Emittentin beabsichtigt eine Dividende in Höhe von EUR 1,47 pro Stammaktie der Emittentin für das Geschäftsjahr 2013 zu zahlen. Die Zahlung einer solchen Dividende ist abhängig von der Zustimmung der Aktionäre der Emittentin auf der Hauptversammlung der Emittentin.
B.14 Abhängigkeit von Entfällt. Siehe Punkt B.5: Die Emittentin ist die Muttergesellschaft der Gruppe anderen Unternehmen und nicht von anderen Unternehmen der Gruppe abhängig. der Gruppe
B.15 Haupttätigkeiten Die Haupttätigkeiten der ProSiebenSat.1 Gruppe, sind Free-TV (d. h. frei empfangbares Fernsehen, im Folgenden "Free TV"), Digital Entertainment (d.h. digitale Unterhaltungsangebote, im Folgenden "Digital Entertainment") und Digital Commerce (d.h. digitaler Handel, im Folgenden "Digital Commerce"), Content Production und Sales Business (d.h. Programmproduktions- und Vertriebsaktivitäten, im Folgenden "Content Production" und "Sales Business"). Die ProSiebenSat.1 Gruppe sieht sich als eines der führenden Medienunternehmen in Europa, das ca. 42 Mio. TV Haushalte mit TV Sendern in Deutschland, Österreich und der Schweiz erreicht. Zu den Aktivitäten der Gruppe gehören der Kernbereich Free TV (einschließlich der führenden TV Sender ProSieben und SAT.1) und ein breites Portfolio an Digital Entertainment- Angeboten, darunter Online Video- und Online Games-Aktivitäten. Über die Media-Investments (d.h. Investitionen über die Vergabe von TV-Werbezeiten /- flächen) und Kapitalinvestitionen ihrer Geschäftseinheit Digital Commerce baut die Gruppe ihr Beteiligungsportfolio in bestimmten E-Commerce Bereichen und in Unternehmen auf. Die Gruppe betreibt ebenfalls das Musikgeschäft und verwandte Geschäftszweige. Zudem gehört der Gruppe ein internationales Produktions- und Vertriebsnetzwerk für Programminhalte mit 15 Produktionsgesellschaften in neun Ländern. Die ProSiebenSat.1 Gruppe, die zum 31. Dezember 2013 rund 3.600 Mitarbeiter (berechnet auf der Basis von vollzeitäquivalenten Stellen) in mehr als zwölf Ländern beschäftigt, verfolgt eine Wachstumsstrategie mit dem Ziel, ein "broadcasting, digital entertainment and commerce powerhouse" (d. h. führendes Unternehmen im Bereich Fernsehunterhaltung, digitaler Unterhaltung und Handel) zu werden.
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Die Geschäftstätigkeiten des Konzerns auf Basis fortgeführter Aktivitäten sind in drei operative Segmente gegliedert: Broadcasting German-speaking, Digital & Adjacent und Content Production & Global Sales. Die Segmente sind strategisch, wirtschaftlich und technisch miteinander vernetzt und werden von der ProSiebenSat.1 Media AG geführt.
Broadcasting German-speaking. Im Segment Broadcasting German-speaking, auf das im Jahr 2012 81,7 % und im Jahr 2013 76,7 % der Konzernumsätze aus fortgeführten Geschäftstätigkeiten der Gruppe entfielen, bündelt die Emittentin die konzernweiten TV Aktivitäten. Mit einer Bevölkerung von rund 80 Mio. Einwohnern ist Deutschland Europas größter Fernsehmarkt. Die ProSiebenSat.1 Gruppe ist über ihre Vertriebstochter SevenOne Media Marktführer im deutschen TV Werbemarkt mit einem Marktanteil (auf Basis von Bruttofernsehwerbeumsatz) in Höhe von rund 43 % im Jahr 2012 und 44 % im Jahr 2013 (Quelle: Nielsen Media Research). Mit komplementären Programmangeboten in den zum Portfolio der Gruppe gehörenden werbefinanzierten TV Sendern (ProSieben, SAT.1, kabel eins, sixx, SAT.1 Gold und ProSieben MAXX) spricht die ProSiebenSat.1 Gruppe die kommerziell relevantesten Zuschauersegmente in Deutschland an und bietet auf diese Weise sowohl Werbekunden als auch Zuschauern ein umfassendes Angebot an Fernsehsendern und zielgruppenspezifischen Programmen. Innerhalb der TV Aktivitäten der Gruppe gewinnt das Distributionsgeschäft mit hochauflösendem (HD) Fernsehen und Angeboten im Bereich Basic Pay TV als zusätzliche Umsatzquelle an Bedeutung. Die ProSiebenSat.1 Gruppe erwägt die Einführung zusätzlicher Free TV Sender und den Ausbau des Basic Pay TV Angebots in Deutschland. In Österreich und in der deutschsprachigen Schweiz betreibt die Gruppe ihre zum Kernbereich gehörenden deutschen Free TV Sender (mit Ausnahme von SAT.1 Gold und ProSieben MAXX, die derzeit in Österreich und der Schweiz nicht angeboten werden) mit lokalen Werbefenstern und überwiegend auch lokalen Programmfenstern. Mit PULS 4 betreibt die ProSiebenSat.1 Gruppe zudem einen rein österreichischen Fernsehsender.
Digital & Adjacent. Auf das Segment Digital & Adjacent, gegenwärtig der stärkste Umsatzwachstumstreiber der Gruppe, entfielen im Geschäftsjahr 2012 14,2 % und im Jahr 2013 18,6 % der Konzernumsätze aus fortgeführten Aktivitäten. In diesem Segment werden die Geschäftseinheiten Digital Entertainment (z.B. Online Video und Online Games), Digital Commerce (z.B. die Aktivitäten im Rahmen derer die Gruppe Werbezeiten/ -flächen an Unternehmen vergibt und im Gegenzug eine Umsatz- und/oder Unternehmensbeteiligung erhält, sowie die Aktivitäten im Reisebereich) und die Adjacent Geschäftseinheiten (z.B. die Musik-, Lizenz und Live- Entertainmentaktivitäten) gebündelt. Die Gruppe nutzt die Inhalte, die Zuschauerreichweite und die geschäftsübergreifende Vermarktungskraft ihrer Fernsehsender zur Entwicklung von digitalen Produkten im Bereich Digital Entertainment und Digital Commerce und zum Aufbau von angrenzenden Geschäftsfeldern mit verschiedenen Marken. Ein Schlüsselelement dieser Strategie ist die Verwendung ungenutzter TV Werbeflächen der Free TV Sender der Gruppe zur übergreifenden Vermarktung ihrer Digital & Adjacent Aktivitäten. Zu den Digital Entertainment-Aktivitäten gehören die Video-on- Demand Plattformen maxdome und MyVideo, ein werbefinanziertes Onlinenetzwerk (ProSiebenSat.1 Networld) und ein Multi-Channel-Network Studio71 für die Online Video Aktivitäten (zur Ausnutzung des internetbasierten Produktionsgeschäfts) und die Online Games-Aktivitäten. Über SevenVentures, durch welche die Gruppe einen erheblichen Teil des Digital Commerce abwickelt, stellt die Gruppe erfolgversprechenden jungen Unternehmen Medialeistung zur Verfügung und erhält als Gegenleistung eine Umsatz- und/oder Unternehmensbeteiligung. Ein weiterer wichtiger Bestandteil der Digital Commerce Aktivitäten der Gruppe sind die Aktivitäten im Reisebereich, die unter dem Dach der ProSieben Travel GmbH betrieben werden. Im Bereich Licensing ist die Gruppe auf dem Gebiet der Vermarktung und der Lizenzierung sowohl der eigenen Rechte als auch der Rechte Dritter tätig. Die Musikaktivitäten der Gruppe, die einen Teil der Digital & Adjacent Geschäftseinheit darstellen, werden von Starwatch Entertainment betrieben, die ebenfalls Nebenaktivitäten wie die Live-Entertainmentaktivitäten und Künstlermanagement betreibt.
Content Production & Global Sales. Das Segment Content Production & Global
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Sales umfasst das internationale Programmproduktions- und Vertriebsgeschäft (Red Arrow Entertainment Group) der Gruppe. Auf das Segment entfielen im Jahr 2012 4,1 % und im Jahr 2013 4,8 % der Konzernumsätze aus fortgeführten Aktivitäten. Mit der Red Arrow Entertainment Group partizipiert die ProSiebenSat.1 Gruppe an der gesamten Wertschöpfungskette im Bereich TV, von der Entwicklung und Produktion bis zum Vertrieb von TV Inhalten. Das Beteiligungsportfolio dieses Segments wurde während der vergangenen drei Jahre aufgebaut und zuletzt durch Akquisitionen in englischsprachigen Schlüsselmärkten erweitert. Das Management geht davon aus, dass sich die Gruppe durch die Expansion, durch die gegenwärtig ein Portfolio von derzeit 15 von der ProSiebenSat.1 Gruppe kontrollierten Gesellschaften in neun Ländern aufgebaut wurde, sehr gut für die Produktion von fiktionalen und nicht- fiktionalen Programminhalten sowohl in Deutschland als auch international positioniert hat.
Als Teil ihrer Strategie der Fokussierung auf die deutschsprachigen Märkte und der Weiterentwicklung ihrer Digital Entertainment-Aktivitäten, Digital Commerce-Aktivitäten und angrenzenden Aktivitäten in den Kernmärkten der Gruppe, hat die ProSiebenSat.1 Gruppe während der letzten drei Jahre ihre Aktivitäten im Bereich TV, Radio und Print in Belgien, den Niederlanden, in Nordeuropa und die Fernseh- und Radioaktivitäten der Gruppe in Zentral- und Osteuropa ("CEE") veräußert (der Vollzug des Verkaufs der rumänischen Radioaktivitäten wird für das zweite Quartal 2014 erwartet). Diese werden/wurden als zur Veräußerung gehaltene Vermögenswerte und als nicht fortgeführte Aktivitäten in den Konzernabschlüssen der Gruppe ausgewiesen.
Im Geschäftsjahr 2012 erwirtschaftete die ProSiebenSat.1 Gruppe einen Umsatz in Höhe von EUR 2.356,2 Mio. und ein recurring EBITDA (um Einmaleffekte bereinigtes EBITDA) von EUR 744,8 Mio., jeweils auf Basis fortgeführter Aktivitäten. Im Geschäftsjahr 2013 belief sich der Konzernumsatz auf EUR 2.605,3 Mio. und das recurring EBITDA betrug EUR 790,3 Mio., jeweils auf Basis fortgeführter Aktivitäten.
B.16 Hauptanteilseigner Bis zum Datum dieses Prospekts wurde die Emittentin gemäß dem Wertpapierhandelsgesetz über die folgenden Aktienbeteiligungen informiert, welche 10 % des Aktienkapitals der Emittentin übersteigen: BlackRock, Inc. und The Capital Group Companies, Inc.
B.17 Kreditratings der Entfällt. Für die Emittentin und ihre Schuldtitel wurde kein Rating erstellt. Emittentin oder ihrer Schuldtitel
Abschnitt C – Wertpapiere
Punkt Beschreibung Geforderte Angaben
C.1 Beschreibung von Art Die festverzinslichen Schuldverschreibungen sind Inhaberpapiere und sind und Gattung der unbesichert und nicht nachrangig. angebotenen Wertpapiere, Wertpapieridentifikationsnummer: ISIN: DE000A11QFA7, Common Code: einschließlich der 105548087 und WKN: A11QFA. Wertpapierkennung
C.2 Währung der Die Währung der Schuldverschreibung ist Euro. Wertpapieremission
C.5 Beschränkungen für die Entfällt. Es gibt keine Beschränkungen für die freie Übertragbarkeit der freie Übertragbarkeit Schuldverschreibungen. der Wertpapiere
C.8 Mit den Wertpapieren Die Schuldverschreibungen werden bezogen auf ihren Nennbetrag verzinst und verbundene Rechte soweit nicht zuvor bereits ganz oder teilweise zurückgezahlt oder angekauft und einschließlich der entwertet, werden die Schuldverschreibungen zu ihrem Nennbetrag am 15. April Rangordnung und 2021 (der "Fälligkeitstermin") zurückgezahlt. Beschränkung dieser
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Rechte Status der Schuldverschreibungen (Rang):
Die Schuldverschreibungen begründen nicht nachrangige und nicht besicherte Verbindlichkeiten der Emittentin, die untereinander und mit allen anderen nicht besicherten und nicht nachrangigen Verbindlichkeiten der Emittentin gleichrangig sind, soweit diesen Verbindlichkeiten nicht durch zwingende gesetzliche Bestimmungen Vorrang eingeräumt wird.
Vorzeitige Rückzahlung aus steuerlichen Gründen:
Eine vorzeitige Rückzahlung aus steuerlichen Gründen ist insgesamt, jedoch nicht teilweise, zum Nennbetrag zuzüglich bis zum Rückzahlungstag (ausschließlich) aufgelaufener Zinsen hierauf zulässig, wenn als Folge einer Änderung oder Ergänzung der Steuer- oder Abgabengesetze in einer Jurisdiktion, in welcher Zahlungen unter den Schuldverschreibungen getätigt werden oder in der die Emittentin gegründet ist oder als ansässig angesehen wird oder Geschäfte aus steuerlicher Sicht tätigt, die Emittentin verpflichtet ist, zusätzliche Beträge auf die Schuldverschreibungen zu zahlen.
Kontrollwechsel:
Die Anleihebedingungen sehen vor, dass jeder Gläubiger das Recht hat, von der Emittentin die Rückzahlung sämtlicher seiner Schuldverschreibungen in Höhe des Nennbetrags der Schuldverschreibungen zuzüglich aufgelaufener Zinsen hierauf zu verlangen, wenn ein Kontrollwechsel eingetreten ist und innerhalb von 120 Tagen (inklusive) nach dem Eintritt des jeweiligen Kontrollwechsels eine Absenkung des Ratings erfolgt (das "Kontrollwechselereignis").
Wenn 75 % oder mehr des Gesamtnennbetrags der dann ausstehenden Schuldverschreibungen als Folge eines Kontrollwechselereignisses zurückgezahlt wurde, ist die Emittentin berechtigt, nach ihrer Wahl sämtliche (aber nicht nur ein Teil der) ausstehenden Schuldverschreibungen zum Nennbetrag zuzüglich bis zum Rückzahlungstag (ausschließlich) aufgelaufener Zinsen zurück zu zahlen.
Vorzeitige Rückzahlung nach Wahl der Emittentin:
Die Emittentin ist berechtigt, die Schuldverschreibungen insgesamt, jedoch nicht teilweise, nach ihrer Wahl mit einer Kündigungsfrist von mindestens 60 und höchstens 90 Tagen gegenüber den Gläubigern vorzeitig zu kündigen und diese zu einem bestimmten vorzeitigen Rückzahlungsbetrag zurück zu zahlen.
Die Emittentin ist berechtigt, die Schuldverschreibungen insgesamt, jedoch nicht teilweise, nach ihrer Wahl mit einer Kündigungsfrist von mindestens 30 und höchstens 60 Tagen gegenüber den Gläubigern nach ihrer Wahl vorzeitig zu kündigen und alle ausstehenden Schuldverschreibungen zum Nennbetrag zuzüglich bis zum Rückzahlungstag (ausschließlich) aufgelaufener Zinsen zurück zu zahlen, wenn der Rückzahlungstag nicht länger als 90 Tage vor dem Fälligkeitstermin liegt.
Negativverpflichtung:
Die Emittentin verpflichtet sich, keine Sicherungsrechte zur Besicherung von Kapitalmarktverbindlichkeiten zu gewähren, ohne gleichzeitig die Gläubiger gleichrangig an einem solchen Sicherungsrecht zu beteiligen oder ihnen ein gleichwertiges Sicherungsrecht zu gewähren, vorbehaltlich bestimmter Ausnahmen. Die Emittentin verpflichtet sich, vorbehaltlich bestimmter Ausnahmen, dafür Sorge zu tragen, dass keine ihrer wesentlichen Tochtergesellschaften Sicherungsrechte über ihre Vermögensgegenstände zur Besicherung von Kapitalmarktverbindlichkeiten gewährt, ohne gleichzeitig die Gläubiger gleichrangig an einem solchen Sicherungsrecht zu beteiligen oder ihnen ein gleichwertiges Sicherungsrecht zu gewähren, es sei denn, dies ist rechtlich unmöglich oder rechtswidrig.
Kündigungsgründe:
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Die Anleihebedingungen sehen Kündigungsgründe unter anderem im Falle der Nichtzahlung, Verletzung einer sonstigen Verpflichtung, Zahlungseinstellung und Insolvenz oder Liquidation vor. Die Anleihebedingungen beinhalten ferner eine Cross-Acceleration-Klausel (Drittverzugsklausel) als Kündigungsgrund im Zusammenhang mit der Nichtzahlung von Finanzverbindlichkeiten ab EUR 50.000.000, sofern ein solcher Verstoß länger als 30 Tage andauert, nachdem die Emittentin eine diesbezügliche Mitteilung von einem Gläubiger durch die Hauptzahlstelle erhalten hat, sofern nicht die Emittentin der jeweiligen Zahlungspflicht in gutem Glauben widerspricht.
Kündigung:
Jeder Gläubiger ist berechtigt, seine jeweiligen Schuldverschreibungen fällig zu stellen und sofortige Rückzahlung zum Nennbetrag zuzüglich bis zum Rückzahlungstag aufgelaufener Zinsen zu verlangen, wenn ein Kündigungsgrund eintritt und fortbesteht. Sofern ein Kündigungsgrund wegen Nichtzahlung, Zahlungseinstellung, Insolvenz oder Liquidation eintritt, werden die von einem Gläubiger gehaltenen Schuldverschreibungen sofort zur Rückzahlung fällig, ohne dass es einer weiteren Handlung oder Benachrichtigung bedarf. Sofern irgendein anderer Kündigungsgrund eintritt, werden die Schuldverschreibungen, die von einem Gläubiger gehalten werden, nur zur Rückzahlung fällig, wenn Gläubiger, die mindestens 10 % des zu diesem Zeitpunkt unter den Schuldverschreibungen insgesamt ausstehenden Nennbetrags halten, die Schuldverschreibungen fällig stellen und Rückzahlung verlangen.
Beschlüsse der Gläubiger:
Im Einklang mit dem Gesetz über Schuldverschreibungen aus Gesamtemissionen (SchVG), beinhalten die Schuldverschreibungen Vorschriften, gemäß denen die Gläubiger berechtigt sind, ihre Zustimmung zu Änderungen der Anleihebedingungen (mit Zustimmung der Emittentin) zu erteilen und über andere, die Schuldverschreibungen betreffende Themen zu entscheiden. Beschlüsse der Gläubiger, die ordnungsgemäß gefasst wurden, sind für alle Gläubiger bindend. Beschlüsse, die wesentliche Änderungen der Anleihebedingungen vorsehen, bedürfen einer qualifizierten Mehrheit von 75 % der an der Abstimmung teilnehmenden Stimmrechte. Beschlüsse über andere Änderungen werden mit einfacher Mehrheit der abgegebenen Stimmen gefasst.
C.9 Nominaler Zinssatz/ Siehe Punkt C.8. Die Schuldverschreibungen werden ab dem 15. April 2014 Fälligkeit/ Rendite (einschließlich) bis zum (aber ausschließlich) 15. April 2021 mit einem Zinssatz von [●] % per annum verzinst der jährlich nachträglich am 15. April zahlbar ist, erstmals am 15. April 2015.
Die Rendite der Schuldverschreibungen beträgt [●] % per annum.
C.10 Derivative Entfällt. Siehe Punkt C.9. Die Schuldverschreibungen haben keine derivative Komponenten bei der Komponente bei der Zinszahlung. Zinszahlung
C.11 Börsenzulassung Die Zulassung der Schuldverschreibungen zum Handel am regulierten Markt der Luxemburger Wertpapierbörse sowie zur Notierung im offiziellen Kursblatt der Luxemburger Wertpapierbörse wurde beantragt.
Abschnitt D – Risiken
Punkt Beschreibung Geforderte Angaben
D.2 Angaben zu den Nachstehend sind zusammenfassend gewisse Risiken aufgeführt, die eine zentralen Risiken des erhebliche nachteilige Auswirkung auf die Geschäftstätigkeit, die Finanz-, Emittenten Vermögens- und Ertragslage und die Kapitalflüsse der Emittentin haben könnten, sowie auf die Fähigkeit der Emittentin, ihre Verpflichtungen aus den Schuldverschreibungen zu erfüllen:
Risiken in Bezug auf die Geschäftstätigkeit der ProSiebenSat.1 Gruppe
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sowie auf die Industrie und die Märkte in denen sie tätig ist
- Die Ertragslage der ProSiebenSat.1 Gruppe ist in hohem Maße abhängig von Umsätzen aus dem Verkauf von Werbezeiten/ -flächen. Werbeumsätze sind stark beeinflusst von gesamtwirtschaftlichen Bedingungen und jede Verschlechterung dieser Bedingungen kann zu einem deutlichen Rückgang der Umsätze und Gewinne der ProSiebenSat.1 Gruppe führen. - Der Fokus der Gruppe liegt auf den deutschsprachigen Märkten Deutschland, Österreich und Schweiz. Die Gruppe ist daher abhängig von den gesamtwirtschaftlichen Bedingungen in diesen Ländern. - Die Entwicklung der Umsätze der ProSiebenSat.1 Gruppe aus Fernsehwerbung, welche die Haupteinnahmequelle der ProSiebenSat.1 Gruppe darstellen, ist von der allgemeinen Reichweite des linearen Fernsehens in den Märkten der Gruppe abhängig, diese Reichweite könnte zukünftig sinken. Die ProSiebenSat.1 Gruppe ist daher dem Risiko von Veränderungen im Technologiebereich (z.B. fortschreitende Digitalisierung und andere technologische Änderungen und neue Formen audiovisueller Mediendistribution) und einer Änderung des Zuschauerverhaltens ausgesetzt. - Schnell fortschreitende technologische Veränderungen und die Unfähigkeit, auf diese zu reagieren, könnte das Geschäft der ProSiebenSat.1 Gruppe nachteilig beeinflussen. - Die ProSiebenSat.1 Gruppe agiert in wettbewerbsintensiven Fernsehwerbemärkten, in denen Faktoren wie die Entwicklung von Zuschauermarktanteilen, die Preisentwicklung für Werbezeiten/ - flächen und die einigen Wettbewerbern der Gruppe zur Verfügung stehende öffentliche Finanzierung, die Fähigkeit der ProSiebenSat.1 Gruppe, das derzeitige Niveau der Werbeverkäufe und die Preise für Werbung zu steigern oder zu halten, beeinträchtigen können. - Die ProSiebenSat.1 Gruppe profitiert davon, auf den Zuschauermärkten eine führende Position zu haben oder hohe Anteile zu halten. Der Verlust dieser marktführenden Stellung innerhalb ihrer relevanten Zuschauerzielgruppen bzw. Marktanteilsverluste im Allgemeinen könnten wesentliche nachteilige Auswirkungen auf ihre Werbeumsätze haben. - Die Standards und Methoden für die Messung von Zuschauerquoten sowie die Zusammensetzung von Fernsehpanelen kann sich in einer Art und Weise ändern, die die Fähigkeit der Gruppe, Zuschauermarktanteile in Werbeumsätze umzuwandeln, nachteilig beeinflussen könnte. - Die demografische Entwicklung in den Märkten der Gruppe, die von einer alternden und schrumpfenden Bevölkerung gekennzeichnet ist, könnte sowohl die Größe der kommerziell relevanten Zuschauerzielgruppen als auch die Zuschauerreichweite und Marktanteile der Sender der Gruppe beeinflussen. - Die Einführung weiterer Fernsehsender durch die ProSiebenSat.1 Gruppe könnte nicht erfolgreich verlaufen. - Die ProSiebenSat.1 Gruppe ist abhängig von einem beständigen Angebot attraktiver Programminhalte, die nur von einer begrenzten Anzahl internationaler, insbesondere US-amerikanischer Produktionsfirmen zur Verfügung gestellt werden und die sich in Zukunft verteuern könnten, oder überhaupt nicht mehr verfügbar sein könnten. - Die Gruppe könnte gezwungen sein, den Programmmix ihrer Fernsehsender zu ändern, was nachteilige Auswirkungen auf ihre Profitabilität haben könnte. - Die Marktmacht von Werbeagenturen beeinträchtigt die Möglichkeiten der ProSiebenSat.1 Gruppe die Preise zu erhöhen oder beizubehalten oder die diesem Bereich inhärenten Rabatte zu reduzieren. - Die Ergebnisse der Gruppe sind stark beeinflusst von einer großen
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Fixkostenbasis und im Gegensatz dazu, geringer Visibilität und hohen Schwankungen in den Umsätzen, insbesondere in den Werbeumsätzen. - Wettbewerber der ProSiebenSat.1 Gruppe, die sich in öffentlicher Hand befinden oder mit öffentlichen Mitteln finanziert werden, unterliegen Beschränkungen bei der Ausstrahlung von Werbung. Regulatorische Änderungen, die es solchen öffentlichen Rundfunkanstalten erlauben würden, mehr Werbung auszustrahlen, könnte die Verfügbarkeit von Werbezeiten/ -flächen weiter erhöhen, was die Nachfrage und Preise für Werbezeiten/ -flächen beeinträchtigen könnte. - Die Bewertung von Programmvermögen ist mit Unsicherheiten behaftet. - Das Fernsehgeschäft der ProSiebenSat.1 Gruppe ist von ausreichender technischer Reichweite über Satelliten und Kabelnetze als auch vom Abschluss von Verbreitungsverträgen zu wirtschaftlich angemessenen Konditionen abhängig. - Die Entwicklung des Distributionsgeschäfts der ProSiebenSat.1 Gruppe ist von Marktentwicklungen, Verbraucherakzeptanz und fortwährender Kooperation mit Satelliten- und Kabelnetzbetreibern abhängig. - Ein wesentlicher Teil der Umsätze, Kapitalflüsse und Aufwendungen der Gruppe sind saisonal beeinflusst. - Die Geschäftstätigkeit der ProSiebenSat.1 Gruppe in den Bereichen Digital Entertainment, Digital Commerce und im angrenzenden Geschäft ist von einem hohen Maß an Wettbewerb und niedrigen Markteintrittsbarrieren gekennzeichnet. Diese Geschäftstätigkeiten werden auch stark von der Entwicklung des Geschäfts im linearen Fernsehen beeinflusst. - Die Strategie der ProSiebenSat.1 Gruppe für das Wachstum ihrer Aktivitäten in den Bereichen Digital Entertainment, Digital Commerce und im angrenzenden Geschäft kann scheitern. Große Investitionen können zu einer Erhöhung des Kapitalbedarfs führen; die Wachstumsstrategie kann sich nachteilig auf die Profitabilität der Gruppe auswirken. - Zunehmende Piraterie bei Inhalten könnte die Fähigkeit der Gruppe, ihre Zuschauerbasis und Nutzergruppen zu sichern oder auszuweiten, beeinträchtigen, insbesondere bei ihren Angeboten im Bereich Video- on-Demand und Online Games. - Die Verbreitung der digitalen Inhalte der Gruppe über das Internet erzeugt über das Hosting und Streaming hinaus derzeit keine Kosten. Zukünftig könnten zusätzliche Gebühren seitens Internet- Infrastrukturanbietern oder -Dienstleistern anfallen. - Die ProSiebenSat.1 Gruppe ist verschiedenen Risiken aus der Auslagerung von Dienstleistungen ausgesetzt. - Die Gruppe ist Risiken durch Ausfälle und Störungen ihrer Datenverarbeitungssysteme, unbefugtes Eindringen in Netzwerke, Unterbrechungen des Sendebetriebs und Datendiebstahl ausgesetzt. - Die Gruppe ist allgemeinen Risiken in Bezug auf Unternehmenserwerbe und Kooperationen ausgesetzt, einschließlich Verkaufsoptionen von Verkäufern der Unternehmen. - Die Gruppe kann erheblichen Verpflichtungen im Zusammenhang mit Beteiligungsveräußerungen ausgesetzt sein, einschließlich Freistellungsvereinbarungen im Zusammenhang mit dem Verkauf von Geschäftseinheiten in Belgien, den Niederlanden und Nordeuropa, sowie Zentral- und Osteuropa. - Das Vermögen der Gruppe besteht zu einem Großteil aus Goodwill und anderen identifizierbaren immateriellen Vermögenswerten, die Gegenstand von Wertminderungen sein können. Auch finanzielle Vermögenswerte der Gruppe können Gegenstand von Wertminderungen werden.
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- Die Gruppe könnte durch Arbeitskämpfe oder sonstige gewerkschaftliche Maßnahmen nachteilig betroffen sein. - Der Versicherungsschutz der ProSiebenSat.1 Gruppe könnte unzureichend sein. - Die Fähigkeit, qualifiziertes Personal anzuwerben, zu halten und zu entwickeln ist für den Erfolg und das Wachstum der ProSiebenSat.1 Gruppe maßgeblich. - Bandbreitenbeschränkungen oder steigende Kosten für Verbraucher können das Wachstum bei dem Konsum digitaler Inhalte, wie etwa Online-Video und -Spiele, nachteilig beeinflussen. - Das Geschäft der Gruppe mit Produktion und Verkauf von Inhalten wird in einem sehr wettbewerbsintensiven Umfeld geführt und erfordert große Vorabinvestitionen, die sich als nicht erfolgreich erweisen können. - Eine zunehmende Anzahl linear ausgestrahlter Fernsehsender könnte zu geringeren Zuschauerquoten für die Gruppe und größerer Fragmentierung ihrer Zuschauerzielgruppen führen. - Die ProSiebenSat.1 Gruppe ist Risiken im Hinblick auf das Management ihrer Organisation und der Einhaltung von Wohlverhaltensstandards und -vorschriften ausgesetzt. - Die Prognosen der Emittentin zur Geschäfts- und Ergebnisentwicklung können sich als falsch erweisen und es könnte ihr misslingen, die in ihrem mittelfristigen Umsatzwachstumsplan gesetzten Ziele zu erreichen. Rechtliche, regulatorische und steuerliche Risiken der ProSiebenSat.1 Gruppe
- Der Geschäftsbetrieb der ProSiebenSat.1 Gruppe ist von der Vergabe von Rundfunklizenzen durch die zuständigen Behörden abhängig. - Aufsichtsrechtliche und regulatorische Beschränkungen sowie Änderungen in dem relevanten rechtlichen und regulatorischen Umfeld könnten die Geschäftsaktivitäten der Gruppe nachteilig beeinflussen. - Gesetzesänderungen im Recht des geistigen Eigentums könnten sich nachteilig auf das Geschäft der Gruppe auswirken. - Die ProSiebenSat.1 Gruppe ist Risiken im Hinblick auf behauptete Verletzungen geistigen Eigentums ausgesetzt, und kann gezwungen sein, sich gegen Verletzungen ihres geistigen Eigentums durch Dritte zu verteidigen. - Das unternehmerische Handeln der ProSiebenSat.1 Gruppe, strategische Kooperationen und Akquisitionen sind Gegenstand regulatorischer Beschränkungen. Solche Beschränkungen haben in der Vergangenheit zu Interventionen seitens Behörden und Zivilrechtsstreitigkeiten geführt und können dies auch zukünftig tun. - Die Gruppe ist Risiken aus gegenwärtigen oder zukünftigen Rechtsstreitigkeiten und behördlichen Verfahren ausgesetzt. - Die ProSiebenSat.1 Gruppe ist Risiken im Zusammenhang mit Betriebsprüfungen und bestimmten Transaktionen ausgesetzt. Ferner ist die Gruppe Risiken im Zusammenhang mit ihrer Steuerstruktur und Änderungen im Steuerrecht ausgesetzt. Risiken in Bezug auf die Finanzlage der Emittentin und der ProSiebenSat.1 Gruppe
- Die Verpflichtungen der ProSiebenSat.1 Gruppe aus Fremdfinanzierungen können die Entwicklung ihres Geschäfts sowie ihre finanzielle Flexibilität, operative Leistung, Kapitalflüsse und Liquidität erheblich nachteilig beeinflussen. - Die gegenwärtige Dividendenpolitik der Emittentin könnte ihre Fähigkeit, ihren Verpflichtungen aus Fremdfinanzierungen
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nachzukommen, einschränken. - Die vertraglichen Bestimmungen des bestehenden Senior- Kreditfazilitätenvertrags und des neuen Senior-Kreditfazilitätenvertrags führen zu Beschränkungen bei der Führung der Geschäfte der Emittentin und ihrer Tochtergesellschaften. Bestimmte Tochtergesellschaften der Emittentin dienen als Sicherheiten für die Verpflichtungen unter dem bestehenden Senior- Kreditfazilitätenvertrag. - Ein Kontrollwechsel bei der Gesellschaft kann erhebliche nachteilige Auswirkungen für die Gruppe haben. - Die Fazilitäten unter dem bestehenden Kreditvertrag und dem neuen Kreditvertrag haben jeweils eine kürzere Laufzeit als die Schuldverschreibungen. Eine Refinanzierung dieser Fazilitäten könnte nicht möglich sein. - Gefährdung durch steigende Zinssätze und negative Marktwerte von Derivaten. - Gefährdung durch Schwankungen der Währungskurse. - Die fortwährende Unsicherheit an den globalen Finanzmärkten könnte den Zugang zu Finanzierungsquellen und die Finanzierungskosten nachteilig beeinflussen. Sie kann auch die Kontrahentenrisiken und Risiken im Hinblick auf die Ausgabenneigung der Kunden der Gruppe erhöhen. - Änderungen von Standards, Methoden und Praktiken der Rechnungslegung können sich nachteilig auf die Vermögens- und Ertragslage der Gruppe auswirken.
D.3 Angaben zu den Eine Anlage in die Schuldverschreibungen ist mit gewissen Risiken verbunden, zentralen Risiken der die sich aus den typischen Eigenschaften der Schuldverschreibungen ergeben Wertpapiere und zu erheblichen Verlusten für die Gläubiger im Falle eines Verkaufs ihrer Schuldverschreibungen oder in Bezug auf den Erhalt von Zinszahlungen und die Rückzahlung von Kapital führen könnten. Zu diesen Risiken gehören insbesondere die Folgenden:
- Die Schuldverschreibungen sind möglicherweise nicht eine für alle Anleger geeignete Kapitalanlage. - Die Fähigkeit der Emittentin ihren Verpflichtungen unter den Schuldverschreibungen nachzukommen, hängt von der zukünftigen finanziellen und operativen Leistung der ProSiebenSat.1 Gruppe ab. - Die Schuldverschreibungen sind tatsächlich nachrangig gegenüber den Verpflichtungen aus dem bestehenden Kreditvertrag und den damit in Zusammenhang stehenden Sicherungsgeschäften. - Kreditaufnahmen, die nicht als Kapitalmarktverbindlichkeiten einzuordnen sind, fallen nicht unter die Negativverpflichtung. Die Emittentin ist daher nicht verpflichtet, den Gläubigern gleichwertige oder gleichrangige Sicherheiten zu gewähren. - Der Marktwert der Schuldverschreibungen könnte sinken, falls sich die Kreditwürdigkeit der ProSiebenSat.1 Gruppe verschlechtert oder sich die Einschätzung der Marktteilnehmer hinsichtlich der Kreditwürdigkeit von Unternehmensschuldnern allgemein oder von Schuldnern, die im selben Geschäftsbereich wie die ProSiebenSat.1 Gruppe tätig sind, nachteilig verändert. - Die Schuldverschreibungen werden am Fälligkeitstermin zurückgezahlt. Die Emittentin ist nicht verpflichtet, die Schuldverschreibungen vor diesem Zeitpunkt zurück zu zahlen, und die Gläubiger der Schuldverschreibungen sind, abgesehen vom Vorliegen bestimmter Umstände, nicht berechtigt, die Rückzahlung zu verlangen. Die Emittentin ist ferner unter bestimmten Bedingungen berechtigt, die Schuldverschreibungen vorzeitig zurück zu zahlen. In diesem Fall kann die Rendite geringer als von den Gläubigern erwartet ausfallen und die Gläubiger können gegebenenfalls ihr Kapital nicht
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wieder zu gleichen Konditionen anlegen.
- Ein Hauptaktionär könnte einen erheblichen Einfluss auf die Emittentin ausüben, ohne dass die Gläubiger berechtigt wären, eine vorzeitige Rückzahlung zu verlangen. - Die Anleihebedingungen sehen keine Beschränkung hinsichtlich der Ausgabe von Schuldtiteln durch die Emittentin vor, die den Verpflichtungen aus oder im Zusammenhang mit den Schuldverschreibungen im Rang gleichstehen. - Die Zulassung der Schuldverschreibungen zum Handel im EU- regulierten Marktsegment der Luxemburger Wertpapierbörse und zur Notierung im offiziellen Kursblatt (Official List) an der Luxemburger Wertpapierbörse ist beantragt worden. Es kann jedoch keine Zusicherung dafür abgegeben werden, dass sich ein liquider Sekundärmarkt für die Schuldverschreibungen entwickeln wird und die Gläubiger ihre Schuldverschreibungen verkaufen können. - Es kann nicht ausgeschlossen werden, dass der Kurs der Schuldverschreibungen fällt, zum Beispiel infolge von Veränderungen des derzeitigen Zinssatzes auf dem Kapitalmarkt (Marktzins), da der Marktzins Schwankungen unterliegt. - Die auf Euro lautenden Schuldverschreibungen könnten ein Währungsrisiko für einen Gläubiger darstellen, wenn der Euro für den betreffenden Gläubiger eine Fremdwährung ist; außerdem könnten Regierungen und zuständige Behörden künftig Devisenkontrollen verhängen. - Da die Globalurkunden von Clearstream gehalten werden, müssen sich Anleihegläubiger auf deren Verfahren zur Übertragung, Zahlung und Kommunikation mit der Emittentin verlassen. - Der Marktpreis der Schuldverschreibungen kann sich zum Nachteil der Gläubiger verändern. - Im Fall des Vorliegens bestimmter Kündigungsgründe werden die Schuldverschreibungen, die von einem Gläubiger gehalten werden, nur zurückgezahlt, wenn Gläubiger die zusammen mindestens 10 % des ausstehenden Kapitals der Schuldverschreibung halten, die Schuldverschreibungen fällig stellen. - Für einen Gläubiger besteht das Risiko, dass er überstimmt wird und gegen seinen Willen Rechte gegenüber der Emittentin verliert, falls Gläubiger Änderungen der Anleihebedingungen durch Mehrheitsbeschluss beschließen.
Abschnitt E – Angebot
Punkt Beschreibung Geforderte Angaben
E.2b Gründe für das Angebot Die Emittentin beabsichtigt, den gesamten Erlös aus der Emission der und Zweckbestimmung Schuldverschreibungen zur teilweisen vorzeitigen Rückzahlung der der Erlöse Verbindlichkeiten unter dem besicherten Senior-Kreditfazilitätenvertrag, den unter anderem, die Emittentin und bestimmte Tochtergesellschaften der Emittentin am 26. Juni 2007 abgeschlossen haben, zuletzt geändert und neugefasst am 30. Mai 2013, einschließlich aufgelaufener Zinsen und sonstiger unter dem Senior-Kreditfazilitätenvertrag ausstehender Beträge, zu verwenden.
E.3 Angebotskonditionen Die Schuldverschreibungen werden in Österreich, Deutschland, Luxemburg und den Niederlanden innerhalb eines Angebotszeitraumes angeboten, der um den 10. April 2014 beginnen soll und bis zum 15. April 2014 (einschließlich) dauern soll, vorbehaltlich einer Verkürzung oder Verlängerung des Angebotszeitraumes.
Der Emissionspreis, der Gesamtnennbetrag der zu begebenden Schuldverschreibungen, die Anzahl der Schuldverschreibungen, der Zinssatz, der Emissionserlös und die Rendite der Schuldverschreibungen werden in der Preismitteilung (Pricing Notice) enthalten sein, die auf der Internetseite der
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Luxemburger Wertpapierbörse (www.bourse.lu) am oder vor dem Begebungstag der Schuldverschreibungen veröffentlicht wird.
Das Angebot unterliegt keinen Bedingungen. Anleger können ein Angebot zum Kauf der Schuldverschreibungen durch Nutzung des Informationssystems Bloomberg oder eines anderen üblicherweise verwendeten Informationssystems übermitteln. Im Falles eines Angebots vor der Festlegung der Einzelheiten des Preises, sollen die Investoren angeben, zu welchem Preis sie bereit wären, welche Beträge der Schuldverschreibungen zu erwerben. Nach Festlegung und Bekanntgabe der Einzelheiten des Preises, werden die Manager (d.h. die Konsortialbanken) die Schuldverschreibungen in Österreich, Deutschland, Luxemburg und den Niederlanden anbieten. Jeder Anleger, der ein Angebot bezüglich der Schuldverschreibungen abgegeben hat und dessen Angebot von den Global Coordinators (d.h. den koordinierenden Konsortialführern) angenommen wurde, erhält eine Bestätigung per E-Mail, Fax oder über ein anderes üblicherweise verwendetes Informationssystem, welche die jeweilige Zuteilung der Schuldverschreibungen angibt. Bevor ein Anleger eine Bestätigung von den Global Coordinators erhält, dass sein Angebot zum Kauf der Schuldverschreibungen angenommen wurde, darf der Anleger sein Kaufangebot reduzieren oder zurückziehen.
Lieferung und Zahlung der Schuldverschreibungen erfolgen innerhalb von drei Geschäftstagen nach dem Tag der Preisfestsetzung der Schuldverschreibungen und der Bestätigung der Zuteilung an die Anleger. Die Schuldverschreibungen werden durch Buchungseintrag über das Clearing System und deren kontoführenden Banken gegen Zahlung des Ausgabepreises übertragen.
E.4 Für die Emission Entfällt. Außer den Interessen der Emittentin bestehen keinerlei Interessen von wesentliche natürlichen oder juristischen Personen an der Emission, auch nicht solche Beteiligungen Interessen, die im Widerspruch stehen und wesentlich für die Emission sein würden.
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RISK FACTORS
In addition to the other information contained in this prospectus (the "Prospectus"), the following risk factors should be carefully reviewed and considered before deciding to purchase the Notes of ProSiebenSat.1 Media AG ("ProSiebenSat.1 Media AG" or the "Issuer" and together with its consolidated subsidiaries, the "Group" or the "ProSiebenSat.1 Group"). Should one or more of the risks described below materialize, this may have a material adverse effect on the business, cash flows, results of operations and financial condition of the Issuer and the other members of the ProSiebenSat.1 Group. Moreover, if any of these risks occur, the likelihood that the Issuer will be in a position to fulfill its payment obligations under the Notes may decrease and the market value of the Notes may deteriorate, in which case the Holders could lose all or part of their investment. Investors should note that the risks discussed below may not prove to be exhaustive and, therefore, may not be the only risks to which the Issuer is exposed. Additional risks and uncertainties, which are currently not known to the Issuer or which the Issuer currently believes to be immaterial, could likewise impair the business operations of the ProSiebenSat.1 Group and have a material adverse effect on the business, cash flows, results of operations and the financial condition of the Issuer and the other members of the ProSiebenSat.1 Group. The order in which the risks described below are presented does not reflect the likelihood of their occurrence or the magnitude of their potential impact on the business, cash flows, results of operations and financial condition of the Issuer and the other members of the ProSiebenSat.1 Group. In addition, investors should be aware that the risks described might combine and thus intensify one another.
Words and expressions defined in the Conditions of Issue shall have the same meanings in this section.
Risks Related to the Business of the ProSiebenSat.1 Group and the Industry and Markets in which the ProSiebenSat.1 Group operates
The operating results of the ProSiebenSat.1 Group are highly dependent on revenues from the sale of TV advertising space. Advertising revenues are strongly influenced by economic conditions and any deterioration of such conditions can cause the revenues and profits of the ProSiebenSat.1 Group to decline significantly.
In fiscal year 2013, 79.4 % of the total revenues of the ProSiebenSat.1 Group (total revenues of EUR 2,605.3 million) were generated from the sale of advertising space, including both TV and non-TV advertising. Demand for advertising space is strongly influenced by prevailing economic conditions and consumer sentiment. When the economic outlook is positive, advertisers are more willing to invest and advertising expenditure tends to rise in response to anticipated increases in consumer demand. Conversely, in periods of economic slowdown, advertisers react quickly to declining demand or an anticipated decline of consumer demand by reducing their advertising budgets. Additional factors such as long term domestic growth prospects, employment rates, consumer spending, purchasing power, access to credit, financial resources, and the overall investment climate may all affect advertising expenditures. Reported or anticipated declines in consumer spending, in particular, may reduce advertising expenditures. Difficult economic conditions and an uncertain outlook therefore have a pronounced effect on the business and operating results of the ProSiebenSat.1 Group through decreasing demand for advertising space and increasing price pressure.
The ProSiebenSat.1 Group has in the past been affected by significant declines in advertising spending where the macro-economic environment was a primary, or at least a contributing, factor. A particularly severe downturn of advertising spending, and thus in the advertising revenues of the ProSiebenSat.1 Group, was recorded in the years 2001 to 2003 and 2008/2009. The worldwide economic downturn in 2008/2009 caused by a credit crunch and followed by turmoil in global financial markets resulted in significant recessionary pressures, lower business and consumer confidence, lower gross domestic product and rising unemployment. During this 2008/2009 economic downturn, the net television advertising market (as measured by Zentralverband der deutschen Werbewirtschaft (ZAW)) in Germany, the Group's largest market, contracted by approximately 14 % from EUR 4.2 billion in 2007 to EUR 3.6 billion in 2009, which was attributable to declining television advertising budgets and to declining net prices. Similar downturns were experienced in Austria and Switzerland where the ProSiebenSat.1 Group is also active. This downturn had a material adverse effect on the Group's business, financial condition, results of operations and cash flows.
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Dependency on the German-speaking Free-TV market.
The ProSiebenSat.1 Group generates the predominant part of its total advertising revenues in the amount of EUR 2,103.3 million from continuing operations in Germany (2013: 89.5 %), and to a lesser extent in Austria (2013: 5.9 %) and Switzerland (2013: 3.9 %). The Group's dependency on the development of the German- speaking market has increased since the disposition of its undertakings in other parts of Europe, e.g., in Belgium and The Netherlands in 2011, the Northern European countries in 2012/2013 and in Central and Eastern Europe ("CEE") in 2013/2014 (closing of the disposal of the Romanian radio activities is expected for the second quarter of 2014). Therefore, a significant downturn or recession in Germany, and to a lesser extent in Austria and Switzerland, cannot be offset by better economic developments in other markets. Any deterioration of the economic environment and consumer sentiment in the markets of the ProSiebenSat.1 Group may lead to a decrease in advertisers' overall advertising spending and price pressure for advertising space, which could have a material adverse effect on the business, financial condition, results of operations and cash flows of the ProSiebenSat.1 Group.
Dependency on the general reach of linear TV broadcasts in the markets of the ProSiebenSat.1 Group, which may decline in the future. Vulnerability to changes in technology and viewer habits.
In the broader advertising market, linear TV competes with various other advertising media, such as newspapers, magazines, radio, cinema, outdoor and online advertising.
Television advertising is the key source of revenues of the ProSiebenSat.1 Group. The reach of linear TV as an advertising medium is therefore of key importance. In the 2013 fiscal year, the Group derived 71.5 % of its total revenues (on the basis of continuing operations) from television advertising in its Broadcasting German- speaking segment. For the 2012 fiscal year, the corresponding revenue share was 76.7 % (on the basis of continuing operations).
In Germany, the ProSiebenSat.1 Group's most important advertising market, television, representing the second most important advertising medium after print (including daily newspapers), has in the past retained a relatively stable share in the allocation of advertising spending among the various media of around 20 % in the period between 2007 and 2012 (source: ZAW, Werbung in Deutschland 2013). There can, however, be no assurance that this trend will continue. Changes in the regulatory environment or technological developments may foster other media offerings, which could be predominantly advertising funded or based on alternative business models. Increased competition among advertising media through the emergence of new media distribution and advertising solutions could result in a general decline in the appeal of television as an advertising medium, also affecting the ProSiebenSat.1 Group's media offerings. This could cause advertisers to shift their advertising spending to other media outlets. If, for example, the shift to online advertising, which has taken market share from print media in Germany over the past years, were to have similar effects on German television advertising, the ProSiebenSat.1 Group may not be in a position to compensate the resulting decline in the reach of television and lower TV advertising revenues with online advertising revenues or other revenues.
The implementation of new technologies and the introduction of broadcasting distribution systems such as digital terrestrial broadcasting, direct-to-home cable and satellite distribution systems, the internet and other non-linear content distribution, as well as the availability of content on portable digital devices have already changed consumer behavior by increasing the number of entertainment choices available and increasing the share of non-linear offerings in consumers' overall media consumption. New audiovisual media offerings such as video-on-demand, video streaming and downloading via the internet add to the number of media and entertainment choices available to consumers and further intensify the challenges posed by audience fragmentation, in particular as it relates to younger audiences, which are particularly attractive to advertisers. Media consumption today also extends beyond the "family television set" to alternative devices which are often portable, allowing for media consumption nearly anywhere; this trend may intensify in the future. New technologies, which enable viewers to choose when and what content to watch, and also to fast forward or skip over advertisements, may lead to changing consumption patterns and a lower tolerance for advertising breaks during media consumption. All these trends could negatively impact the reach and efficiency of television as an advertising medium and consequently the growth and price development within the Group's core business of advertising funded linear TV broadcasting.
The Group's existing and new competitors may gain significant market share in the course of these developments, depending on how successful they are in adapting to a changing media landscape and identifying the most lucrative business models. Reductions in the cost of launching and distributing non-linear audiovisual media offerings, e.g., via open platforms such as YouTube, have lowered entry barriers for new media and production companies. This may lead to further fragmentation of audience and advertising market shares across
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different advertising media and other media verticals. The competitive landscape may also be impacted profoundly by large foreign internet/media companies (e.g., Google, Apple, Facebook, Microsoft, Amazon, Netflix and others) increasingly expanding and investing in the German-speaking media markets. Strategic acquisition activity in the German-speaking markets (for example the acquisition of the cable network operator Kabel Deutschland by Vodafone in 2013) may also significantly impact the competitive landscape in the TV and content distribution industry, e.g., by creating new competitors with large scale proprietary media offerings. Furthermore, the increasing penetration of certain devices, such as internet connected television sets, set top boxes, smartphones and tablet computers, enable new market entrants to capture viewers without the need for distribution agreements with television infrastructure operators and without being subject to the extensive government regulation applicable to traditional broadcasters. This so-called over the top supply of video content poses a risk for broadcasters such as the ProSiebenSat.1 Group since the lack of regulatory restrictions and distribution agreements results in relatively low market entry barriers and competitive advantages for such market entrants.
Each of these developments may lead to generally lower consumption of linear TV, reducing the reach of traditional television and consequently the importance of television as an advertising medium. Simultaneously, the ProSiebenSat.1 Group is exposed to increased competition for audiences and advertising market share. This may also necessitate significant investments to address competition arising on account of technological innovations. Each of these developments may have material adverse effects on the business, financial condition, results of operations and cash flows of the ProSiebenSat.1 Group.
Rapid changes in technology and failure to respond to technological developments may adversely affect the business.
Technologies relating to cable access and TV are changing rapidly. The ProSiebenSat.1 Group needs to anticipate and react to these changes and to develop successful new and enhanced products and services quickly enough to adapt to the changing market. This could result in the need to make substantial investments in new or enhanced technologies, products or services, and the ProSiebenSat.1 Group may not be able to adopt such technology due to insufficient capital or for other reasons. In addition, new technologies may become dominant in the future, rendering the current technologies and systems of the ProSiebenSat.1 Group obsolete. Some of these technological changes may also be mandated by regulation, such as the German federal and state governments' goal to eventually replace all analog TV services with digital delivery. The ability of the ProSiebenSat.1 Group to adapt successfully to changes in technology in the industry and provide new or enhanced services in a timely and cost-effective manner, or successfully anticipate the demands of its viewers, will determine whether the ProSiebenSat.1 Group will be able to increase or maintain its viewer and revenue base. Failure to respond adequately to technological changes could result in loss of subscribers and a decrease in revenues and, as a result, the business, results of operations, cash flows, financial condition and prospects of the ProSiebenSat.1 Group could be materially and adversely affected.
The ProSiebenSat.1 Group operates in very competitive television advertising markets, where factors like the development of audience shares, pricing of advertising space and the public funding available to some of the Group's competitors may impair its ability to increase or even maintain its current level of advertising sales and pricing.
The ProSiebenSat.1 Group faces intense competition from other television broadcasters and other media companies, in particular from other free-TV broadcasters. In the Group's core market, Germany, its main competitor, RTL Group, operates several advertising-funded free-TV stations. In 2013, the gross TV advertising market share of SevenOne Media, the ProSiebenSat.1 Group's advertising sales house reached approximately 44 % in Germany (based on gross television advertising revenue) while RTL Group's advertising sales house in Germany, IP Deutschland GmbH (which does not sell advertising time of minority-owned RTL 2) reached approximately 34 % (source: Nielsen Media Research). In addition, the Group competes for advertising revenues with public broadcasters, a number of smaller private TV stations and, albeit to a lesser extent, with pay-TV providers such as Sky Deutschland. The competitive landscape in Austria and Switzerland is largely similar.
The ProSiebenSat.1 Group's ability to successfully compete for advertising accounts and maintain or increase its level of advertising sales depends on a number of factors, the most important being the audience share and reach of its TV stations. Falling audience shares of the Group's TV stations could have negative effects on the Group's future advertising revenues. Moreover, while the audience share is a core factor determining the ProSiebenSat.1 Group's commercial success, the Group may not always be able to translate a high audience share into an equally high share of advertising sales or maintain or increase its prices for advertising space. Advertising
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clients tend to spread their media spending across market participants and other media verticals so as to avoid dependency on individual broadcasters or broadcasting groups.
The competitive landscape is also influenced by the funding available to the various broadcasters in the Group's markets, including the publicly owned and fee-funded TV stations. ARD's "Das Erste", ZDF, and regional ARD broadcasters ("Dritte") in Germany, as well as ORF in Austria and SRF in Switzerland, are predominantly funded through mandatory broadcasting fees paid by households, and to a lesser extent through advertising revenues. In 2013, the share of the publicly owned TV stations in the reference group of 14-49 year olds in Germany was 18.4 % (source: AGF in cooperation with GfK, TV Scope 5.0). Based on their funding through mandatory broadcasting fees, these TV stations are significantly less dependent on advertising revenues and they have significant financial resources that enable them to secure attractive content, including major sports events (e.g., the Olympic Games or international football championships). Loss of attractive content ultimately affects the ProSiebenSat.1 Group's audience share and consequently demand for, and pricing of, the Group's advertising space. It is also possible that the competitive position of the public broadcasters will increase further in the future, e.g., through increasing broadcasting fees, though currently not foreseen, or through loosened restrictions on the broadcast of advertisements by public broadcasters (see "Publicly owned and funded competitors of the ProSiebenSat.1 Group in Germany are subject to limitations in broadcasting advertisements. Regulatory changes permitting such public broadcasters to air more advertisements may further increase available advertising space, creating pressure on demand for and pricing of the ProSiebenSat.1 Group's advertising space.").
Furthermore, new competitors may emerge, thereby further increasing competition and fragmentation or the existing competitors of the ProSiebenSat.1 Group may gain larger market shares or better funding than the ProSiebenSat.1 Group. As a result, the Group may suffer declining market shares with negative impacts on its revenues and profitability.
If and to the extent the ProSiebenSat.1 Group loses market share or experiences pricing pressure in the highly competitive television advertising market, the Group's business, financial condition, results of operations and cash flows could be materially adversely affected.
The ProSiebenSat.1 Group benefits from being an audience market leader or holding significant audience shares and the loss of such a position could have significant negative effects on its advertising revenues.
The station universe for commercial television in Germany can be split into first generation and other stations. First generation stations in Germany include the ProSiebenSat.1 Group's stations ProSieben and SAT.1. Advertisers are willing to pay an advertising price premium to first generation stations as these TV stations deliver the broadest relevant reach in their respective key commercial demographics. In 2013 the ProSiebenSat.1 Group's TV stations reached an all-day audience share of 28.1 % (target group of 14-49 year olds) in Germany (source: AGF in cooperation with GfK, TV Scope 5.0).
In Austria, the Group reached an all-day audience share of 21.2 % in the age group adults 12-49 years in Austria in 2013 (source: AGTT, GfK TELETEST, Evogenius Reporting). In Switzerland, the Group reached a combined all-day audience share in the key demographic of adults aged 15-49 years of 17.6 % in 2013 (source: Infosys+, D-CH, ZG 15-49 mit Gäste, Totalsignal).
There can, however, be no assurance that the ProSiebenSat.1 Group's TV stations will maintain a sufficient audience share in the relevant target groups in the future. If the Group's TV stations were to lose audience share in their respective key commercial demographics, it could result in significantly lower advertising revenues, with material adverse effects on the Group's business, financial condition, results of operations and cash flows.
The standards and methods of measuring television audiences, as well as the composition of audience panels, may change in a way that could negatively impact the Group's ability to convert audience share into advertising revenue.
The terms on which TV advertising space can be sold depends mainly on the audience share of a given TV station or its programs, as this determines the reach of an advertising campaign. The audience measurement standards and methods in use determine the metrics by which market participants measure audience share and total reach. In the Group's core German market, audience measurement is conducted by Arbeitsgemeinschaft Fernsehforschung (AGF) in cooperation with Gesellschaft für Konsumforschung (GfK) for the account of the participating TV stations. In Austria, the audience measurement is conducted by Arbeitsgemeinschaft TELETEST and in Switzerland by Mediapulse AG. In each of the Group's markets, measurements are
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conducted through a group of households representing the composition of the larger population, a so-called audience panel or panel group.
Changes in the standards and methods of audience measurement, or the suspension or failure of audience measurements, as well as changes in the composition of audience panels may thus affect recorded audience shares, thereby restraining the Group's ability to adequately monetize its inventory or depressing the Group's advertising revenues and its pricing, which could have material adverse effects on its business, financial condition, results of operations and cash flows.
The demographic development in the Group's markets, which is marked by an aging and shrinking population, could impact the size of commercially relevant target audiences, as well as the audience reach and share of the Group's TV stations.
The populations in Europe, including Germany, Austria and Switzerland, are aging. For the Group's key market Germany, the German Federal Statistical Office expects that the proportion of people aged 65 years or older will increase by approximately 33 % from 16.7 million in 2008 to around 22.3 million in 2030, at which time this group would represent 29 % of the total population in Germany (compared to 20 % in 2008). At the same time, the proportion of people aged 20-65 years is expected to shrink by approximately 15 % from 49.7 million in 2008 to around 42.2 million in 2030, at which point it would represent only 54 % of the total German population (compared to 61 % in 2008) (source: Regional Statistical Office, Population and Population Density).
These demographic developments are affecting the size and relevance of the Group's relevant target audiences, which differ from station to station, but mostly center around the age group of adults aged 14-49 years. As a result, advertisers may reevaluate the importance of the relevant target age groups or their composition.
The ProSiebenSat.1 Group may be required to adapt its TV stations in view of shifting demographics in order to offer program content appealing to an older audience. There can be no assurance that the Group will be able to capture commercially relevant audience shares with its TV stations and attract mass audiences in older age groups. For example, it may be difficult for the Group to attract older audiences through channel and programming adaptation since the public broadcasters have traditionally occupied a strong competitive position in the older age segments.
Declining revenues due to the shift in demographics, which could also lead to impairments of the Group's programming assets, may be further aggravated by the expected shrinking population in the Group's markets and a potential corresponding reduction of the overall advertising spending based on the declining number of consumers. For example, the German Federal and State Statistical Offices expect the German population to decline by 5.7 %, from 82 million in 2008 to 77 million in 2030 (source: Regional Statistical Office, Population and Population Density).
These developments could have material adverse effects on the Group's business, financial condition, results of operations and cash flows.
The ProSiebenSat.1 Group's launch of additional TV stations may not be successful.
The ProSiebenSat.1 Group has in the recent past launched new TV stations for linear TV distribution in Germany, such as sixx for the younger female audience in 2010, and in 2013 launched SAT.1 Gold for older females as well as ProSieben MAXX, which is a free-TV station targeted at the male audience between 30 and 59 years of age and also includes offerings for children. The launch of new TV stations forms a part of the Group's strategy of capturing audience shares, in particular target groups, e.g., based on age or gender, which are attractive to advertisers and complement the Group's existing main TV stations. The introduction of new TV stations may require more investments or generate higher start-up costs/losses than expected. Furthermore, there is no guarantee that these new launches will break-even or prove commercially successful.
In terms of new pay-TV stations, the Group may launch additional stations for basic pay-TV bundles, as offered by cable network operators. Such pay-TV stations need to achieve a certain penetration rate in order to cover their costs. This may also prove to be increasingly difficult based on the generally growing number of basic and premium pay-TV stations offered.
If the Group's new TV stations do not become commercially successful, these stations may ultimately be taken off-air and the Group may lose a large part of its investments, which in turn could have material adverse effects on the Group's business, financial condition, results of operations and cash flows.
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Dependency on a steady supply of attractive programming content which is provided by only a limited number of international, particularly U.S., production companies, and which may become more expensive to acquire, if available at all.
The success of the ProSiebenSat.1 Group's program schedules depends largely on a sufficient supply of attractive content on commercially acceptable terms. Television programming licenses constitute a large portion of the Group's operating costs. The Group acquires the predominant portion of its feature films, television films and series as commissioned productions or licensed programs from third parties. With regard to licensed programming, which accounts for the largest share of the ProSiebenSat.1 Group's program schedules (around 55 % for its three main stations), the main portion of the inventory is sourced from major U.S. studios (e.g., FOX, Warner Bros., Paramount and CBS) or independent producers (e.g., Regency Enterprises). Popular programming content is in high demand and while the market is very competitive, the supply side is dominated by a handful of large Hollywood studios with significant bargaining power. Unlimited access to these rights (at commercially acceptable terms) is crucial for the commercial success of the Group. Price increases or changes in the supply structure in the markets for programming content or in the licensing terms and conditions for television programming could have a material adverse effect on the business, results of operations, financial condition and cash flows of the ProSiebenSat.1 Group.
Furthermore, a number of U.S. output agreements have a term of several years and encompass future productions. When concluding such contracts, the ProSiebenSat.1 Group enters into a financial commitment associated with significant risk, since under such output deals, the ProSiebenSat.1 Group is usually required to agree to unconditional payment of licensing fees for the content which has not yet been produced and tested in the market, thus meaning it is subject to limited visibility regarding the audience appeal and general success of the purchased content.
The Group's existing or new competitors may outbid the ProSiebenSat.1 Group for the best content on the basis of more aggressive growth strategy or greater financial resources, be it for linear TV or non-linear content rights. This could lead to a general cost increase or, if the ProSiebenSat.1 Group is not willing to accept such higher costs on commercial grounds, a shift of audiences to competing offerings. This, in turn, could have a negative impact on the ProSiebenSat.1 Group's audience share and consequently on its advertising revenues.
Increasing competition for licensed content coupled with increasing costs could have an adverse effect on the Group's business, financial condition, results of operations and cash flows.
The Group may be required to change the programming mix on its TV stations, which could have negative effects on its profitability.
The Group's programming comprises a mix of licensed programming, which is predominantly sourced from major U.S. studios or independent producers, as well as productions commissioned by the ProSiebenSat.1 Group and in-house productions or sports rights. The programming mix for the three main stations of the ProSiebenSat.1 Group is made up of approximately 55 % of content licensed from U.S. studios and around 45 % of local, commissioned and in-house productions. This program mix may change again in the future, which may be driven by different factors, such as the launch of additional TV stations or increased audience demand for top entertainment and sports broadcasts. Such events, in particular licenses for top sports events, are generally very costly and may not be profitable for the Group.
Changing media regulatory requirements may also necessitate a higher share of European or domestic content. Licensed content may also not be available to satisfy the Group's demand or on commercially acceptable terms. This would likely increase the Group's cost for programming, with a negative impact on the profitability of the Group's linear TV business.
Any significant change in the current program mix could thus have an adverse effect on the Group's business, financial condition, results of operations and cash flows.
The market power of advertising agencies affects the ability of the ProSiebenSat.1 Group to raise or maintain prices or to reduce the discount levels inherent in the sector.
The television advertising markets in Germany, Austria and Switzerland are dominated by a limited number of media buying agencies. In the Group's core German market, there are fewer than ten media buying agencies that dominate the market. The largest agency group, GroupM, a subsidiary of WPP-Group, accounted for around 42 % of media buying agency budgets spent on the ProSiebenSat.1 Group's TV stations in 2013. This concentration among media buying agencies may become even more pronounced in the future. The prices
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charged by the ProSiebenSat.1 Group for its advertising space are based on commercial negotiations with the relevant media buying agencies. By centralizing the purchase of advertising space for their clients, these media buying agencies can create considerable bargaining power on behalf of advertisers, thereby increasing competition among broadcasters for large accounts.
The high concentration of advertising agencies coupled with intense competition in the broadcasting media space has historically impaired the ability of the ProSiebenSat.1 Group to maintain or increase its net pricing levels and may continue to do so in the future. Failure by the ProSiebenSat.1 Group to maintain or improve its current pricing levels in the relevant television advertising markets or in the context of advertising sales or loss of advertising accounts, could result in a material adverse effect on the business, results of operations, cash flows, financial condition and prospects of the ProSiebenSat.1 Group.
Fixed programming and distribution costs and volatility in the advertising revenues.
The contracts by which the ProSiebenSat.1 Group acquires programming rights, in particular licensed programming, are generally long-term in nature and result in a high level of fixed costs. The Group's costs for distribution of content via satellite and cable signals also tend to be fixed over long periods. As a result, a large portion of the Group's costs are determined in advance for a period of several years, whereas the Group's revenues tend to be volatile and are very difficult to forecast with any reliability. This pertains in particular to television advertising revenues, which are primarily generated through advertisers' short-term purchases of advertising space on the Group's TV stations and are consequently volatile. As a result, if and when the ProSiebenSat.1 Group's advertising revenues decline the Group is limited in its ability to reduce costs to maintain its profitability and operating cash flow. This combination of a high level of fixed costs and variable advertising revenues, which are inherently difficult to forecast, can have material adverse effects on the Group's business, financial condition, results of operations and cash flows.
Publicly owned and funded competitors of the ProSiebenSat.1 Group in Germany are subject to limitations in broadcasting advertisements. Regulatory changes permitting such public broadcasters to air more advertisements may further increase available advertising space, creating pressure on demand for and pricing of the ProSiebenSat.1 Group's advertising space.
In the ProSiebenSat.1 Group's core German market, publicly owned and funded TV stations are subject to significant restrictions in their broadcasting of advertisements. The German publicly owned and funded television broadcasters ARD's "Das Erste" and ZDF are generally prohibited to broadcast advertising after 8:00 p.m. and all day on Sundays and public holidays (though certain exceptions exist). Advertising on regional programming of public broadcasters and digital station offerings is prohibited. Other restrictions include limitations with respect to the amount of advertising aired per day and sponsoring activities. If the restrictions on advertising by public broadcasters in Germany were to be loosened, the ProSiebenSat.1 Group's TV stations may lose advertising market share and advertising prices for the relevant advertising slots could decrease. This in turn could reduce the Group's advertising revenues and materially adversely affect its business, financial condition, results of operations and cash flows.
The valuation of programming assets is subject to uncertainties.
The ProSiebenSat.1 Group invests large amounts in licensed programming. Programming assets primarily comprise feature films, series, commissioned productions and advance payments for future broadcasting rights. All programming assets are initially recognized at cost and subsequently measured based on estimated revenue potential. Programming assets or groups of programming assets are impaired (in accordance with the International Financial Reporting Standards as adopted by the European Union ("IFRS")) if it is not expected that the costs are recoverable from future revenues. Indications for this assumption may include changes in the advertising environment, changing audience tastes, media-law restrictions on the usability of films, licenses that expire for broadcasting, or if a commissioned production is discontinued.
Due to the significant competition in the market for programming rights, licensed programs must often be purchased well in advance of the commencement of production and thus at a point when the quality and the audience appeal of the programming is difficult to assess, which increases the risk of future impairments. For example, new series are typically purchased at a point in time when no, or no final, assessment of the quality and audience appeal of subsequent episodes in the series can be made. This risk is particularly high for commissioned local productions or certain sports rights, where audience appeal is particularly difficult to gauge or dependent on performance or appeal of athletes or teams. Furthermore, the expected revenue potential of a program could be impaired by its classification by the German film industry's self-regulation body or
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comparable institution in other European markets as only being suitable for screening later in the evening in accordance with youth protection regulations.
This lack of visibility and the uncertainty around the commercial success of content acquired by ProSiebenSat.1, as well as other circumstances that call for impairments exposes the Group to the risk of substantial write-downs that could result in a material adverse effect on its business, financial condition, results of operations and cash flows.
The ProSiebenSat.1 Group's television broadcasting operations depend on sufficient technical reach via satellite and cable networks, as well as entry into transmission agreements on commercially reasonable terms.
The main distribution networks for the TV channels of the ProSiebenSat.1 Group are satellite and analog or digital cable networks. Terrestrial (digital) distribution and distribution via IPTV and the internet currently play little role. In the Group's core German market, the allocation of the limited number of analog cable stations to broadcasters is decided by the state media authorities, or, in certain German states, partially by the state media authorities and partially by the cable network operators themselves. There is no statutory obligation per se to include private broadcasters' programming in terrestrial, satellite or cable transmissions. In Austria and Switzerland the regime is similar. There can be no assurance that the ProSiebenSat.1 Group's TV stations will continue to receive the required allocations in the analog cable networks or that the Group would receive allocations for additional TV stations in order to expand its technical reach. Moreover, cable network operators may introduce proprietary decoding systems or encryption technology in an attempt to bind users to their own programming. Limitations imposed on the ProSiebenSat.1 Group in its access to analog or digital cable networks could have a material adverse effect on its business, financial condition, results of operations and cash flows.
The development of the ProSiebenSat.1 Group's distribution business depends on market developments, consumer acceptance and continued cooperation with satellite and cable network operators.
The ProSiebenSat.1 Group increasingly generates revenues from the distribution of its TV stations in HD quality and pay-TV stations. While the Issuer estimates that the market for its distribution business will grow over the coming years, there can be no assurance that it will in fact do so. Moreover, the agreements with satellite and cable network operators have limited terms and the ProSiebenSat.1 Group may not be able to extend these agreements at similar terms in the future or at all. This could lead to declining distribution revenues in the future, which may have a material adverse effect on the business, financial condition, results of operations and cash flows of the ProSiebenSat.1 Group.
A substantial part of the Group's revenues, cash flows and expenses are subject to seasonality.
The ProSiebenSat.1 Group's business operations are subject to industry-specific and seasonal patterns. Like other television broadcasters, the Group's advertising sales are subject to seasonal patterns, with advertising sales tending to be comparatively low during the third quarter of each calendar year due to the summer holiday period (typically July and August), and increasing significantly during the fourth quarter of each calendar year. This is primarily due to a higher media and television consumption in the fourth quarter, with higher bookings and a higher seasonal pricing index for advertising space, as this period coincides with the pre-Christmas shopping period and higher spending by consumers and therefore also advertisers. Therefore, the Group's results and cash flows during the fourth quarter of the calendar year tend to be disproportionately higher than each of the preceding three quarters. Every year, a total of around 30 % of revenues, and around 40 % of recurring EBITDA, are generated in the fourth quarter. Other seasonal factors that may influence advertisers' spending in individual quarters include the Easter period, major sports events such as the Olympic Games or major international football championships, which may attract large audiences away from the ProSiebenSat.1 Group's TV stations, or unseasonal weather and other events, which can influence the allocation of advertisers' spending.
Furthermore, the Group is subject to seasonality with regard to its expenses and cash requirements. For example, capital expenditures and cash outlays for programming tend to be significantly higher in the first quarter of the calendar year since the licensed content of a number of the large Hollywood studios becomes available or payable to the Group in this period, generally resulting in negative cash flows in the first three months of the Group's fiscal year. There are also other types of one-off expenditures, for example in the context of acquisitions and other investments, which can differ substantially from year to year.
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The ProSiebenSat.1 Group's digital entertainment, digital commerce and adjacent business activities are subject to a high degree of competition and low market-entry barriers. They are also strongly influenced by the development of the Group's linear TV business.
The Group's operations encompass a broad spectrum of digital entertainment activities, including online video and online games. In addition, in its digital commerce business, the Group has built a portfolio of participations in dedicated e-commerce clusters and in various business ventures through which the Group participates in revenues and/or equity of such ventures in exchange for provision of advertising space. The digital entertainment and digital commerce activities are bundled in the Group's Digital & Adjacent segment, which accounted for 14.2 % of the Group's revenues in 2012 and is currently the strongest revenue-growth-driver for the Group. In the fiscal year 2013, the segment's revenue share compared to Group revenues increased to 18.6 %.
There are a number of challenges and distinct risks pertaining to the Group's strategy for developing its digital business activities. The digital entertainment industry, which largely uses the open internet as a platform, is highly competitive and open to new market entrants due to relatively low start-up costs and comparatively sparse regulation. In the area of online video offerings, where the ProSiebenSat.1 Group is positioned with maxdome as a leading German pay video-on-demand provider and MyVideo as a highly frequented advertising- financed online video platform, the Group competes with a large number of free and pay video-on-demand services. The competing online video offerings have a large reach and benefit from strong name recognition, e.g., YouTube and iTunes, and it may prove difficult to achieve lasting name/brand recognition for the Group's online video platforms.
The Group's online games business encompasses a wide range of online games offerings as a digital publisher and provides gaming entertainment on many popular devices; the ProSiebenSat.1 Group also engages in the development of games through its newly acquired subsidiary Aeria Games Europe. Revenues are generated mainly in the form of commissions through channeling to third-party online game operators and also through "virtual item selling" (often also referred to as "freemium" or "free-to-play"), meaning that players can acquire virtual items for their online games against payment of a cash consideration. The ProSiebenSat.1 Group competes with a large number of commercial offerings based on similar business models. In order to be successful, it is essential that the ProSiebenSat.1 Group is able to offer attractive games and that these become sufficiently known to users, which may prove to be difficult based on the very fragmented market and the fact that the ProSiebenSat.1 Group uses all distribution forms including mobile. As such, the Group's recent acquisition of Aeria Games Europe is aimed to strengthen the Group's competitive position in this highly competitive environment. The Group is dependent not only on continued access to attractive content through licensing agreements at commercially reasonable terms with capable distribution partners in the relevant local markets, but also on its ability to adapt to technological change and changing consumer consumption habits.
In the Group's digital commerce business, a significant part of which is operated through its SevenVentures subsidiary, the competitive environment is also very challenging. The various e-commerce verticals in which the Group has invested or intends to invest are all based on reaching consumers via the internet, and the competitive landscape is characterized by existing large and established internet companies, as well as a continuously growing number of new companies due to very low market-entry barriers. A generally low level of customer loyalty and rapidly shifting trends pose additional challenges to building sustainable businesses with relevant market share or penetration.
Due to the typically low entry barriers in its digital entertainment, digital commerce and adjacent businesses (in contrast to its traditional broadcasting business), the Group is, or may in the future be, exposed to severe and extended price competition from existing or new competitors that aim to build market share or even seek a dominant market position regardless of, or at the expense of, profitability and cash flows. This is further exacerbated by large global players with the financial means to enter any markets that they deem attractive. The Group's ability to respond to technological changes and to make, where necessary, the required investments or to successfully build and manage direct consumer relationships (so-called "B2C business") will also be crucial for the success of the digital entertainment, digital commerce and adjacent business. The B2C business has not been a business focus of the Group in the past but is expected to become an increasing part of its business in the future.
The Group's digital entertainment, digital commerce and adjacent strategy is largely based on leveraging its extensive free-TV content base, its brand recognition and broad reach, as well as its idle advertising inventory, cross-promotion and bundling capabilities to build its portfolio of digital entertainment and e-commerce assets. This is particularly pronounced in the digital commerce business, where the media-for-revenues/media-for- equity business model plays a significant role with the Group providing media advertising space to promising
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start-up companies that primarily operate e-commerce businesses. The Issuer believes that without support through this type of sponsored advertising, it would be much more difficult to establish successful digital and e- commerce offerings that can prevail in a very competitive environment. This dependency on available advertising space for its digital entertainment, digital commerce and adjacent business activities is, however, also subject to the risk of decreasing availability. If third-party demand for advertising space increases, leading to (temporary) revenue-growth for the Group's television broadcasting operations, there would be less inventory available to support its digital activities. This in turn could harm the development and growth of the digital business. Likewise, increasing regulatory restrictions for advertising broadcasts or a changing pricing policy (i.e., a decision to lower prices in order to increase advertising sales volume) could potentially limit the availability of advertising space. The competitive environment for the media-for-revenues/media-for-equity business model may also intensify if other commercial broadcasters' and other media companies' pursue a similar strategy and increase availability of advertising space to businesses interested in these types of cooperations.
Based on these challenges and risks, the ProSiebenSat.1 Group's digital entertainment, digital commerce and adjacent business activities may prove unsuccessful with large investments not yielding anticipated returns, which could have material adverse effects on the Group's business, financial condition, results of operations and cash flows.
The strategy of the ProSiebenSat.1 Group for the growth of its digital entertainment, digital commerce and adjacent business may fail. Significant investments may lead to increased capital requirements; the growth strategy may have negative effects on the Group's profitability.
The digital media industry is strongly influenced by technological trends, new business models and a very large number of market participants. There are many examples of large and powerful media companies that have suffered significant losses after having made sizable acquisitions and/or investments in online enterprises which did not ultimately succeed in the rapid developments of the internet. The ProSiebenSat.1 Group's online video offerings could, for example, lose market share if competing offerings offer better and more convenient options for video consumption. Similar risks exist with respect to the Group's online games business as user preferences and demand for online games offerings may change rapidly through new offers or concepts introduced by competitors and new market entrants. In addition, as the Group generates revenues through cooperations with external online games operators, it depends on being able to enter into and maintain agreements with such operators of online games websites. One of the Group's contractual partners in the online video channeling business (i.e., where commissions or a share of revenues is paid by third party online game operators to their business partners for referrals/links to the online game operators' services), Bigpoint, Inc., gave notice of termination of its existing agreement with the ProSiebenSat.1 Group in 2013 that was replaced by a new agreement only for new games launches. This will have a negative revenue impact for the Group going forward. As such, there can be no assurance that the Group's digital growth strategy will be successful.
In the Group's digital commerce business, many of the companies with which the Group cooperates or in which the Group invests qualify as start-ups. They do not have any track record of success or a proven business model and they are subject to a high failure rate. For example, with respect to the media-for-revenue component, the Group is exposed to a high bad-debt risk. The Group already had to write off receivables in the past. With respect to its media-for-equity business, the Group is also exposed to impairment risks regarding its equity interests in these companies. While the Issuer does not expect all, or even most, of the investments to be commercially successful, its digital commerce business is based on the premise that at least some of these start- ups will be successful, but there can be no assurance that this will be the case. In its digital commerce business, the Group currently focuses on several defined clusters, each of which focuses on certain commercial areas such as travel, beauty and lifestyle, as well as related market places. The selection of these clusters or market places may prove commercially detrimental with more promising or viable opportunities in other commercial areas. Therefore, the current cluster focus is subject to change. With regard to the Group's incubator program, set up in 2013 and for which it has hired venture capital specialists, the risk of failure is even higher. Therefore, due to its start-up character this business is currently centrally managed as financial investment. There are additional personnel costs and direct cash investments in start-ups, which the Issuer may decide to increase in the future, e.g., if the media available to expand the media-for-equity/media-for-revenues business are not sufficient. These higher costs may further aggravate the business risk associated with the Group's digital commerce business. Moreover, investing in a large number of start-ups may pose challenges in terms of managerial oversight and control, which may be aggravated by the fact that many of the businesses operate in sectors or industries where the Group does not have the same level of industry or management expertise as in its core TV business. Currently, the prevalent application of consignment sales models limits the inventory risk of businesses engaged in the sale of goods in which the digital commerce business invests. However, if such e-commerce businesses grow and build up own inventory and/or if the Group invests in a larger number of such businesses in the future, 41
the exposure of the digital commerce business to inventory risk may increase. There can also be no assurance that the Group will be able to monetize its investments through disposals if and when the Group decides to sell any of its strategic or opportunistic ventures investments. The opportunistic (minority) investments, in particular, are generally subject to a limited investment horizon of a few years, but the Group may be unable to sell its participations when the investments have matured in line with management's view. Disposal processes may also be initiated too late, e.g., at a time when the success and value of the investment is beyond its peak and declining, which in turn could trigger significant impairments.
As the Group aims to achieve significant growth of its digital entertainment, digital commerce and adjacent business, it intends to make significant investments. Growth of its online video and online games offerings may increase the Group's capital expenditures significantly. This may, for example, become relevant if the Group acquires a large content rights stock for its video-on-demand or online games offering. It may also be necessary to accelerate infrastructure investments, e.g., for the Group's online video platform, its video-on-demand business or construction of new studios for production of online/digital video content, and the investment cycles may become shorter due to rapid technological changes. Capital requirements may also increase due to strategic cash investments, e.g., for acquisitions of companies. The Issuer may also be required or decide to significantly increase the cash allocation for future acquisitions. Such increased capital expenditure may bind the Group's capital resources. These capital resources would then not be available for other capital requirements of the Group and/or result in maintained or even increased debt leverage ratios for the Group and also impair its ability to make payments under the Notes. These effects can become very visible in line with the degree to which management decides to further prioritize growth over the Group's overall profitability.
If the ProSiebenSat.1 Group's strategy for its digital business fails, this may have material adverse effects on the Group's business, financial condition, results of operations and cash flows.
Growing content piracy may affect the Group's ability to retain and expand its audiences and users, in particular with regard to its video-on-demand and online gaming offerings.
The ProSiebenSat.1 Group is exposed to the risk of content piracy, i.e., the widespread unauthorized consumption and distribution of content generally available free of charge. Such content piracy includes, among other things, the streaming of content mainly via offshore websites, which make media content, such as movie and TV series, accessible via download or video streaming without any cost to the viewer or user, and usually do so without advertising or with significantly less advertising than legal media channels. This could make content broadcast or sold as video-on-demand or as online games by the ProSiebenSat.1 Group available through other channels without charge or, more generally, cause audiences and users to consume less television or fewer online offerings by the ProSiebenSat.1 Group. The prevalence of these types of piracy has increased in recent years and may not subside in the future. The ProSiebenSat.1 Group is also subject to risks related to hacking and other types of content piracy (see "The Group is subject to risks of outages or malfunctions of its data processing systems, unauthorized network intrusions, broadcasting service interruptions and data theft."). Thus, content piracy and other security breaches could materially adversely affect the Group's business, financial condition, results of operations and cash flows.
Distribution of the Group's digital content via the internet does not currently result in costs beyond hosting and streaming costs. Additional fees may be charged by internet infrastructure or service providers in the future.
The ProSiebenSat.1 Group currently distributes its digital content (websites, non-linear video, and increasingly linear video) via the open internet, without incurring any cost beyond those for hosting and streaming. It is conceivable that internet infrastructure or service providers such as Deutsche Telekom Group will in the future charge additional fees in return for adequate distribution capacity and quality. Any additional fees charged by internet infrastructure or service providers could have a material negative impact on the Group's cost base with a material adverse effect on its business, financial condition, results of operations and cash flows.
The ProSiebenSat.1 Group is subject to various risks from the outsourcing of services.
The ProSiebenSat.1 Group has outsourced a range of services to external providers, including the management of its IT infrastructure and business applications, the technical infrastructure for its customer relationship management (CRM), program planning and rights management, as well as its broadcast infrastructure and call center operations. The Group's outsourcing of the services to third parties can result in a dependency on the performance of these service providers. It can also bring about a loss of operational control and flexibility, as well as reduced cost control. Further, third party services may become unavailable without adequate time for ProSiebenSat.1 to procure alternative providers or such services may become overly expensive, forcing the
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Group to procure these services from alternative providers, which may not always be available. This could compromise ProSiebenSat.1's ability to offer and optimize its products and services.
If any of these risks materialize, the Group's business, financial condition, results of operations and cash flows could be materially adversely affected.
The Group is subject to risks of outages or malfunctions of its data processing systems, unauthorized network intrusions, broadcasting service interruptions and data theft.
The operations of the ProSiebenSat.1 Group are susceptible to outages due to incidents such as fire, water damage, floods, power loss, network failures and accidents, terrorist attacks, sabotage and other similar events. Broadcasts may also be disrupted as a result of local disasters including extreme weather or satellite and cable network malfunctions. Natural disasters, accidents and other incidents at sites of third parties with whom the Group cooperates in the context of broadcasts or other operations may also adversely affect the Group's business.
As a result of the increasing complexity of the Group's data processing systems, IT security risks, operating faults, malfunctions or interruptions of the data processing systems could have serious consequences for the business. These include violations of data integrity and data confidentiality. The Group's exposure to unauthorised network intrusions and data theft has increased in line with its expanding digital entertainment activities, which are largely based on internet services (e.g., online games) thereby increasing the risk of hacking attacks. Any such failures or network intrusions could cause cost overruns and affect the efficiency and productivity of the Group's operations, as well as its reputation among consumers. The ProSiebenSat.1 Group's business interruption insurance may not adequately cover all losses incurred as a result of any such events. Moreover, a range of IT services has been outsourced to external providers, and such outsourcing may continue in the future. This creates additional risks, given the greater dependency on such external service providers to maintain a functioning IT infrastructure and rapidly rectify malfunctions.
If any of these risks were to materialize, they could have a material adverse effect on the Group's business, financial condition, results of operations and cash flows.
The Group is generally exposed to risks in relation to business acquisitions and cooperations, including with respect to contracted put rights on the part of sellers of the businesses.
Over the last few years, the Group has acquired other companies, participations, business activities and technologies. These include a number of bolt-on acquisitions across the Group's segments, in particular in the Digital & Adjacent and the Content Production & Global Sales segments. The Group may make further acquisitions or enter into cooperations or co-investments with third parties in the future. No assurances can be given that the Group will correctly anticipate market development and properly allocate financial and management resources in developing the Group's business through its acquisition activities.
Furthermore, there is a risk that past or future acquisitions or cooperations cannot be successfully integrated into the Group's existing operations, or that such transactions do not yield the expected benefits or advantages. Failures or delays in integrating acquisitions or implementing cooperations may be costly and impair the development of the Group's business. The ProSiebenSat.1 Group may also be required to recognize impairments on its investments, in particular within the Group's digital commerce business, where it invests in start-up companies, and where the risk of failure, and even insolvency, is particularly high.
In the context of certain investments made by the Group, primarily in the Content Production & Global Sales segment, but also in its digital entertainment and digital commerce business, the ProSiebenSat.1 Group has agreed to certain put rights in respect of further shares to be purchased by the Group or other arrangements, such as earn-outs, where the Group may be required to make significant payments in the future. The Group's liabilities in respect of such put rights, earn-outs or similar arrangements may increase considerably in the future.
Moreover, it is possible that the Group will make larger acquisitions in the future than it has in the recent past. The Group may also decide to make larger cash investments, either in addition to or in lieu of the media-for- equity investments or the current bolt-on-type cash acquisitions that are currently conducted in the Group's digital entertainment, digital commerce and adjacent business. Furthermore, the Group may enter into equity- like investments, such as loans, convertibles or similar instruments to non-consolidated participations. The Group may also decide to finance significant parts of its investments through external borrowings and thereby increase its leverage. This may further increase the risk exposure from acquisition activities and the risk of
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significant impairments if the investment proves unsuccessful and may also impact the Group's financial leverage profile. The Issuer may also decide to enter into cooperations, co-investments, partnerships or joint ventures, mergers for businesses it currently owns or in which it holds the majority interest, which may have an effect on its scope of consolidation or business setup.
If any of these risks materialize, this could have material adverse effects on the Group's business, financial condition, results of operations and cash flows.
The Group may be exposed to considerable liabilities in the context of divestments, including certain indemnification obligations relating to the disposal of its businesses in Belgium, The Netherlands, Northern Europe and Central and Eastern Europe.
The Group has in the past sold a range of companies and/or assets (previously) belonging to its business operations or investment portfolio, and it may do so in the future. For example, the ProSiebenSat.1 Group has sold its television broadcasting, radio and print media businesses in Belgium, The Netherlands and Northern Europe, and has also sold the Group's CEE broadcasting operations. The relevant agreements concerning the sale of these businesses provide for stipulations (e.g., representations and warranties, undertakings, indemnities and other obligations) that can give rise to liabilities on the part of the ProSiebenSat.1 Group and may even result in court action. For example, the Group has received a notice of claims in a low double digit million euro amount from the purchasers of its Belgian business and, while the Group holds these claims unfounded, liability and/or litigation in this context cannot be ruled out. If and to the extent the above described liabilities arise in the context of the ProSiebenSat.1 Group's divestments, the Group's business, financial condition, results of operations and cash flows can be materially adversely affected.
Moreover, specific risks relate to the sale of the Eastern European TV activities. In the context of the sale of the Hungarian operations a vendor loan has been granted to the purchasers and a working capital line has been granted to the sold entity. The loans are subject to impairment risks if the Hungarian operations will not generate sufficient cash flows. Additionally, the ProSiebenSat.1 Group guarantees for the performance of several licensing agreements between the Hungarian and Romanian TV stations and Universal Studios, CBS and Programs for Media with an overall commitment of approximately EUR 40 million. If the sold Hungarian or Romanian entities are unable to repay the loans or the guaranteed licence fee at their maturity dates, the ProSiebenSat.1 Group may have to reconsolidate the respective Hungarian or Romanian entities. Such reconsolidation could materially adversely affect the Group's business and financial condition, results of operation and cash flows.
The Group's assets are to a large extent composed of goodwill and other identifiable intangible assets, which may become subject to impairments. Financial assets held by the Group may also become subject to impairments.
The Group's goodwill and other identifiable intangible assets (e.g., brands, broadcasting licenses, customer relationships, intellectual property rights or software) are recorded at fair value on the date of acquisition and are reviewed for any necessary impairments annually and when certain events warrant an interim review. Goodwill is tested for impairment using certain assumptions. The most important assumptions underlying the changes in value concern future cash flows, estimated growth rates, weighted average costs of capital, and tax rates. These assumptions, as well as the method used, may have a material effect on the resulting values. By nature, assumptions and estimates are less certain for intangible assets like goodwill than for all other assets. Impairments may result from, among other things, deterioration in performance, adverse market conditions, adverse changes in applicable laws or regulations, challenges to the validity of certain registered intellectual property, disposals of group assets and a variety of other factors. Impairments on goodwill or other intangible assets may also become relevant in the context of acquisitions (see "The Group is generally exposed to risks in relation to business acquisitions and cooperations, including with respect to contracted put rights on the part of sellers of the businesses.") and the Group is continuously exposed to the risk of significant write-downs of its programming inventory (see "The valuation of programming assets is subject to uncertainties.").
Changes in the Group's expectations regarding the above mentioned assumptions, triggered by changes in market developments, have in the past triggered impairments on the goodwill of acquired companies and other identifiable intangible assets. See also "The forecasts made by the Issuer on the development of its business and its earnings may turn out to be incorrect and the Issuer may be unable to achieve the goals set out in its mid- term revenue-growth growth plan.". Financial assets held by the Group may also become subject to impairments. See also "The strategy of the ProSiebenSat.1 Group for the growth of its digital entertainment, digital commerce and adjacent business may fail. Significant investments may lead to increased capital
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requirements; the growth strategy may have negative effects on the Group's profitability.". Any such future impairments may have a material adverse effect on the Group's financial condition.
The Group could be adversely affected by labor disputes and other union activity.
The Group may be exposed to the risk of future strikes and other industrial actions, as well as the negotiation of new collective bargaining agreements or salary increases. This could disrupt its operations and make it more costly to operate its facilities, which in turn could have a material adverse effect on the Group's business, financial condition, results of operations and cash flows.
The ProSiebenSat.1 Group's insurance coverage may be inadequate.
The ProSiebenSat.1 Group has insurance coverage against various operational risks. There can, however, be no assurance that the Group's current insurance policies will be adequate and sufficient to cover all potential risks or all potential losses and liabilities to which it may be exposed or that it will be able to obtain adequate insurance coverage on commercially reasonable terms and conditions in the future. A loss or liability in excess of its maximum insurance coverage could materially adversely affect the Group's business, financial condition, results of operations and cash flows.
The ability to recruit, retain and develop qualified personnel is critical to success and growth of the ProSiebenSat.1 Group.
All of the businesses of the ProSiebenSat.1 Group function at the intersection of rapidly changing technological, social, economic and regulatory developments that requires a wide ranging set of expertise and intellectual capital. For the ProSiebenSat.1 Group to successfully compete and grow, it must retain, recruit and develop the necessary personnel who can provide the needed expertise across the entire spectrum of intellectual capital and technical needs. In addition, personnel must be developed to provide succession plans capable of maintaining continuity in the midst of the inevitable unpredictability of human capital. However, the market for qualified personnel is competitive and the ProSiebenSat.1 Group may not succeed in recruiting additional personnel or may fail to effectively replace current personnel, who depart, with qualified successors.
Successful management of the business of the ProSiebenSat.1 Group depends on a number of key personnel, including the members of the executive board of the Issuer. No assurance can be given that key personnel, including executive officers, will continue to be employed by the ProSiebenSat.1 Group. Failure to retain or attract key personnel could have a material adverse effect on the ProSiebenSat.1 Group.
Bandwidth capacity limitations or cost increases for consumers may negatively affect the growth of digital content consumption, such as online video and games.
The ProSiebenSat.1 Group's digital business activities largely depend on the open internet as a distribution platform. The streaming or downloading of videos in particular requires adequate bandwidth and data volume for rapid content delivery, specifically with respect to the distribution of high-resolution content. A consistently increasing number of households in the Group's core German market (where the Group operates its maxdome video-on-demand service), and also in Austria and Switzerland, use or have access to an internet connection that permits streaming and downloading of high-resolution audiovisual content.
Access to reliable HD streaming generally requires bandwidths of 16 Mbit/s or more. A considerable group of consumers currently is and may remain in the future locked out from HD content streaming and downloading services, negatively impacting the Group's business in that field.
In the past, distribution of videos via the internet has been promoted by the fact that many internet service providers (ISPs) offer flat-rate contracts for broadband internet connections over fixed line networks, meaning that there are no limitations on the volume of data traffic for the individual user. It currently remains open if large internet service providers in Germany, e.g., the Deutsche Telekom Group or Telefónica Deutschland, will limit the volume of data traffic under its new flat-rate contracts. Full-length HD movies have a size of up to 10 GB (gigabytes). As such, frequent internet users, particularly those who regularly watch downloaded or streamed high-resolution videos, may be affected by any volume limitations and/or higher internet costs. Volume limitations and/or higher internet costs bear risks for the ProSiebenSat.1 Group in its pursuit of further developing and growing its digital business activities, with potential material adverse effects on the Group's business, financial condition, results of operations and cash flows.
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The Group's content production and sales business operates in a very competitive environment and requires large upfront investments which may prove unsuccessful.
The ProSiebenSat.1 Group operates an international program production and distribution business through Red Arrow Entertainment Group GmbH and its subsidiaries ("Red Arrow Entertainment Group"), through which the Group participates in the entire TV value chain, comprising the development, production and sale of television programs. This business, which is bundled in the Content Production & Global Sales segment, accounted for 4.1 % of the Group's revenues from continuing operations in 2012; for the fiscal year 2013, the corresponding revenue share was 4.8 %. The investment portfolio in this segment currently comprises majority stakes in 15 production companies in nine countries.
The business of Red Arrow Entertainment Group is subject to significant risks. The development and production of TV content is expensive and commercial success depends on the Group's ability to successfully market its productions. The production business is also very much dependent on access to creative talent. The Issuer competes with other production firms for licenses for literary adaptations and film scripts, as well as for contracts with successful directors, actors and studios. There can be no assurance that it will be able to do so effectively. Profit margins are generally low. The failure rate in the production business is relatively high, and profitability is largely dependent on the generation of some hit TV shows or serial formats that allow for repeats, principally through the sale of additional seasons. The content sales business and its expansion into overseas markets may also fail due to insufficient familiarity with the local markets or for other reasons. Furthermore, despite the growth of Red Arrow Entertainment Group, the business may still be too small to reach a sufficient scale for lasting commercial success and/or require the Group to enter into cooperations with other production or distribution companies. There also can be no assurance that the Issuer may not decide to divest its content production business in the future. Any such partial or complete divestment could also result in losses for the Group if the respective businesses were to be sold below their book value.
If these risks materialize, they may have a material adverse effect on the Group's business, financial condition, results of operations and cash flows.
An increasing number of TV stations available via linear TV broadcasts could result in lower audience shares for the Group and greater fragmentation of its target audiences.
The increasing number of TV stations available via digital terrestrial, cable, satellite and internet broadcasts (e.g., IPTV) is broadening the spectrum of linear TV offerings available to viewers in Germany, Austria and Switzerland significantly. This development can be attributed to deregulation, the digitalization of TV distribution and the increased transmission capacity resulting therefrom. Significantly lower costs for launching new TV stations have also led to a growing number of linear TV stations with increasingly targeted niche programming, which are increasingly made available on several distribution platforms. This may lead to further fragmentation of audience and advertising market shares for the Group's TV stations, with material adverse effects on its business, financial condition, results of operations and cash flows.
The ProSiebenSat.1 Group is exposed to risks with respect to the management of its organization and adherence to compliance-related standards and regulations.
The Group conducts its business activities across different markets and industries with the support of around 3,600 employees (full time equivalents) as of December 31, 2013. This requires an efficient organization that can be supervised and developed by management. The organizational challenges are amplified by the Issuer's growth strategy. Developing and refining appropriate internal management, organizational and risk monitoring structures for the purpose of identifying undesirable developments and risks, places high demands on the management and the Group as a whole. Delays in adapting the organizational structures could result in business or administrative oversights or errors, which could also lead to higher operating expenses or damages. The size of the Group's organization and the rapid development of compliance standards on a national and international level also increase demands on the Group wide organization. A particular risk may exist with respect to investments in the Group's digital commerce business or its international content production companies. It is possible that day to day management of the start-ups or these production companies does not meet the same standards as those of other subsidiaries of the Group, and an increasing number of participations may pose challenges in terms of managerial oversight and control on a Group level.
Failure by the ProSiebenSat.1 Group to effectively manage its organization could have material adverse effects on the Group's business, financial condition, results of operations and cash flows.
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The forecasts made by the Issuer on the development of its business and its earnings may turn out to be incorrect and the Issuer may be unable to achieve the goals set out in its mid-term revenue-growth plan.
The Issuer provides outlooks to investors with respect to, among other things, revenues and recurring EBITDA, and it makes other forward looking statements as part of its investor communication. This Prospectus contains a qualitative outlook to investors with respect to, among other things, revenues and recurring EBITDA of the ProSiebenSat.1 Group for the fiscal year 2014. The Issuer's short term and mid-term outlook is based on various assumptions and data, which may prove incorrect or imprecise. The assumptions underlying the Issuer's short term and mid-term outlook include predictions on future developments that are subject to uncertainty and there can be no assurance that these assumptions will be correct. Likewise, the environment may change, and such change may require an adjustment of the assumptions made with respect to future developments. Moreover, the methods used by the management of the Issuer in preparing the outlook may not be sufficiently precise.
Furthermore, the Issuer operates on the basis of mid-term revenue-growth plans. These mid-term revenue- growth plans and their degree of achievement form part of the Issuer's investor communication. There can be no assurance that the ProSiebenSat.1 Group will realize the targets presented in its mid-term revenue-growth plan or any other forward-looking statement. Finally, the Issuer's mid-term revenue-growth plan is subject to updates from time to time and investors should not view the mid-term revenue-growth plan as a forecast.
Legal, Regulatory and Taxation Risks
The ProSiebenSat.1 Group's business operations are dependent on broadcasting licenses issued by the competent authorities.
Commercial television broadcasters in the Group's markets must obtain broadcasting licenses. Such licenses are awarded for a fixed time period and are generally renewed as long as the relevant TV stations comply with the terms of their licenses and with general legal requirements. Failure by the ProSiebenSat.1 Group to comply in all material respects with the terms of broadcasting licenses or other legal requirements may, however, result in the loss of such licenses. In addition, there can be no assurance that renewals or extensions of existing licenses will be issued on the same terms as existing licenses.
The Group is currently restructuring the corporate and licensing structure of its broadcasting operations in Germany and plans for one of its entities, ProSiebenSat.1 TV Deutschland, to become the Group's sole broadcasting company for all of the ProSiebenSat.1 Group's free-TV stations. For this purpose, ProSiebenSat.1 TV Deutschland is required to obtain new broadcasting licenses with regard to every single free-TV station of the Group in Germany. When such new licenses have been obtained, the relevant Group companies will cede their existing licenses. While this process has been completed with regard to the majority of the Group's free-TV stations, the license for SAT.1 is currently still held by another Group company. Although ProSiebenSat.1 TV Deutschland has already been granted the license for SAT.1 by the state media authority in Hamburg and Schleswig-Holstein, the grant of this license has been challenged in court by certain other state media authorities. While the competent administrative court rejected these claims in late May 2013, an appeal is expected. However, SAT.1's existing broadcasting license is valid until 2020, and the Group may decide to retain this license if it were to lose the current litigation, in order to ensure continued broadcasting of SAT.1.
Under German broadcasting law, broadcasters must notify the competent state media authorities of a material change in their direct or indirect shareholder structure. The authorities then confirm a change as unobjectionable if they conclude that the relevant broadcasting license could also be granted under the changed circumstances. In their evaluation, the competent authorities consider in particular how the change in the shareholder structure affects media concentration and the safeguard of plurality of opinions. If a broadcaster or its parent company implements a change in the shareholder structure that cannot be confirmed as unobjectionable, the broadcasting license is to be revoked.
There may be future changes in the Issuer's shareholder structure that are not found unobjectionable, which could lead to a revocation of the Group's German broadcasting licenses or the imposition of restrictions and conditions on the Group's broadcasting operations in Germany.
With respect to the Group's other broadcasting licenses abroad, changes to the Issuer's shareholder structure are not subject to prior approval by the competent national media authorities. It can nevertheless not be fully ruled out that the relevant national authorities might hold a future change in the Issuer's ownership structure to be inconsistent with national broadcasting and media regulations and on the basis thereof revoke or impose limitations on the respective broadcasting license.
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The loss of broadcasting licenses held by the ProSiebenSat.1 Group at their present terms or the Group's inability to obtain additional licenses, as it may require for its operations, could materially adversely affect its business, financial condition, results of operations and cash flows.
Supervisory and regulatory restrictions and changes in the relevant legal and regulatory environment could adversely affect the Group's business activities.
The television broadcasting operations of the Group in Germany and the other countries in which the Group operates are subject to extensive government regulation. These regulations govern matters such as the issuance, renewal, transfer and ownership of broadcasting licenses, the timing and content of programming, the timing, content and amount of permitted advertising, protection of minors, restrictions to safeguard the plurality of opinions, including the obligation to air third-party programs, and cross-media, foreign or other ownership restrictions.
In the Group's core market Germany, leading TV broadcasters, including the Group's TV station SAT.1, are required to broadcast regional (Regionalfenster) and independent third-party (Drittsendezeitfenster) programs dedicated to special interests of viewers in certain regions and to culture and news. This regional programming is comparatively expensive for the Group and limits its overall flexibility in terms of program scheduling. Pursuant to European and/or national legislation, the Group is also required to satisfy certain obligations with regard to the scheduling of programs of European and independent origin. The ProSiebenSat.1 Group can either produce these programs in-house or license them from third-party vendors. The Group's cost with respect to regional or independent third-party programs may increase if new laws and regulations mandate the scheduling of an even greater amount of such programming.
These regulations can limit the ProSiebenSat.1 Group's ability to increase its audience share or otherwise contravene the development of its business – particularly in the Group's core market Germany. Moreover, these regulations may impose limitations on the Group's acquisition activity in the German media sector – for example, if the Group's German TV stations reach or exceed certain thresholds of audience share.
It is conceivable that further regulatory restrictions on broadcasting, programming, advertising or other relevant matters are introduced in the future. The Issuer believes it is particularly exposed to risks concerning stricter regulatory requirements, in particular regarding the amount and form of television advertising. Other current or future business activities of the Group, such as its engagements in e-commerce ventures or digital entertainment offerings, may also become subject to new or increasing regulatory requirements, which could make such business activities more costly, limit the Group's flexibility in terms of developing its business, or even render some of its existing business models untenable.
Moreover, the regulatory environment is characterized by asymmetrical density in terms of regulatory requirements across the broader media landscape. Existing and future competitors of the ProSiebenSat.1 Group that offer non-linear audiovisual media services from outside the European Union, such as Google's YouTube, are not subject to the same regulatory requirements and limitations as traditional European linear TV broadcasters or European non-linear media services providers, e.g., in relation to the form and amount of advertising broadcasts, media concentration rules, regional programming requirements and the protection of minors. This non-level competitive field may increase further depending on regulatory developments for linear TV broadcasters and the consumption behavior between linear and non-linear audiovisual media services.
Such increasing regulatory restrictions and conditions concerning the ProSiebenSat.1 Group's television broadcasts could materially adversely affect the Group's business, financial condition, results of operations and cash flows.
Changes in laws governing intellectual property may be disadvantageous to the Group's business.
The Group's operations are to a large extent based on the use of intellectual property, and copyrights in particular. As a broadcaster, the ProSiebenSat.1 Group licenses copyrighted content. The online video and online games business is also based on the use of copyrighted works. As a producer and distributor of content, Red Arrow Entertainment Group is essentially a business based on the exploitation of copyrights to audiovisual content. Other types of intellectual property such as trademarks, which protect the Group's brands, are also important. As a consequence, the ProSiebenSat.1 Group's business is exposed to changes in the laws relating to intellectual property and their application and enforcement.
There is currently a process on the European level concerning the legal framework for copyrights across the European Union. The European Commission is currently conducting a comprehensive review of the EU
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copyright framework, covering such areas as territoriality relating to copyrights within the European Union, harmonization of copyright regimes in the member states, and future limitations/exceptions to copyright protection with regard to the digital market. It is expected that the Commission will conclude this process in 2014 with a decision whether or not to propose a reform of the current legislation. It is not yet possible to predict the outcome of this process, but it may result in profound changes in the legal landscape governing copyrights, in particular regarding the territorial exclusivity for licensed content. For example, if new copyright laws made it impossible to obtain copyright licenses for specific countries within the European Union, allowing only licenses for the entire EU territory, the cost of such licenses could increase significantly and also impact the current business model of licensing content for distribution in select territories. Furthermore, it may become more difficult to license exclusive content for internet distribution, which could impact the Group's online video business.
If the legislative process were to result in significant changes to the existing principle of territoriality or the level of copyright protection afforded to authors, the costs for content, which form the largest part of the Group's expenses, may increase significantly, and the ProSiebenSat.1 Group may have to adjust its current business model, with material adverse effects on the Group's business, financial condition, results of operations and cash flows.
The ProSiebenSat.1 Group is exposed to allegations of intellectual property infringement, and the Group may have to defend third parties' infringement of its intellectual property rights.
The Group has received various notices by third parties claiming infringement of their intellectual property rights. Similar claims of intellectual property infringement may arise going forward, e.g., with respect to its brands and content offerings. Such claims may result in costly and time-consuming litigation and/or restrict the Group in its use of brands and other content that are important for its business. Alternatively, the Group may have to enter into royalty or licensing agreements at unfavorable terms. Conversely, the ProSiebenSat.1 Group may be exposed to intellectual property infringement by third parties, e.g., through content piracy or unauthorized use of the Group's brands and content, which may also entail costly and/or potentially unsuccessful litigation. Some of these intellectual property infringements by the Group or by third parties to the detriment of the Group may have material adverse effects on its business, financial condition, results of operations and cash flows.
The ProSiebenSat.1 Group's business conduct, strategic cooperations and acquisitions are subject to regulatory restrictions. Such restrictions have led to interventions by authorities and civil litigation in the past and may do so in the future.
The ProSiebenSat.1 Group's business conduct and development, in particular as it relates to cooperations, mergers and acquisitions, is subject to European and national antitrust laws. In this respect, media companies are primarily subject to enforcement by the European Commission and in Germany also by the German Federal Cartel Office (Bundeskartellamt). Limitations are also imposed by media regulation, for example, through media concentration rules under the Interstate Broadcasting Treaty (RStV).
The Group has in the past been restricted in the strategic development of its business on the basis of antitrust laws and may be subject to a heightened level of antitrust scrutiny.
Certain of the Group's prospective disposals, acquisitions and cooperations with other media companies are subject to review by antitrust authorities. This review may lead to time-consuming and costly antitrust proceedings and no guarantee can be made that approval will be granted. For example, the establishment of a planned joint video-on-demand platform of ProSiebenSat.1 Media AG and Mediengruppe RTL was prohibited in 2011 due to the alleged dominant position of both companies in the television advertising market.
Antitrust laws may also impact the Group's operational development, in particular as higher regulatory standards can be imposed on the ProSiebenSat.1 Group as a "market-dominant undertaking". In 2007, the ProSiebenSat.1 Group was fined EUR 120 million by the German Federal Cartel Office for a rebate and discount scheme for advertising sales operated by SevenOne Media; litigation with third parties evolving from this decision of the Federal Cartel Office is still ongoing (see "The Group is subject to risks from current or future legal and administrative proceedings.").
Moreover, in May 2010, the German Federal Cartel Office initiated an investigation against the ProSiebenSat.1 Group based on its suspicion of violations of the cartel prohibition under the German Act Against Restraints on Competition (Gesetz gegen Wettbewerbsbeschränkungen) by the Group's agreement with the RTL Group in the years 2005/2006 to encrypt substantial parts of their digital free-TV in SD quality programming demanding
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additional fees. The ProSiebenSat.1 Group and RTL Group were each fined EUR 27.5 million and agreed on a settlement under which they committed to broadcast their free-TV programs in standard quality without encoding for at least 10 years, starting in 2013. In addition to the fines imposed by the German Federal Cartel Office, the Group could be subject to damage claims by third parties.
There may also be antitrust violations and/or proceedings, in Germany or in other jurisdictions, relating to companies in which the Group holds a minority participation, i.e., where it does not control the relevant companies. In August 2012, the Swiss antitrust authority, WEKO, initiated a preliminary investigation into Goldbach Media Group AG, a TV- and radio marketing business and the majority shareholder of Goldbach Media Group (Switzerland) AG, in which the ProSiebenSat.1 Group holds a minority interest of around 23 %. The Group, being a shareholder, could be affected by any fines or orders issued by the competent authorities. Moreover, the ProSiebenSat.1 Group will not necessarily be able to control future compliance with orders and antitrust laws in its minority participations.
The Group is subject to risks from current or future legal and administrative proceedings.
Various companies of the ProSiebenSat.1 Group are involved in administrative proceedings and litigation and are therefore exposed to numerous risks. Litigation and regulatory proceedings are inherently unpredictable and can be costly. Provisions are not always made or may not cover the entire cost, in particular, if the Issuer substantially misjudges the final outcome of lawsuits against the Issuer or its subsidiaries. The Issuer currently deems the following proceedings in particular to bear a risk of having material adverse effects on the Group's business, financial condition, results of operations and cash flows.
A legal action by RTL 2 Fernsehen GmbH & Co. KG and El Cartel Media GmbH & Co. KG against SevenOne Media GmbH and SAT.1 Satelliten Fernsehen GmbH, ProSieben Television GmbH, kabel eins Fernsehen GmbH and N24 Gesellschaft für Nachrichten und Zeitgeschehen mbH (the latter no longer being part of the ProSiebenSat.1 Group) has been pending before the Dusseldorf regional court (Landgericht Düsseldorf) since November 10, 2008. Parallel proceedings were initiated against RTL Group's sales arm IP Deutschland GmbH and the RTL Group broadcasting companies, in which SevenOne Media and the ProSiebenSat.1 Group broadcasting operators act as third-party defendants and interveners (Streitverkündete und Nebenintervenienten). The plaintiffs are asserting disclosure and damages claims in connection with SevenOne Media's former pricing policy, which was challenged and fined by the Federal Cartel Office (Bundeskartellamt) in 2007 (see "Risk Factors – Legal, Regulatory and Taxation Risks – the ProSiebenSat.1 Group's business conduct, strategic cooperations and acquisitions are subject to regulatory restrictions. Such restrictions have led to interventions by authorities and civil litigation in the past and may do so in the future."). On April 13, 2012, the regional court of Dusseldorf resolved to obtain an expert appraisal on the probability of loss. An expert has since been appointed, however, it is not yet known when the report of the expert will be submitted. The outcome of the case cannot currently be predicted.
Based on Section 32a of the German Copyright Act (Urheberrechtsgesetz or UrhG) (so-called "bestseller clause"), various copyright owners of German TV series/shows are claiming additional remuneration against companies of the ProSiebenSat.1 Group, judicially and out of court. Because the German Copyright Act (UrhG) does not specify at what point such claims actually come into existence, the ProSiebenSat.1 Group has developed a model for additional payments in accordance with Section 32a of the German Copyright Act (UrhG). This model stipulates that the beneficiaries receive further specific payments when specific audience thresholds are reached. The ProSiebenSat.1 Group has negotiated and signed so-called "common rules on compensation" (Section 36 of the German Copyright Act (UrhG)) with the associations Bundesverband der Film- und Fernsehregisseure e.V. (BVR) and Bundesverband der Film- und Fernsehschauspieler (BFFS), each based on this model. Talks with one other association are ongoing. For this issue, a provision has been made (EUR 13.8 million as of 2013). There can, however, be no assurance that such provision will cover all amounts payable to copyright owners under the bestseller clause.
The ProSiebenSat.1 Group is exposed to risks in relation to tax audits and certain transactions. Moreover, the Group is exposed to risks in relation to its tax structure and changes in tax laws.
The ProSiebenSat.1 Group is subject to regular audits by the tax authorities. The German tax authorities are currently conducting a tax audit for the assessment periods 2001 through 2012. In addition, tax audits are currently being performed in The Netherlands (assessment periods 2008 through 2012) and UK (assessment period 2011). There is a risk that these audits or other tax audits could result in additional taxes payable by the Issuer or any of its subsidiaries, e.g., the tax authorities may challenge the factual or legal basis on which the tax returns were prepared or take views that are different from those reflected in such returns. The Group also depends on the validity and recognition of its tax structure and it is exposed to changes in the tax laws. For
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example, the ProSiebenSat.1 Group has in place a number of profit-and-loss transfer agreements between members of the Group, the validity and recognition of which is necessary for establishing a fiscal unity between these companies. Furthermore, changes in tax laws, which can have many different facets, and may also include an expansion of the applicable taxation base or an increase in tax rates, may increase corporate, trade and other taxes payable by the Group.
With respect to the Group's former SBS Media Group business in Sweden, the Swedish tax authorities completed the tax audit of a former Swedish branch of the ProSiebenSat.1 Group in December 2013. In the judgment of the tax authorities, interest payments connected to the financing of shares in the former TV and radio companies of the SBS Group are not tax deductible in Sweden. The concluding report of the tax audit therefore earmarks additional payments totaling approximately EUR 31.0 million for the assessment periods 2008 to 2011. According to the same judgment, additional payments of approximately EUR 11.0 million would be added to this for the 2012 assessment period, which has not yet been audited. The ProSiebenSat.1 Group appealed against the tax assessments within the deadline. In accordance with the request, a suspension of the enforcement of the assessments was granted at the end of January 2014. A judicial dispute before the Swedish Administrative Court seems likely.
If any of the above described risks materialize, substantial additional tax liabilities and ancillary cost could be incurred by the Group and/or the Group's overall tax burden may increase, which could materially adversely affect its business, financial condition, results of operations and cash flows.
Risks Related to the Financial Position of the Issuer and the ProSiebenSat.1 Group
The debt service obligations of the Issuer and the ProSiebenSat.1 Group could materially adversely affect their business, as well as their financial flexibility, financial condition, results of operations, cash flows and liquidity.
As of the date of this Prospectus, the ProSiebenSat.1 Group's borrowings are predominantly outstanding under a senior secured facilities agreement (the "Existing Credit Facilities Agreement") entered into by, inter alia, the Issuer and certain of its subsidiaries on June 26, 2007, as last amended and restated on May 30, 2013. The gross proceeds from the Notes are intended to be used to prepay in part the EUR 1,859.7 million term loan facility of the Existing Credit Facilities Agreement.
On April 2, 2014, the Issuer has entered into a EUR 2,000 million senior unsecured credit facilities agreement with each of the Managers or their affiliates for the purposes of refinancing the remainder of the indebtedness outstanding under the Existing Credit Facilities Agreement and financing general corporate purposes of the Group (the "New Credit Facilities Agreement"). As of the date of this Prospectus, after giving effect to the offering of the Notes and the application of the proceeds thereof and after giving effect to the closing of the New Credit Facilities Agreement, the ProSiebenSat.1 Group's term loans under the New Credit Facilities Agreement would amount to EUR 1,400 million. In addition, EUR 600 million revolving credit facilities are available to the Issuer under its New Credit Facilities Agreement. The aforementioned level of indebtedness of the ProSiebenSat.1 Group, together with the indebtedness outstanding under the Notes, could have material adverse consequences for prospective investors in the Notes. For example it could:
make it more difficult for the Issuer and the other members of the ProSiebenSat.1 Group to satisfy their debt obligations;
require the Issuer and the other members of the ProSiebenSat.1 Group to dedicate a substantial portion of their cash flows to payments to service its debt, thereby reducing the funds available to finance operations, capital expenditures (including expenditures in programming assets), working capital and other general corporate purposes of the ProSiebenSat.1 Group;
place the ProSiebenSat.1 Group at a competitive disadvantage compared to those competitors that have less debt;
limit the flexibility in planning for, or reacting to, changes in the industry and/or business opportunities;
adversely affect the public perception of the ProSiebenSat.1 Group and of its brand; and
impede the ability to obtain additional debt or equity financing, and increase the cost of those borrowings. 51
The aforementioned level of indebtedness could also make the Issuer and the other members of the ProSiebenSat.1 Group vulnerable to:
a downturn in operating performance;
larger than normal fluctuations or volatility in the cash flow of the ProSiebenSat.1 Group, particularly in light of the seasonality of its business;
a downturn in economic conditions; or
increased interest payments as the borrowings under the Existing Credit Facilities Agreement or, following the date on which the Existing Credit Facilities Agreement is repaid in full, which is expected to occur on or about the Issue Date, the New Credit Facilities Agreement bear interest at variable rates.
Furthermore, the ProSiebenSat.1 Group may incur substantial additional debt in the future in which case, the related risks would intensify.
Each of these risks related to the ProSiebenSat.1 Group's level of indebtedness may create material adverse effects on the ProSiebenSat.1 Group's business, financial condition, results of operations and cash flows.
If the cash flows of the ProSiebenSat.1 Group were not sufficient to meet its debt service requirements, holders of the Notes may not receive scheduled payments on the Notes in a timely manner or at all. An actual or impending inability to pay its debts and other obligations as they become due and payable could require the Issuer and the other members of the ProSiebenSat.1 Group to apply for the institution of insolvency proceedings.
The current dividend policy of the Issuer may limit its ability to meet its debt service obligations.
Dividends may only be paid out of the distributable profit (Bilanzgewinn) of the Issuer recorded in its separate financial statements prepared in accordance with the German Commercial Code (HGB). The German Commercial Code (HGB) accounting principles, applied in preparing the separate financial statements of the Issuer, differ from the IFRS accounting principles, on which the consolidated financial statements of the Issuer are based. The payment of dividends is subject to the approval of the shareholders of the Issuer in the annual general shareholders' meeting of the Issuer.
The Issuer currently aims to generally distribute approximately 80 % to 90 % of the underlying net income of the Group from continuing operations (see "General Information on the Issuer and the ProSiebenSat.1 Group – Selected Financial Information about the Issuer and the ProSiebenSat.1 Group - Additional Key Figures.") as dividend payments. The dividend proposal is made anew for each fiscal year. The Group's corporate development and the required capital base for growth initiatives and the current business prospects are taken into account. In addition, the Issuer may in the future make share repurchases, either in lieu or in addition to its current policy of returning capital to its shareholders.
Given the high level of dividend distribution to its shareholders or future share repurchases, the Issuer may not have sufficient funds to redeem the Notes upon their maturity. No assurance can be given that any alternatives, such as refinancing the Notes, reducing or delaying capital expenditures, selling assets or raising equity capital are available at all or at acceptable terms and whether those actions would yield sufficient funds to redeem the Notes.
The contractual terms and conditions of the Existing Credit Facilities Agreement and the New Credit Facilities Agreement impose restrictions on the business of the Issuer and its subsidiaries. Certain subsidiaries of the Issuer serve as collateral for the obligations under the Existing Credit Facilities Agreement.
The obligations under the Existing Credit Facilities Agreement are guaranteed by the Issuer and by the following subsidiaries of the Issuer: ProSiebenSat.1 TV Deutschland GmbH, SAT.1 Satelliten Fernsehen GmbH, ProSieben Television GmbH, kabel eins Fernsehen GmbH, P7S1 Erste SBS Holding GmbH, P7S1 Zweite SBS Holding GmbH, 9Live Fernsehen GmbH, ProSiebenSat.1 Digital & Adjacent GmbH, ProSiebenSat.1 Adjacent Holding GmbH and ProSiebenSat.1 Digital GmbH, P7S1 Broadcasting S.à. r.l., P7S1 Broadcasting Holding I B.V., P7S1 Broadcasting Holding II B.V., P7S1 Broadcasting Europe B.V. and P7S1 Nederland B.V. (the "Guarantors"). The Existing Credit Facilities Agreement contains restrictive undertakings which bind the Issuer and the Guarantors as obligors.
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These covenants restrict or limit, among other things, the ability of the Group to incur additional indebtedness, create liens, transfer or sell shares, merge or consolidate with other entities, and a number of intra-group transactions (in each case subject to a number of important exceptions and qualifications). Some of these undertakings are currently suspended, based on the fact that the ProSiebenSat.1 Group does not exceed a certain leverage ratio, but may apply in the future if the ProSiebenSat.1 Group's financial indebtedness were to exceed that certain leverage ratio. Furthermore, if the ProSiebenSat.1 Group exceeds certain leverage levels (which is currently not the case), a fixed percentage of the excess cash flow from the previous fiscal year must be used to repay the outstanding amounts under the Existing Credit Facilities Agreement, with the amount of this payment based on the ratio of consolidated net financial debt to consolidated EBITDA (as defined in the Existing Credit Facilities Agreement) and on an annual threshold of EUR 50 million, subject to certain conditions. In addition, the Existing Credit Facilities Agreement contains financial covenants that require the Issuer to maintain a maximum leverage ratio and a minimum interest coverage ratio.
The New Credit Facilities Agreement contains restrictive undertakings which will bind the Issuer and, in case a subsidiary of the Issuer has acceded to the New Credit Facilities Agreement as borrower, that subsidiary. These covenants restrict or limit, among other things, the ability of the Group to create liens, to dispose of assets or to incur additional financial indebtedness (except for the Issuer which is not restricted to incur additional financial indebtedness), in each case subject to a number of important exceptions and qualifications. Some of these undertakings will be suspended, if the ProSiebenSat.1 Group does not exceed a certain leverage ratio. In addition, the New Credit Facilities Agreement contains a financial covenant that will require the Issuer to maintain a maximum leverage ratio.
If the Issuer, or with respect to the Existing Credit Facilities Agreement, the Issuer or the Guarantors as obligors, were to breach any of these restrictive undertakings or financial covenants without curing such breach or obtaining a waiver from the lenders, as the case may be, they would be in default under the terms of the Existing Credit Facilities Agreement or, as the case may be, the New Credit Facilities Agreement. Such default could result in a default under other financing arrangements and could cause or permit the lenders to accelerate the relevant financing arrangements, whereby amounts owed under those arrangements would become due and payable immediately. The funds and assets of the ProSiebenSat.1 Group could be insufficient to repay such amounts and/or continue making payments to other creditors. Ultimately, the Issuer, the Guarantors and/or other subsidiaries within the ProSiebenSat.1 Group could be required to apply for the institution of insolvency proceedings.
Furthermore, the loans under the Existing Credit Facilities Agreement are secured with guarantees by the Guarantors, as well as share pledges over such Guarantors. If this security is enforced, the Issuer may lose key operating subsidiaries.
A change of control at the Issuer may entail significant negative consequences for the Group.
The Existing Credit Facilities Agreement and the New Credit Facilities Agreement contain a standard "change of control" clause, according to which any lender may demand repayment of all outstanding funds drawn down within a defined period if a person (acting alone or in agreement with others) acquires more than 50 % of the voting common stock of the Issuer. Pursuant to the Existing Credit Facilities Agreement, the lenders would have the same right, if a sale of all or substantially all of the business and/or assets of the Group taken as a whole were to take place.
No assurance can be made that the Issuer would be able to refinance its debt or that the ProSiebenSat.1 Group's assets would be sufficient to repay the loan amounts outstanding in which case the Issuer, the Guarantors and/or other members of the ProSiebenSat.1 Group could be required to apply for the institution of insolvency proceedings.
The facilities under the Existing Credit Facilities Agreement and the New Credit Facilities Agreement have a shorter maturity than the Notes. A refinancing of such facilities may not be possible.
All drawings under the Existing Credit Facilities Agreement (term loan and revolving credit facilities) will be due for repayment on July 3, 2018, unless they are extended or refinanced before such time. The Issuer expects to refinance and replace the Existing Credit Facilities Agreement on or about the Issue Date. All drawings under the New Credit Facilities Agreement (term loan and revolving credit facilities) would be due for repayment in April 2019, unless they are extended or refinanced before such time. The New Credit Facilities Agreement will also most likely need to be extended or refinanced as the capital needs are not expected to decline significantly in the future and revolving credit facilities will also be required for general corporate purposes, including funding the Group's fluctuating working capital. An extension or refinancing upon the credit facilities' maturity
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may not be available or may be so only on less favorable terms. If the Issuer were unable to refinance the loans under the New Credit Facilities Agreement, it could face liquidity problems which may impair the ability of the Issuer to make payments under the Notes to the respective holders. Ultimately, the Issuer and/or other members of the ProSiebenSat.1 Group could be required to apply for the institution of insolvency proceedings.
Exposure to rising interest rates and negative market values of derivatives transactions.
Most of the borrowings of the ProSiebenSat.1 Group are subject to variable interest rates. Given the existing level of debt, the associated interest rate risk exposure is significant. Any rise in the reference interest rate agreed upon for these loans would result in a higher interest rate payable by the Issuer and its relevant subsidiaries. To manage the interest rate risk, the Group has entered into interest rate swaps and options, but approximately 14 % of the drawn interest rate exposure (without consideration of drawdowns on the revolving credit facilities) remains unhedged (as of December 31, 2013). The Group has settled several interest rate swaps in April 2014. Generally, the Group enters into derivative transactions in order to manage its interest rate risk exposure, depending on prevailing market conditions. Furthermore, the Group expects to extend its outstanding term loans under its Existing Credit Facilities Agreement to April 2019 by closing the New Credit Facilities Agreement, whereas the Group's hedges expire in the first half of 2018 at the latest (unless they are extended). These interest rate risks, and the fact that hedging transactions envisioned by the Group's hedging strategy may not always be available at a reasonable cost in the future, could have a material adverse effect on the business, financial condition, results of operations and cash flows of the Issuer and/or other members of the ProSiebenSat.1 Group.
The Issuer intends to use the gross proceeds of the offering of the Notes to reduce the indebtedness outstanding under the Existing Credit Facilities Agreement. A reduction of the indebtedness outstanding under the Existing Credit Facilities Agreement may require the Issuer to terminate existing hedging agreements in order to avoid that the amount hedged under the hedging agreements exceeds the amount which is subject to interest rate fluctuations (over-hedging). Such termination may result in payment obligations of the ProSiebenSat.1 Group, depending, inter alia, on the market value of such hedging agreements.
Exposure to fluctuating currency exchange rates.
Revenues and income of the ProSiebenSat.1 Group are primarily generated in euros. However, the ProSiebenSat.1 Group enters into contracts or incurs costs denominated in various currencies other than euros and may not always be able to match revenues with costs denominated in the same currency. In particular, a material part of the financial obligations of the ProSiebenSat.1 Group for the acquisition of programming rights are denominated in USD, since a significant number of suppliers invoice their licensed programming in USD. If the currency in which the costs are denominated increases in value relative to the currency in which the revenues are denominated, operating margins decrease. The Group currently expects that approximately USD 2.0 billion will become due on these contracts within the next five years. To manage the foreign exchange risk, the Group primarily enters into foreign exchange forward contracts, but approximately 19 % of the foreign exchange exposure is unhedged (as of December 31, 2013). The ProSiebenSat.1 Group attempts to minimize its exposure to such foreign exchange risks through adequate (derivative) hedging instruments, although there can be no assurance that it will be able to successfully hedge its foreign exchange risks at reasonable cost in the future.
Any uncertainty in global financial markets could adversely affect the Group's access to and cost of financing. It may also increase risks in relation to the Group's counterparty exposure and investment propensity of its customers.
In the recent past, global financial markets were marked by continued uncertainty around the development of the global economy, in particular as it concerns the European sovereign debt crisis, the development of the Chinese economy and a slow recovery of the U.S. economy. Many corporations still report difficulties in obtaining requisite funding. Banks' continued financial difficulties and higher capital requirements, in particular on the basis of Basel III, which introduces new regulatory standards on bank capital adequacy, stress testing and market liquidity risk, may limit the availability of credit further and/or increase the cost of borrowing.
In addition, the Issuer has entered into a number of financial transactions with large financial institutions and could be affected by severe financial difficulties faced by these counterparties. There is a possibility that the ProSiebenSat.1 Group's lenders will be unable to fulfill commitments made under the Group's credit facilities, as was the case with two lenders in the past.
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A pronounced or prolonged negative performance of financial markets and declining availability of credit could have material adverse effects on the Group's business, financial condition, results of operations and cash flows.
Changes in accounting standards, methods or practices may have a negative impact on the Group's financial position and reported results.
The Group's consolidated financial statements are prepared in accordance with International Financial Reporting Standards as adopted by the European Union (IFRS) and the additional requirements of German commercial law pursuant to Section 315a para. 1 of the German Commercial Code (Handelsgesetzbuch or HGB). These accounting standards are subject to change and such changes may have a significant impact on the Group's accounting and may have material adverse effects on the Group's reported financial condition, results of operations and cash flows.
Risks Related to the Notes
An investment in the Notes involves certain risks associated with the characteristics of the Notes. Such risks could result in principal or interest not being paid on time or at all by the Issuer and/or a material impairment of the market price of the Notes which could lead to substantial losses the Holders would have to bear in the case of selling their Notes. The following is a description of risk factors in relation to the Notes.
Notes may not be a suitable investment for all investors.
Each potential investor in the Notes must determine the suitability of such investment in light of its own circumstances. In particular, each potential investor should:
(i) have sufficient knowledge and experience to make a meaningful evaluation of the Notes, the merits and risks of investing in the Notes and the information contained or incorporated by reference into this Prospectus;
(ii) have access to, and knowledge of, appropriate analytical tools to evaluate, in the context of its particular financial situation and the investment(s) it is considering, an investment in the Notes and the impact the Notes will have on its overall investment portfolio;
(iii) have sufficient financial resources and liquidity to bear all of the risks of an investment in the Notes, including where principal or interest is payable in one or more currencies, or where the currency for principal or interest payments is different from the potential investor's currency;
(iv) understand thoroughly the terms of the Notes; and
(v) be able to evaluate (either alone or with the help of a financial adviser) possible scenarios for economic, interest rate and other factors that may affect his investment and his ability to bear the applicable risks.
The Issuer's ability to fulfill its obligations under the Notes depends upon the future financial and operating performance of the ProSiebenSat.1 Group.
The Notes will be obligations of the Issuer only. The Issuer's ability to pay interest on the Notes and to redeem the Notes at maturity depends upon the future financial and operating performance of the Issuer and the other members of the ProSiebenSat.1 Group and upon their ability to renew or refinance borrowings or to raise additional equity capital. Prevailing economic conditions and financial, business and other factors, many of which are beyond ProSiebenSat.1 Group's control, will have an impact on the ability of the ProSiebenSat.1 Group to generate funds which in turn will affect the Issuer's ability to make the payments on the Notes. A significant drop in operating cash flow resulting from adverse economic conditions, competition or other uncertainties beyond ProSiebenSat.1 Group's control would increase the need for alternative sources of liquidity. If the ProSiebenSat.1 Group is unable to generate sufficient cash flow to meet the Issuer's debt obligations, the ProSiebenSat.1 Group will have to pursue one or more alternatives, such as:
reducing or delaying capital expenditures;
restructuring or refinancing debt, including the Notes;
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selling assets; or
obtaining additional debt or raising equity capital.
No assurance can be given that any of these alternatives could be accomplished on satisfactory terms, if at all, or that those actions would yield sufficient funds to redeem the Notes.
The Notes are effectively subordinated to the obligations under the Existing Credit Facilities Agreement and the related hedging transactions.
The obligations under the Notes are not guaranteed. In contrast, the obligations under the Existing Credit Facilities Agreement are guaranteed by the Issuer and by the Guarantors. Furthermore, the obligations under the Notes are not secured. In contrast, the obligations under the Existing Credit Facilities Agreement are secured by pledges over the shares in the Guarantors.
In addition, the Group has entered into hedging transactions in order to manage its interest rate risk arising under existing term loans in the amount of EUR 1,859.7 million under its Existing Credit Facilities Agreement. Several of such hedging transactions are also secured (on a pari passu basis with the obligations under the Existing Credit Facilities Agreement) by the same guarantees and in rem collateral as the obligations under the Existing Credit Facilities Agreement.
Therefore, although the Notes will rank equally to the obligations under the Existing Credit Facilities Agreement and the related hedging transactions, they will, however, be effectively subordinated to the obligations under the Existing Credit Facilities Agreement and the related hedging transactions to the extent such obligations are guaranteed or secured. In addition, the Notes will also rank effectively junior to any other debt that may be guaranteed by subsidiaries of the Issuer or secured by charging or pledging any assets of the ProSiebenSat.1 Group to secure such other debt.
The Issuer intends to use the gross proceeds which it receives from the issuance of the Notes against the indebtedness outstanding under the Existing Credit Facilities Agreement. Furthermore, the Issuer intends to repay the remainder of the indebtedness outstanding under the Existing Credit Facilities Agreement in full and to replace the Existing Credit Facilities Agreement by the New Credit Facilities Agreement on or about the Issue Date. The New Credit Facilities Agreement has been entered into between the Issuer and each of the Managers or their affiliates on April 2, 2014 for the purposes of refinancing and replacing the Existing Credit Facilities Agreement and financing general corporate purposes of the Group.
However, the closing of the New Credit Facilities Agreement has not yet occurred as of the date of this Prospectus. If the Existing Credit Facilities Agreement is ultimately refinanced and replaced by the New Credit Facilities Agreement, the aforementioned subordination of the Notes would cease as the New Credit Facilities Agreement is neither secured by in rem collateral nor guaranteed by subsidiaries of the Issuer. The Issuer furthermore intends to release the guarantees and in rem collateral for the related hedging transactions or to terminate such hedging transactions. Investors should note, however, that there can be no assurance that the closing of the New Credit Facilities Agreement will occur or that the release of the guarantees and in rem collateral for the related hedging transactions, or the termination of such hedging transactions, will occur.
Negative pledge and borrowings not classified as Capital Market Indebtedness.
Any borrowings that do not meet the definition of Capital Market Indebtedness (including but not limited to bank loans) are excluded from the negative pledge. Therefore, in any of these cases the Issuer is under no obligation to grant the Holders an equal or rateable security. Such transactions may reduce the amount recoverable by the Holders upon winding-up or insolvency of the Issuer.
The market value of the Notes could decrease if the creditworthiness of the ProSiebenSat.1 Group worsens.
If the likelihood that the Issuer will be in a position to fully perform all obligations under the Notes when they fall due decreases, for example, because of the materialisation of any of the risks regarding the ProSiebenSat.1 Group, the market value of the Notes will deteriorate. In addition, even if the likelihood that the Issuer will be in position to fully perform all obligations under the Notes when they fall due actually has not decreased, market participants could nevertheless have a different perception. In addition, the market participants' estimation of the creditworthiness of corporate debtors in general or debtors operating in the same business as the ProSiebenSat.1 Group could adversely change. If any of these risks occurs, third parties would only be willing to purchase
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Notes for a lower price than before the materialization of any such risk. Under these circumstances, the market value of the Notes could decrease.
Long-term Securities and Risk of Early Redemption.
The Notes will be redeemed on the Maturity Date. The Issuer is under no obligation to redeem the Notes at any time before this date. The Holders have no right to call for their redemption except upon the occurrence of a Change of Control Event or an Event of Default under the Notes.
The Notes may be redeemed at the option of the Issuer (in whole, but not in part) at the principal amount of the Notes plus accrued interest to the date fixed for redemption, (i) for reasons of taxation, if withholding taxes will be leviable on payments of principal or interest in respect of the Notes as a result of a future change of applicable laws, (ii) if 75 % or more of the aggregate principal amount of the Notes then outstanding have been redeemed following the occurrence of a Change of Control Event or (iii) if such redemption date does not fall earlier than 90 days prior to the Maturity Date. In the event that the Issuer exercises the option to redeem the Notes, the Holders might suffer a lower than expected yield and might not be able to reinvest the funds on the same terms.
If the Issuer exercises its right to voluntarily redeem the Notes, in whole but not in part, at the Early Call Redemption Amount, the Holders might not be able to reinvest the funds on the same terms.
A principal shareholder may exercise significant influence on the Issuer, without the Holders having the right to call for early redemption of the Notes.
The Issuer's articles of association provide that resolutions may be adopted by a simple majority of the votes cast, unless higher thresholds are required by law. Generally, a simple majority of the votes cast in the Issuer's shareholders' meeting is required to adopt a resolution, e.g., regarding the election and removal of supervisory board members or the use of the balance sheet profit. Due to the historically low attendance at shareholders' meetings, a principal shareholder holding significantly less than 50 % of the share capital of the Issuer may be able to direct the voting of 50 % of the share capital at a shareholders' meeting and it could adopt resolutions on significant matters adverse to the interests of the Holders.
Moreover, the Conditions of Issue only entitle the Holders to call for early redemption of the Notes, if any person or persons acting in concert acquire more than 50 % of the voting rights in the Issuer and a Rating Downgrade occurs. If no Rating Downgrade occurs within 120 days after the occurrence of the relevant Change of Control, the Holders will not be entitled to call for early redemption of the Notes despite the rise of a principal shareholder which has influence on the governance and development of the Group and whose interest may not be in line with the interests of the Holders.
No limitation on issuing further debt.
There is no restriction under the Conditions of Issue on the amount of debt which the Issuer may issue ranking equal to the obligations under or in connection with the Notes. Such issuance of further debt may reduce the amount recoverable by the Holders upon insolvency or winding-up of the Issuer or may increase the likelihood that the Issuer may or shall defer payments of the principal amount or interest under the Notes.
Liquidity risk.
There is currently no secondary market for the Notes. Application has been made for the Notes to be admitted to trading on the EU-regulated market segment of the Luxembourg Stock Exchange and to be listed on the official list of the Luxembourg Stock Exchange. There can, however, be no assurance that a liquid secondary market for the Notes will develop or, if it does develop, that it will continue. In an illiquid market, an investor may not be able to sell his Notes at any time at fair market prices. The possibility to sell the Notes might additionally be restricted by country specific reasons.
Fixed rate notes.
The Notes bear interest at a fixed rate. A holder of a fixed interest rate note is exposed to the risk that the price of such note may fall because of changes in the market interest rate. While the nominal interest rate of a fixed interest rate note is fixed during the life of such note or during a certain period of time, the current interest rate on the capital market (market interest rate) typically changes on a daily basis. If the market interest rate changes, the price of such note changes in the opposite direction. If the market interest rate increases, the price of such
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note typically falls, until the yield of such note is approximately equal to the market interest rate. If the market interest rate falls, the price of a fixed interest rate note typically increases, until the yield of such note is approximately equal to the market interest rate. Holders should be aware that movements of the market interest rate can adversely affect the price of the Notes and can lead to losses for the Holders if they sell Notes during the period in which the market interest rate exceeds the fixed interest rate of the Notes.
Currency Risk.
The Notes are denominated in euro. If such currency represents a foreign currency to a Holder, such Holder is particularly exposed to the risk of changes in currency exchange rates which may affect the yield of such Notes measured in the Holder's currency. Changes in currency exchange rates result from various factors such as macro-economic factors, speculative transactions and interventions by central banks and governments.
In addition, government and monetary authorities may impose (as some have done in the past) exchange controls that could adversely affect an applicable currency exchange rate. As a result, investors may receive less interest or principal than expected, or no interest or principal.
Because the Global Notes are held by Clearstream, investors will have to rely on their procedures for transfer, payment and communication with the Issuer.
The Notes will be represented by one or more Global Notes. Such Global Notes will be deposited with Clearstream Banking AG, Mergenthalerallee 61, 65760 Eschborn, Germany. Investors will not be entitled to receive definitive Notes. Clearstream will maintain records of the beneficial interests in the Global Notes. While the Notes are represented by one or more Global Notes, investors will be able to trade their beneficial interests only through Clearstream and the Issuer will discharge its payment obligations under the Notes by making payments, or causing payments to be made, to Clearstream for distribution to their account holders. A holder of a beneficial interest in a Global Note must rely on the procedures of Clearstream to receive payments under the Notes. The Issuer has no responsibility or liability for the records relating to, or payments made in respect of beneficial interests in the Global Notes.
The market price of the Notes may change unfavorably for the Holders.
The development of market prices of the Notes depends on various factors, such as changes of market interest rate levels, the policies of central banks, overall economic developments, taxation of investments in securities, inflation rates or the lack of or excess demand for the Notes. The Holders are therefore exposed to the risk of an unfavourable development of market prices of their Notes which materializes if the Holders sell the Notes prior to the final maturity. If a Holder decides to hold the Notes until final maturity, the Issuer is required to redeem the Notes at the amount set out in the Conditions of Issue.
In case of certain Events of Default, the Notes held by a Holder will only be redeemable if Holders of at least 10 % in aggregate principal amount of Notes declare the Notes due and payable.
The Conditions of Issue provide that the Notes held by a Holder will, upon the occurrence of certain Events of Default, only be redeemable, if Holders of at least 10 % in aggregate principal amount of the then outstanding Notes declare the Notes due and payable. Holders should therefore be aware that, as a result, they may not be able to accelerate the Notes upon the occurrence of certain Events of Default, unless the required quorum of Holders also declares their Notes due and payable.
The Conditions of Issue, including the terms of payment of principal and interest, can be amended by majority resolution and any such majority resolution will be binding for all Holders.
The Conditions of Issue and the German Act on Debt Securities provide that Holders can, by majority resolution, consent to amendments of the Conditions of Issue. Resolutions shall be passed by a majority of not less than 50.1 % of the votes cast; provided, however, that resolutions providing for certain material amendments require a higher majority. Although no obligation to make any payment or render any other performance may be imposed on any Holder by majority resolution, Holders may, by majority resolution, among other things agree to:
change the due date for payment of interest and the reduction, or the cancellation, of interest;
change the maturity date of the Notes or reduce the principal amount payable on the Notes;
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convert the Notes into, or exchange the Notes for, shares or other securities or obligations;
change the currency of the Notes;
the waiver or restriction of Holders' rights to terminate the Notes; or
subordinate some or all of the claims under the Notes in an insolvency proceeding.
Under the German Act on Debt Securities and the Conditions of Issue, amendments described in the bullet points above require a majority resolution of Holders holding in the aggregate not less than 75 % of the votes cast in respect of the Notes. Subject to contestation in court, any such majority resolution will be binding on all Holders.
As a result, a Holder is subject to the risk of being outvoted and losing rights towards the Issuer against his will in the event Holders holding a sufficient aggregate principal amount of Notes agree to amend the Conditions of Issue by majority vote in accordance with the Conditions of Issue and the German Act on Debt Securities.
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USE OF PROCEEDS
In connection with the offering of the Notes, the Issuer will receive gross proceeds of approximately EUR [●]. Costs and expenses of the offering of the Notes in an amount of approximately EUR 400,000 and the underwriting commission of up to 0.565 % of the principal amount of the Notes will be paid separately by the Issuer. The Issuer intends to use the gross proceeds to prepay in part the indebtedness outstanding under the Existing Credit Facilities Agreement, under which the Managers (except for Société Générale) or affiliates thereof are lenders, together with any accrued interests and any other amounts thereunder.
The issue proceeds will be included in the Pricing Notice (together with the issue price, the aggregate principal amount, the number of Notes, the interest rate and the yield of the Notes) which will be published on the website of the Luxembourg Stock Exchange (www.bourse.lu) on or prior to the Issue Date of the Notes.
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GENERAL INFORMATION ON THE ISSUER AND THE PROSIEBENSAT.1 GROUP
Corporate History, Formation, Company Name, Registered Office, Fiscal Year and Duration of the Issuer
On June 12, 1986, the predecessor of ProSieben Media Aktiengesellschaft, Eureka Television GmbH, Munich, was founded, which was entered into the commercial register of the local court of Munich (Amtsgericht München) under registration number 80438 on December 19, 1986. It operated the TV station Eureka TV, the forerunner of ProSieben. Eureka Television GmbH changed its legal name to PRO 7 Television GmbH upon resolution of its shareholders' meeting of February 8, 1989, which was entered into the commercial register of the local court of Munich (Amtsgericht München) on March 1, 1989. On January 10, 1991, PRO 7 Television GmbH's shareholders' meeting resolved to change its registered seat to Unterföhring, which was entered into the commercial register of the local court of Munich (Amtsgericht München) on June 7, 1991. Upon resolution of its shareholders' meeting of November 21, 1995, PRO 7 Television GmbH changed its legal name and form to PRO SIEBEN Television Aktiengesellschaft, which was entered into the commercial register of the local court of Munich (Amtsgericht München) under registration number 111532 on December 19, 1995. It subsequently changed its legal name to ProSieben Media Aktiengesellschaft by resolution of its general shareholders' meeting of July 5, 1996, which was entered into the commercial register of the local court of Munich (Amtsgericht München) on July 30, 1996. On December 18, 1996, KABEL 1 Holding Fernsehen GmbH merged into ProSieben Media Aktiengesellschaft.
In June 2000, ProSieben Media Aktiengesellschaft and SAT.1 Holding GmbH announced their intent to combine the four stations SAT.1, ProSieben, Kabel 1 and N24, together with all their subsidiaries and affiliates. ProSieben Media Aktiengesellschaft and SAT.1 Holding GmbH were merged into Oppenheim Aktiengesellschaft on October 2, 2000, on the basis of a merger agreement entered into on July 10, 2000, and resolutions of ProSieben Media Aktiengesellschaft's and Oppenheim Aktiengesellschaft's general shareholders' meetings and SAT.1 Holding GmbH's shareholders' meeting, each on August 22, 2000.
Oppenheim Aktiengesellschaft was founded on November 16, 1998, and was registered with the commercial register of the local court of Düsseldorf (Amtsgericht Düsseldorf) on November 20, 1998. On January 21, 1999, Oppenheim Aktiengesellschaft's general shareholders' meeting resolved to change its registered seat to Munich, which was entered into the commercial register of the local court of Munich (Amtsgericht München) on February 10, 1999. On July 10, 2000, the general shareholders' meeting of Oppenheim Aktiengesellschaft resolved, inter alia, to change the Issuer's legal name to ProSiebenSAT.1 Media Aktiengesellschaft, which was entered into the commercial register of the local court of Munich (Amtsgericht München) on August 17, 2000. Upon resolution of the general shareholders' meeting of May 31, 2001, the Issuer's legal name was changed to ProSiebenSat.1 Media AG, which was entered into the commercial register of the local court of Munich (Amtsgericht München) on June 18, 2001.
As of the date of the Prospectus, the Issuer's legal name is ProSiebenSat.1 Media AG. The Issuer's commercial name is "ProSiebenSat.1". The Issuer's registered office is in Unterföhring, Germany. The Issuer is registered in the commercial register of the local court of Munich (Amtsgericht München) under HRB 124169. Its business address is: ProSiebenSat.1 Media AG, Medienallee 7, 85774 Unterföhring, Germany. The Issuer can be reached by telephone at +49 89 9507 10.
As a stock corporation established under German law, ProSiebenSat.1 Media AG is subject to the German Stock Corporation Act (Aktiengesetz). The Issuer's fiscal year ends on December 31 of each calendar year. The Issuer was established for an indefinite term.
Corporate Purpose
Pursuant to Section 3 of the articles of association, the corporate purpose (Unternehmensgegenstand) of ProSiebenSat.1 Media AG is to organize broadcast television programs following the issuing of any licenses or permits which may be required under media law and to procure, manufacture and sell film and television productions and to purchase and grant rights of all kinds, as well as merchandising and multimedia business.
The Issuer is entitled to carry out all transactions and actions which appear appropriate to serve the objects of the Issuer, in particular to procure, perform and market services of all kinds within the field of electronic communications and to operate movie theaters.
The Issuer may establish branch offices in Germany and abroad, may establish or purchase other corporations or hold participating interests in and manage such other corporations or limit itself to the administration of the
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participating interest and may enter into inter-company agreements. The Issuer is also entitled to carry out its business activity through subsidiaries, through companies in which the Issuer holds a participating interest and through joint ventures. It may spin off parts of its enterprise to group companies or transfer the use thereof to group companies. The Issuer may also restrict itself to administering its own assets.
Group Structure
The Issuer is the holding company of the Group. As of the date of the Prospectus, the Issuer has around 133 direct and indirect fully consolidated subsidiaries.
The following chart sets forth a summary of important subsidiaries of the Issuer, all of which are wholly owned by the Issuer, as of the date of the Prospectus.
Auditors
The auditor of ProSiebenSat.1 Media AG for the fiscal years ended December 31, 2012 and December 31, 2013 was KPMG AG Wirtschaftsprüfungsgesellschaft, Ganghoferstraße 29, 80339 Munich, ("KPMG"), which is a member of the German Chamber of Auditors (Wirtschaftsprüferkammer). KPMG audited in accordance with Section 317 of the German Commercial Code (HGB) the consolidated financial statements of ProSiebenSat.1 Media AG for the fiscal years ended December 31, 2012 and December 31, 2013, both prepared in accordance with International Financial Reporting Standards as adopted by the European Union ("IFRS") and the additional requirements of German commercial law pursuant to Section 315a para. of the German Commercial Code (Handelsgesetzbuch), and which are both incorporated by reference into this Prospectus. KPMG issued an unqualified audit report in each case.
Selected Financial Information about the Issuer and the ProSiebenSat.1 Group
The following tables set out the key financial information about the Issuer and the ProSiebenSat.1 Group derived from the Issuer's audited consolidated financial statements as of and for the years ended December 31, 2013 and December 31, 2012.
These consolidated financial statements were prepared in accordance with IFRS and the additional requirements of German commercial law pursuant to Section 315a para. 1 of the German Commercial Code (Handelsgesetzbuch or HGB).
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KPMG AG Wirtschaftsprüfungsgesellschaft audited the consolidated financial statements for ProSiebenSat.1 Media AG as of and for the years ended December 31, 2013 and December 31, 2012 and issued in each case an unqualified auditor's report.
Where financial data in the tables below is labeled "audited", this means that it was taken or derived from these audited consolidated financial statements. The label "unaudited" is used in the tables below to indicate financial data that was taken or derived from a source other than the audited consolidated financial statements mentioned above. Some of the financial and performance indicators including Performance Measures reproduced below were taken from the accounting records of the ProSiebenSat.1 Group and are unaudited.
In the periods under review, the ProSiebenSat.1 Group disposed of and classified as held for sale a number of its business activities, including its businesses in Northern and Eastern Europe, which resulted in substantial changes to the Group's financial statements and segment reporting. The ProSiebenSat.1 Group's disposed activities in Northern Europe and sold activities in Eastern Europe are reported as discontinued operations starting at the end of fiscal year 2012. In the tables below, figures for fiscal years 2013 and 2012 are derived from the audited consolidated financial statements for 2013 and 2012 and show the disposed activities in Northern Europe, as well as the activities in Eastern Europe as discontinued operations.
The following selected financial information and operating data below should be read, in particular, in conjunction with the audited consolidated financial statements of the Issuer for the years ended December 31, 2013 and December 31, 2012, which are incorporated into this Prospectus by reference.
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Consolidated Income Statement Data
For the year ended December 31, 2013 2012 (EUR in millions)* (audited) Continuing Operations Revenues ...... 2,605.3 2,356.2 Cost of sales ...... (1,431.8) (1,266.4) Gross profit ...... 1,173.5 1,089.8 Selling expenses ...... (243.5) (229.9) Administrative expenses ...... (285.7) (243.9) Other operating expenses ...... (0.8) (28.6) Other operating income ...... 25.4 13.4 Operating profit (EBIT) ...... 668.9 600.9 Interest and similar income ...... 6.5 3.0 Interest and similar expenses ...... (135.0) (156.2) Interest result ...... (128.5) (153.2) Income from investments accounted for using the equity method ...... 5.1 10.3 Other financial result ...... (18.6) (1.5) Financial result ...... (142.0) (144.4) Profit before income taxes ...... 526.9 456.5 Income taxes ...... (162.2) (127.4) Profit for the period from continuing operations ...... 364.6 329.1 Discontinued Operations Profit from discontinued operations (net of income taxes) ...... (47.6) (30.2) Profit for the period ...... 317.0 298.8 Attributable to shareholders of ProSiebenSat.1 Media AG ...... 312.1 295.0 Non-controlling interests ...... 4.9 3.9
* Columns may not add due to rounding and the omission of certain line items.
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Condensed Consolidated Balance Sheet Data
As of December 31, 2013 2012 (EUR in millions)* (audited) Intangible assets ...... 1,164.5 1,062.6 Property, plant and equipment ...... 204.8 198.7 Investments accounted for using the equity method .. 15.9 5.3 Programming assets ...... 1,064.6 1,110.7 Other non-current assets ...... 85.6 89.9 Total non-current assets ...... 2,535.4 2,467.1 Programming assets ...... 137.1 166.2 Inventories ...... 1.3 0.7 Other current assets ...... 417.8 404.9 Cash and cash equivalents ...... 395.7 702.3 Assets held for sale ...... 68.8 1,671.4 Total current assets ...... 1,020.7 2,945.5 Total assets ...... 3,556.0 5,412.6 Subscribed capital ...... 218.8 218.8 Capital reserves ...... 585.7 581.6 Consolidated equity generated ...... (55.8) 833.4(1) Treasury Shares ...... (37.6) (47.4) Other equity(2) ...... (137.3) (90.7)(1) Total equity attributable to shareholders of ProSiebenSat.1 Media AG ...... 573.9 1,495.8 Non-controlling interests ...... 10.2 5.0 Total equity ...... 584.1 1,500.8 Non-current financial liabilities ...... 2,088.5 2,659.2 Other non-current liabilities ...... 4.4 4.4 Non-current provisions ...... 19.3 18.1 Deferred tax liabilities ...... 81.5 66.7 Total non-current liabilities ...... 2,193.7 2,748.4 Current financial liabilities ...... 438.0 589.1 Other current liabilities ...... 223.2 202.6 Current provisions ...... 76.9 73.1 Liabilities associated with assets held for sale ...... 40.2 298.6 Total current liabilities ...... 778.3 1,163.4 Total equity and liabilities ...... 3,556.0 5,412.6
* Columns may not add due to rounding and the omission of certain line items.
(1) Figures were extracted from the 2013 audited consolidated financial statements. In 2013, the ProSiebenSat.1 Group applied IAS 19 "Employee benefits" (revised 2011) for the first time. Under the revised standard, actuarial gains and losses are recognized as remeasurements in other comprehensive income without being reclassified to profit and loss in future periods. Since the ProSiebenSat.1 Group previously recognized these gains or losses in profit and loss when they occurred, the retrospective application of IAS 19 (revised 2011) resulted in an increase of consolidated equity generated as of December 31, 2012, from EUR 829.6 million as reported in the audited 2012 consolidated financial statements by EUR 3.8 million to EUR 833.4 million as reported as comparative figure in the 2013 audited consolidated financial statements. Correspondingly, other equity decreased by EUR 3.8 million from EUR -86.9 million as reported in the audited 2012 consolidated financial statements to EUR -90.7 million as reported as comparative figure in the 2013 audited consolidated financial statements.
(2) Includes balance sheet items Accumulated other comprehensive income from continuing operations, Accumulated other comprehensive income associated with assets and liabilities held for sale, and Other equity.
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Condensed Consolidated Statement of Cash Flow Data
For the year ended December 31,
2013 2012 (EUR in millions)* (audited) Cash flow from operating activities ...... 1,406.8 1,565.2 Thereof from continuing operations ...... 1,348.3 1,202.1 Thereof from discontinued operations ...... 58.4 363.1 Cash flow from investing activities ...... 163.6 (1,263.7) Thereof from continuing operations ...... (1,018.3) (945.8) Thereof from discontinued operations ...... 1,181.9 (317.9) Cash flow from financing activities ...... (1,955.5) (31.7) Thereof from continuing operations ...... (1,953.2) (30.9) Thereof from discontinued operations ...... (2.3) (0.8)
Cash and cash equivalents at end of reporting period 404,5 792.6 Thereof of continuing operations ...... 395.7 702.3 Thereof classified under assets held for sale ...... (8.8) (90.4)
* Columns may not add due to rounding and the omission of certain line items.
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Additional Key Figures
The ProSiebenSat.1 Group uses the performance measures recurring EBITDA (i.e., EBITDA adjusted for income or expense items, which in management's view are non-recurring, see also footnote (1)(c) below), recurring EBITDA margin, EBITDA, underlying net income, free cash flow, net financial debt and leverage ratio (as defined below) in evaluating the performance of its business (together, the "Performance Measures"). For the evaluation of its operating performance, the Group primarily uses recurring EBITDA as the relevant measure. The Group believes that the Performance Measures are useful in evaluating its operating performance, level of indebtedness and cash flow generation because a number of companies, in particular companies in the television business, also publish these or similar figures as key performance indicators. However, the Performance Measures are not recognized as measures under IFRS or the German Commercial Code (HGB) and should not be considered as substitutes for figures on results before taxes, net earnings, cash flow from operating activities or other income statement, cash flow or balance sheet data, as determined in accordance with IFRS, or as measures of profitability or liquidity. The Performance Measures do not necessarily indicate whether cash flow will be sufficient or available for the ProSiebenSat.1 Group's cash requirements (including debt service), and they may not necessarily develop in line with the Group's operating results. The Performance Measures are not meant to be indicative of future results. Because not all companies calculate these Performance Measures in the same way, the Group's presentation of the Performance Measures is not necessarily comparable with similarly-titled measures used by other companies. The following presents a summary of certain additional key figures for the periods shown.
For the year ended December 31, 2013 2012 (EUR in millions, unless otherwise indicated)* (unaudited, unless otherwise indicated) Recurring EBITDA(1) ...... 790.3 744.8 Recurring EBITDA margin (%) ...... 30.3 31.6 EBITDA(2) ...... 757.8 680.4 Consolidated net profit from continuing operations attributable to shareholders of ProSiebenSat.1 Media AG(3) ...... 359.5(a) 324.7(a) Underlying net income(4) ...... 379.7 355.5 Free cash flow(5) ...... 1,570.4(a) 301.5(a) Thereof from continuing operations ...... 330.1(a) 256.3(a) Thereof from discontinued operations ...... 1,240.3 (a) 45.2(a) Net financial debt(6) ...... 1,446.3(7) 1,780.4(8) Leverage ratio(9) ...... 1.8(10) 2.0(11)
* Columns may not add due to rounding and the omission of certain line items.
(a) Audited.
(1) Earnings before interest, taxes, depreciation and amortization, calculated on the basis of continuing operations, adjusted for non-recurring items. The following table shows a reconciliation of Recurring EBITDA:
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For the year ended December 31,
2013 2012
(EUR in millions)*
(audited, unless otherwise indicated)
Profit for the period from continuing operations ...... 364.6 329.1 Taxes ...... 162.2 127.4 Profit before income tax ...... 526.9 456.5 Financial result ...... (142.0) (144.4) Operating Profit (EBIT) ...... 668.9 600.9 Depreciation and amortization ...... 88.9 79.5 EBITDA ...... 757.8(b) 680.4(b) Non-recurring items(c)...... 32.6(b) 64.4(b) Recurring EBITDA ...... 790.3(b) 744.8(b)
* Columns may not add due to rounding and the omission of certain line items.
(b) Unaudited.
(c) Non-recurring expenses are netted against non-recurring income. In 2013, non-recurring items primarily resulted from acquisitions and due diligence costs in the Digital & Adjacent segment, as well as from a EUR 7.6 million increase in provisions for additional payments to bestseller copyright owners and minor reorganizations. In fiscal year 2012, non- recurring items primarily comprised expenses of EUR 27.7 million related to the antitrust proceedings concluded in the fourth quarter of fiscal year 2012, management consulting fees of EUR 10.8 million related to the Group's business strategy and a EUR 5.8 million increase in provisions for additional payments to bestseller copyright owners.
(2) Earnings before interest, taxes, depreciation and amortization, calculated on the basis of continuing operations.
(3) Profit for the period attributable to shareholders of ProSiebenSat.1 Media AG minus profit from discontinued operations attributable to shareholders of ProSiebenSat.1 Media AG.
(4) Consolidated net profit from continuing operations attributable to shareholders of ProSiebenSat.1 Media AG adjusted for special items, i.e., before the effects of purchase price allocation and non-cash currency valuation effects. In respect of 2012 and 2013 also before expenses incurred in connection with the antitrust proceedings. The Issuer currently aims to generally distribute approximately 80 % to 90 % of the Group's underlying net income from continuing operations as dividend payments. The following table shows a reconciliation of consolidated net profit from continuing operations attributable to shareholders of ProSiebenSat.1 Media AG to underlying net income from continuing operations:
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For the year ended December 31,
2013 2012
(EUR in millions)*
(unaudited)
Consolidated net profit from continuing operations attributable to shareholders of ProSiebenSat.1 Media AG...... 359.5 324.7 Special items ...... 20.2 30.8 Thereof amortization from purchase price allocations (after tax) ...... 5.4 3.1 Thereof impairments in connection with original purchase price allocations (after tax) ...... - - Thereof fine in connection with antitrust proceedings ...... - 27.7 Thereof impairment Ventures non-controlling interests Q4 2013 ...... 2.4 - Thereof impairment of ZeniMax ...... 12.4 - Underlying net income ...... 379.7 355.5
* Columns may not add due to rounding and the omission of certain line items.
(5) The total of cash flow from operating activities and cash flow from investing activities.
(6) Calculated as total loans and borrowing minus cash and cash equivalents and current financial assets and excluding finance leases.
(7) After reclassification of cash and cash equivalents from the Eastern European business.
(8) Including the discontinued operations in Eastern Europe, net debt as of December 31, 2013 would have been EUR 1,437.5 million. Excluding the discontinued operations in Eastern Europe and Northern Europe, net debt as of December 31, 2012 would have been EUR 1,870.8 million. Before reclassification of cash and cash equivalents from the Northern and Eastern European business.
(9) The ratio of net financial debt to recurring EBITDA, in each case calculated on the basis of the preceding twelve months.
(10) After reclassification of cash and cash equivalents from the Eastern European business. Adjusted for LTM recurring EBITDA contribution from the Northern and Eastern European business.
(11) Including the discontinued operations in Northern Europe that were sold in December 2012 with completion of the sale pending as of December 31, 2012 and held for sale operations in Eastern Europe recorded as discontinued operations. Before reclassification of cash and cash equivalents from the Northern and Eastern European business.
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Management and Administrative Bodies
Overview
The principal corporate bodies of the Issuer are the executive board (Vorstand), the supervisory board (Aufsichtsrat) and the shareholders' meeting (Hauptversammlung). The respective rights and responsibilities of these bodies are set forth in the German Stock Corporation Act (Aktiengesetz), the Issuer's articles of incorporation (Satzung) and the internal rules of procedure (Geschäftsordnung) for the executive board and the supervisory board.
Executive Board
The executive board is responsible for managing the business of the Issuer and representing the Issuer in dealings with third parties. The Issuer is legally represented by two members of the executive board or by one member of the executive board acting jointly with an executive officer vested with special power of representation under German law (Prokurist). The supervisory board may determine that members of the executive board have sole and individual authority to represent the Issuer.
The supervisory board appoints the members of the executive board for a term of up to five years. A repeated appointment or extension of their term of office (in each case for a maximum of five years) is permissible. The supervisory board can dismiss a member of the executive board before the expiry of his/her term of office if an important reason (wichtiger Grund) arises, e.g., generally, a gross breach of duty or in case of a vote of no- confidence against a particular executive board member by the general shareholders' meeting.
The executive board must report regularly to the supervisory board on the proposed corporate strategy and other strategic matters regarding the future group management, profitability, business development (earnings, financial position and assets position), risk position and risk management as well as on transactions that could have a significant effect on the Issuer's profitability or liquidity. The executive board also reports to the chairman of the supervisory board any other matter of importance. For certain types of transactions the executive board needs the consent of the supervisory board. The supervisory board has issued internal rules of procedures that are binding for the executive board. Such internal rules of procedure stipulate legal acts and transactions that may only be effected with the consent of the supervisory board. The supervisory board may also issue its consent in the form of a general authorisation for a category of specific transactions.
The current members of the Issuer's executive board are:
Member Responsibility Other relevant positions outside the Issuer
Thomas Ebeling Chief Executive Officer (CEO) - Bayer AG, Leverkusen (supervisory board member) ProSiebenSat.1 TV Deutschland, Pay- TV, Group Content, Group Program - Lonza Group AG, Basel (member Strategy & Development, Sales & of the board of directors Marketing, Strategy & Operations, (Verwaltungsrat)) Corporate Communication
Axel Salzmann Chief Financial Officer (CFO) - Deutsches Rechnungslegungs Standards Committee e.V. (DRSC) Group Operations & IT, Group (member of the administrative Controlling, Group Finance and Investor board) Relations, Accounting & Taxes, Internal Audit, Corporate Procurement, - Salzmann Consulting oHG (partner) Corporate Real Estate
Conrad Albert Legal, Distribution, Regulatory Affairs, - Gesellschaft zur Verwertung der Public Affairs, International Free-TV Urheber- und Leistungsschutzrechte CEE von Medienunternehmen mbH (VG Media GmbH) (vice chairman of the advisory council)
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Dr. Christian Wegner Digital & Adjacent, Online Video, None Online Games, Digital Commerce, Music
Heidi Stopper Human Resources, Compensation & Macro Media – Hochschule für Medien Benefits, HR Training, Talent und Kommunikation (Director of the Management, Recruiting & OD, Labor curatorship) Law, Freelance Management
The business address of each of the members of the executive board is c/o ProSiebenSat.1 Media AG, Medienallee 7, 85774 Unterföhring, Germany.
There are no conflicts of interest or potential conflicts of interest between the private interests of the members of the executive board and their duties vis-à-vis the Issuer.
Supervisory Board
The supervisory board appoints the members of the executive board and has the right to dismiss such members for cause. The supervisory board advises the executive board on managing the Issuer and supervises its business conduct. In accordance with the German Stock Corporation Act (Aktiengesetz), the supervisory board does not have the right to conduct business itself. According to the internal rules of procedures of the executive board, the executive board must, however, procure the consent of the supervisory board for certain business transactions, usually before carrying out the relevant transaction.
In accordance with the Issuer's articles of association and Sections 95 and 96 of the German Stock Corporation Act (AktG), the supervisory board consists of nine members, who are elected by the shareholders at the general shareholders' meeting. Currently, the supervisory board counts only seven members as Mr. Gregory Dyke resigned as member of the supervisory board with effect as of May 11, 2013 and Mr. Fred Th. J. Arp resigned as member of the supervisory board with effect as of October 19, 2013, and successors have not yet been appointed or elected. The supervisory board can nevertheless fully perform its functions with seven members.
As a company that predominantly serves the purpose of journalism or the expression of opinions within the meaning of Section 1 para. 4 sentence 1 number 2 of the German Co-Determination Act (MitbestG) and Section 1 para. 2 sentence 1 number 2 letter b of the German One Third Participation Act (Drittelbeteiligungsgesetz), ProSiebenSat.1 Media AG is not subject to employee co-determination.
Pursuant to the articles of association, supervisory board members are appointed for the period ending with the conclusion of the general shareholders' meeting which resolves on the formal approval of the actions of the supervisory board for the fourth fiscal year after the beginning of their term of office excluding the fiscal year in which the term of office begins. A re-election is possible.
The following table lists the current members of the supervisory board of the Issuer and their principal occupations and their positions outside the Issuer. The term of office of all current members of the supervisory board will expire at the end of the upcoming general shareholders' meeting in June 2014 at which, therefore, elections for the supervisory board will take place.
Member Principal Activities Other relevant positions
Johannes Peter Huth - Chairman of the Supervisory Board - KION GROUP AG (supervisory (Chairman) board member) - Kohlberg Kravis Roberts & Co. Ltd. (Member of the Investment - KION GROUP GmbH Committee) (supervisory board member)
- NXP BV, Eindhoven (vice chairman of the supervisory board)
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- Wild Flavors GmbH (member of the advisory board)
- WMF AG (chairman of the supervisory board)
- Hertha BSC (supervisory board member)
Dr. Jörg Rockenhäuser - Vice Chairman of the Supervisory - Permira Holdings Limited (board Board member)
- Permira Beteiligungsberatung GmbH - Netafim (member of the board of (Managing Partner) directors)
Stefan Dziarski - Permira Beteiligungsberatung GmbH - None (Principal)
Philipp Freise - Kohlberg Kravis Roberts & Co. Ltd. - Fotolia LLC (chairman of the (Partner) board of directors)
Lord Clive Hollick - G.P. Bullhound LLP (Partner) - Honeywell International Inc. (non-executive director)
- We Predict Ltd (chairman of the executive board)
Götz Mäuser - Permira Beteiligungsberatung GmbH - None (Partner) until December 2013
Prof. Dr. Harald - Gleiss Lutz Hootz Hirsch - Prime Office REIT-AT (member Wiedmann Partnerschaftsgesellschaft von of the supervisory board) Rechtsanwälten und Steuerberatern (German Certified Public - Universal-Investment GmbH Accountant, Tax Adviser, Attorney (chairman of the advisory board) at Law)
The business address of each of the members of the supervisory board is c/o ProSiebenSat.1 Media AG, Medienallee 7, 85774 Unterföhring, Germany.
There are no conflicts of interest or potential conflicts of interest between the private interests of the members of the supervisory board and their duties vis-à-vis the Issuer.
Board Practices
Resolutions of the supervisory board are adopted by simple majority of the votes cast, unless otherwise stipulated by mandatory statutory provisions. Pursuant to the articles of incorporation, an abstaining member is deemed to have participated in the adoption of a resolution. In the event of a parity of votes, the chairman of the supervisory board shall have casting vote.
The supervisory board has established three committees from among its members: the presiding committee, the audit and finance committee and the compensation committee. The committees prepare resolutions and agenda items to be discussed by the supervisory board. Furthermore, the committees have been entrusted with making resolutions concerning various tasks of the supervisory board, especially approving certain management measures. A committee's resolutions are valid if at least half – and in no case less than three – of its members participate in the vote. Committee resolutions are normally adopted by a simple majority vote; in the event of a tie, the vote of the committee chairman decides. In respect to some issues, committees may also pass resolutions instead of the entire supervisory board. The supervisory board is regularly and comprehensively informed about the committees' activities.
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The following table shows the committees as of the date of this Prospectus and the appointed members of such committees:
Member of the Supervisory Board Member of the Member of the Compensation member Presiding Committee Audit and Finance Committee Committee Johannes Peter Huth .... Co-Chairman Member Chairman Dr. Jörg Co-Chairman — Member Rockenhäuser ...... Stefan Dziarski ...... Member Member — Philipp Freise ...... Member Member — Lord Clive Hollick ...... Member — — Götz Mäuser ...... Member Member — Prof. Dr. Harald — Chairman and independent — Wiedmann ...... financial expert
Shareholders' Meeting
Pursuant to the articles of association of the Issuer, general shareholders' meetings are convened by the executive board, or – in legally stipulated cases – by the supervisory board. Depending on the choice of the convening body, general shareholders' meetings take place at the registered office of the Issuer or at the location of a German Stock Exchange.
Unless binding provisions of the German Stock Corporation Act (Aktiengesetz) or the articles of association of the Issuer state otherwise, resolutions of general shareholders' meetings are passed with a simple majority of the votes cast. In accordance with the German Stock Corporation Act (Aktiengesetz), resolutions of fundamental importance require – in addition to a simple majority of the votes cast – also a majority of at least three quarters of the share capital represented in order to pass such a resolution.
The general shareholders' meetings can be and generally are convened by the executive board. Furthermore, shareholders whose aggregate shareholdings represent at least 5 % of the share capital or the proportionate amount of EUR 500,000.00 of the share capital may request the convening of shareholders' meetings. If the interests of the Issuer require it, the supervisory board can and must call a general shareholders' meeting. The annual general shareholders' meeting takes place within the first eight months of every fiscal year.
Corporate Governance
The German Corporate Governance Code (in the version of May 13, 2013, as published in the official part of the Federal Gazette on June 10, 2013 (the "Code")) contains recommendations and suggestions regarding the management and supervision of German companies listed on a stock exchange. There exists no legal obligation to comply with recommendations (Empfehlungen) or suggestions (Anregungen) of the Code. Section 161 of the German Stock Corporation Act (AktG) only obligates the executive board and supervisory board to declare, every year, that the recommendations of the Code have been complied with, or declare which recommendations have not been or are not complied with and explain the non-compliance with such recommendations.
In March 2014, the executive board and supervisory board of ProSiebenSat.1 Media AG jointly adopted the declaration of conformity with the Code which can be summarised as follows:
The recommendations of the Code have in principle been complied with since their publication. Only the following recommendations of the Code have not been and will not be applied:
- The executive board has not appointed a proxy to exercise shareholder voting rights at the annual shareholders' meeting (item 2.3.3 of the Code). The Issuer believes that there was no need for such a proxy because of the previous shareholder structure and the limited number of shareholders entitled to vote at the annual shareholders' meeting. For the separate meeting of preference shareholders on
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July 23, 2013, however, the Issuer appointed a proxy for the exercise of the preference voting rights in accordance with instructions. Due to the changed shareholder structure, beginning with and including the fiscal year 2014, proxies of the Issuer will be appointed for annual shareholders' meetings.
- The directors and officers liability insurance the Issuer has taken out for the members of the executive board and the members of the supervisory board provide for a deductible for insured members of the executive board in order to comply with the legal framework. However, neither the executive board nor the supervisory board regards a deductible as an effective way of enhancing board members' motivation or sense of responsibility. Therefore, contrary to the recommendation in item 3.8 of the Code, no deductible is agreed for members of the supervisory board.
- The Issuer's stock option plan (Long Term Incentive Plan) provides only for performance targets relating to the stock price of the shares of the Issuer. Additional comparison parameters relating to corporate key figures as set out in item 4.2.3 of the Code were not included, since due to the particular conditions of the German TV advertising market, no comparable German or foreign companies can be identified at present. The long-term compensation program (Group Share Plan) which was first launched in 2012 and which shall replace the Long Term Incentive Plan, now also provides for performance targets relating to corporate key figures.
- The compensation of the executive board of the Issuer does not provide for a predefined cap amount with respect to fringe benefits (in contrast to item 4.2.3 para. 2 of the Code) and, therefore, does also not provide for a predefined cap amount for the overall compensation of the executive board of the Issuer. The employment contract of Dr. Wegner, however, which was amended at the end of 2013, already provides for such a cap amount. The aforementioned recommendation has only been applicable since June 10, 2013. The current employment contract of the executive board members, with the exception of Dr. Wegner, were concluded or amended, respectively, already before the aforementioned recommendation came into effect. The supervisory board, however, will follow this recommendation in the future when concluding new or amending existing employment contracts of the executive board members.
- The supervisory board of the Issuer has abstained from complying with the recommendations of item 5.4.1 para. 2 and 3 of the Code. Pursuant to item 5.4.1 para. 2 and 3 of the Code, the supervisory board shall specify concrete objectives regarding its composition which, whilst considering the specifics of the enterprise, take into account the international activities of the enterprise, potential conflicts of interest, the number of independent supervisory board members within the meaning of item 5.4.2 of the Code, an age limit to be specified for members of the supervisory board and diversity. These objectives shall, in particular, stipulate an appropriate degree of female representation. Proposals by the supervisory board to the competent election bodies shall take these objectives into account. The concrete objectives of the supervisory board and the status of the implementation shall be published in the corporate governance report. The supervisory board is of the opinion that such formalized targets regarding its composition are not required, in particular, to ensure that these criteria set out by the Code are reflected with a view to the composition of the supervisory board. In fact, the supervisory board is of the opinion that also absent such formalized targets, the composition of the supervisory board will be implemented in a way that is in the best interest of the Issuer.
Subject to the exceptions stated above, the Issuer is, as of the date of this Prospectus, in compliance with the recommendations of the Code and intends to continue complying with the aforementioned recommendations of the Code also in the future. The executive board and supervisory board of ProSiebenSat.1 Media AG further declare that, with respect to the time period since the declaration of compliance of March 2013 until the publication of the recommendations of the Government Commission on the Code, as amended on May 13, 2013, in the Federal Gazette on June 10, 2013, the Issuer complied with the recommendations of the Government Commission on the German Corporate Governance Code as amended on May 15, 2012 and published in the Federal Gazette on June 15, 2012, subject to the above mentioned exceptions.
Share Capital and Major Shareholders
As of the date of this Prospectus, the Issuer has a share capital of EUR 218,797,200.00 that is divided into 218,797,200 common registered shares, each without par value and with a notional value of EUR 1.00. The shares are admitted to trading on the regulated market of the Frankfurt Stock Exchange (Frankfurter Wertpapierbörse) and the sub-segment of the regulated market of the Frankfurt Stock Exchange with additional post admission obligations (Prime Standard) and on the regulated market of the Luxembourg Stock Exchange (Bourse de Luxembourg). Each share in the Issuer carries one vote. There are no shares with multiple,
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preferential or maximum voting rights. There are no limitations of voting rights arising from the common shares exist.
Except for 2.6 % of the shares, which are held as treasury stock by the Issuer, the shares of the Issuer are considered to be entirely in free float (as defined in the Leitfaden zu den Aktienindizes der Deutschen Börse, Version 6.18, dated January 2013, of Deutsche Börse AG). As of the date of the Prospectus, the Issuer had been notified under the German Securities Trading Act (Wertpapierhandelsgesetz, "WpHG") of the following shareholdings in the Issuer that exceed 10 % of the share capital of the Issuer:
Name of Shareholder Share of common voting stock
BlackRock, Inc. 10.02 % (21,919,191 common shares)
The Capital Group Companies, Inc. 10.03 % (21,952,205 common shares)
The shareholders listed above informed the Issuer pursuant to Sections 21 et seq. of the WpHG that a share of voting rights of over 10 % in the Issuer is either held directly by or attributed to the notifying shareholder. The reported share of voting rights may have changed since the date of the notification or the date of the threshold exceeding, respectively.
Infrastructure and Technology
Broadcasting Infrastructure
The TV stations of the ProSiebenSat.1 Group broadcast around the clock via satellite, cable, IPTV and also via terrestrial television, predominantly in digital format. Contractual arrangements among TV stations, network operators and end-customers concerning satellite, cable, Internet Protocol Television ("IPTV") and terrestrial transmissions in Germany can be described as follows: cable network operators are funded predominantly by the fees they charge to the end customers they serve directly or the landlords that contract with the cable network operators on behalf of their tenants. The two big regional cable network operators Kabel Deutschland and Unitymedia KabelBW GmbH receive a feed-in-fee from TV stations for analog and digital distribution. Satellite network operators are primarily funded through transmission fees paid by the TV stations using the satellite broadcasting infrastructure, which has been fully digitized since the shutdown of analog transmission in April 2012. Contracts between satellite network operators and end-customers only came into existence in the German market recently with the introduction of encrypted HD distribution via satellite. Terrestrial television, which is all digital in the ProSiebenSat.1 Group's German-speaking footprint, is still exclusively based on feed-in-fee payments of broadcasters and is broadcast by Media Broadcast in Germany. In Austria (and to a lesser degree in the German-speaking part of Switzerland), the distribution regime is comparable. Compared to household reach via cable and satellite distribution, terrestrial and IPTV distribution generally play a minor role for the ProSiebenSat.1 Group.
The ProSiebenSat.1 Group is dependent on the availability and adequate capacity of cable network distribution channels and satellite broadcasting infrastructure (see "Risk Factors – Risks related to the Business of the ProSiebenSat.1 Group and the Industry and Markets in which the ProSiebenSat.1 Group operates – The ProSiebenSat.1 Group's television broadcasting operations depend on sufficient technical reach via satellite and cable networks, as well as entry into transmission agreements on commercially reasonable terms.").
The free-TV stations of the ProSiebenSat.1 Group can be received in 38 different countries outside Germany, Austria, and Switzerland. The stations are broadcast locally on the basis of licensing agreements through cable and IPTV and because of technical overspill via satellite transmission. The majority of such revenue is derived from licensing signal retransmission rights of the ProSieben and SAT.1 TV stations, with kabel eins and sixx bringing in smaller revenue portions. The ProSiebenSat.1 Group currently plans to start licensing the signal retransmission rights into the Italian and Spanish markets, pending the completion of court proceedings regarding the licensing of the ProSiebenSat.1 Group's TV stations in these markets. In the United States and Canada, the Group markets selected content from its TV stations ProSieben, SAT.1, kabel eins and sixx as a pay-TV service under the brand ProSiebenSat.1 Welt.
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IT Systems
Reliable broadcasting technology and IT infrastructure is particularly important for the operating activities of the ProSiebenSat.1 Group. For purposes of ensuring a functioning IT infrastructure that encompasses the latest technical standards a dedicated internal CIO division is governing and implementing the group's technological foundation. A selected set of strategic vendors, including IBM, SAP, salesforce.com, AVID, and Mediagenix is providing software solutions and services. A strategic technology roadmap ensures the continuous improvement and evolution of the employed infrastructure, software, and services. Paramount priority is the highest system availability for the broadcast play-out process.
Intellectual Property
The ProSiebenSat.1 Group has a broad range of intellectual property, including word or figurative trademarks, inter alia, for its free-TV broadcasting activities and pay-TV stations, members of the ProSiebenSat.1 Group, television shows and series or licensing programs produced by the Group and for activities in the Digital & Adjacent segment.
Employees
As of December 31, 2013, the ProSiebenSat.1 Group had a total of 3,590 employees, compared to 3,026 employees at the end of 2012 (calculated on the basis of full-time equivalents and on the basis of continuing operations). The increase of employees resulted primarily from the continued strategic expansion in the Digital & Adjacent segment. In addition, the Content Production & Global Sales segment contributed to the increase.
With 1,982 employees (based on the average number of full-time equivalents and on the basis of continuing operations), the Group employed most of its staff in the Broadcasting German-speaking segment. The average number of personnel in the Digital & Adjacent segment was 755 employees while the Content Production & Global Sales segment counted 663 employees (in each case calculated on the basis of full-time equivalents average and on the basis of continuing operations).
The ProSiebenSat.1 Group is not bound by any collective bargaining agreements.
As a company exempt from the German Co-Determination Act (Mitbestimmungsgesetz or MitbestG), ProSiebenSat.1 Media AG does not have employee representatives on its Supervisory Board.
Insurance
As a matter of policy, the ProSiebenSat.1 Group obtains insurance coverage for third-party claims, property damage losses (e.g., fire or water damage), business interruptions and other common risks. The ProSiebenSat.1 Group continuously examines and evaluates its need for insurance coverage and believes that the current insurance package is adequate and that the insurance rates are reasonable. However, there might still be incidents not covered by insurance or that an insurance company will not compensate completely.
Legal and Governmental Proceedings
The matters summarized below represent the legal and regulatory proceedings and claims that the Issuer currently believes could have a material adverse effect on the business, financial condition, cash flows and results of operations of the ProSiebenSat.1 Group.
Apart from the proceedings described below, the ProSiebenSat.1 Group and its subsidiaries are not and have not been party to any governmental, legal or arbitration proceedings (including any pending or threatened proceedings) during the previous 12 months, which may have, or in the recent past have had, significant effects on the financial position or profitability of the Issuer or the ProSiebenSat.1 Group.
Legal Action for Disclosure and Damages by RTL 2 Fernsehen GmbH & Co. KG and El Cartel Media GmbH & Co. KG
Following the German Federal Cartel Office's 2007 investigation and prohibition of a rebate and discount scheme operated by the Group through SevenOne Media (see "Risk Factors – Legal, Regulatory and Taxation Risks – The ProSiebenSat.1 Group's business conduct, strategic cooperations and acquisitions are subject to regulatory restrictions. Such restrictions have led to interventions by authorities and civil litigation in the past
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and may do so in the future."), between November 2008 and December 2009, three German-based television broadcasters, RTL 2 Fernsehen GmbH & Co. KG (together with El Cartel Media GmbH & Co. KG), TM- TV GmbH and MTV Networks Germany GmbH (now VIMN) each brought actions in various German courts against SevenOne Media and the ProSiebenSat.1 Group broadcasting companies. These lawsuits seek damages on the basis of antitrust law infringement by SevenOne Media. Each of the plaintiffs alleges that SevenOne Media operated an unlawful rebate scheme for its advertising customers which denied the claimants access to the market for television advertising in Germany and resulted in lost profits. The lawsuit brought by TM- TV GmbH has been dismissed by the Munich Regional Court (Landgericht) and, upon appeal, also by the Munich Court of Appeal (Oberlandesgericht). No further appeal was lodged. MTV Networks Germany GmbH (now VIMN) has withdrawn its appeal against the first instance ruling dismissing its claim, thereby rendering the first instance judgment binding (rechtskräftig). The case brought by RTL 2 Fernsehen GmbH & Co. KG is still pending before the regional court of Dusseldorf (Landgericht Dusseldorf). On April 13, 2012, the regional court resolved to obtain an expert appraisal on the probability of loss. An expert has since been appointed. It is not yet known when the expert's report will be submitted. There can, however, be no assurance that the ProSiebenSat.1 Group will prevail in the still-pending proceedings.
Legal Action for Additional Payments to Bestseller Copyright Owners against Companies of the ProSiebenSat.1 Group
Based on Section 32a of the German Copyright Act (Urheberrechtsgesetz or UrhG) (so-called "bestseller clause"), various copyright owners of German TV series/shows are claiming additional remuneration against companies of the ProSiebenSat.1 Group, judicially and out of court. Because the German Copyright Act (UrhG) does not specify at what point such claims actually come into existence, the ProSiebenSat.1 Group has developed a model for additional payments in accordance with Section 32a of the German Copyright Act (UrhG). The ProSiebenSat.1 Group has negotiated and signed so-called "common rules on compensation" (Section 36 of the German Copyright Act (UrhG)) with the associations Bundesverband der Film- und Fernsehregisseure e.V. (BVR) and Bundesverband der Film- und Fernsehschauspieler (BFFS), each based on this model. Talks with one other association are ongoing. For this issue, a provision has been made (EUR 13.8 million as of December 31, 2013), which is based on best estimates with regard to the status of the respective negotiations; the provision is subject to adaptation based on developments going forward. There can, however, be no assurance that such provision will cover all amounts payable to copyright owners under the bestseller clause.
Media Regulation
The business of the ProSiebenSat.1 Group is subject to a wide range of regulatory provisions. Areas of regulation include, among others, broadcasting, allocation of transmission capacity, protection of minors, editorial/content-related provisions, regulation of internet offerings, copyright and antitrust. Based on the markets of the ProSiebenSat.1 Group (on the basis of continuing operations), the broadcasting activities of the ProSiebenSat.1 Group are almost exclusively subject to regulation in Germany, Austria and Switzerland. The following contains an overview of the most relevant aspects of media regulation in Germany, Austria, and Switzerland.
Overview of Media Regulation in the Federal Republic of Germany
Media regulation is predominantly the domain of the sixteen German federal states (Bundesländer). Each federal state either has its own state media law or a joint media law together with other states. The federal states have harmonized substantial parts of their media laws applicable to national television broadcasters. Accordingly, television and radio broadcasting by public and privately owned broadcasting stations in Germany are primarily regulated by the Interstate Broadcasting Treaty (RStV), dated August 31, 1991, as last amended by the 15th State Broadcasting Amendment Treaty (15. Rundfunkänderungsstaatsvertrag), dated January 1, 2013. The Interstate Broadcasting Treaty (RStV) implements the EU Audiovisual Media Services Directive and, along with other state media laws, regulates in particular: (i) the media regulatory bodies and their powers, (ii) the regulatory framework for public broadcasters in Germany, (iii) the requirements for nationwide broadcasting licenses of private television broadcasters, (iv) the allocation and use of transmission capacities and digital platforms, (v) certain technical and commercial aspects of the broadcasting of programs to ensure non-discriminatory treatment among the broadcasters by certain providers of transmission services, and (vi) the regulatory framework for advertising, teleshopping and admissible product placement in broadcasts of commercial broadcasters. Broadcasters are also subject to the state media law of the federal state that has granted the broadcasting license, unless the Interstate Broadcasting Treaty (RStV) provides for exceptions to this principle.
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Independent state media authorities (Landesmedienanstalten) in the form of public law institutions implement and safeguard the provisions of the Interstate Broadcasting Treaty (RStV) and the state media laws. To ensure homogeneous application of the Interstate Broadcasting Treaty (RStV), the state media authorities have also formed joint bodies (Direktorenkonferenz der Landesmedienanstalten — DLM, Kommission für Zulassung und Aufsicht – ZAK) to deal with important aspects of media regulation. Similar joint commissions have been established to oversee the protection of minors (Kommission für Jugendmedienschutz or "KJM") and media concentration (Kommission für die Ermittlung der Konzentration im Medienbereich or "KEK"). The state media authorities have various enforcement powers, including the issuance of administrative orders and the imposition of fines.
Private broadcasters in Germany are required to obtain a broadcasting license from the competent state media authority. A broadcasting license is required for linear broadcasts through all technical means (including satellite, cable, IPTV and webcasts). A broadcasting license is granted upon an application to the competent state media authority, which, in turn, submits the application to the ZAK and, if necessary, to the KEK for further processing. Licenses are time limited. The ProSiebenSat.1 Group has all necessary broadcasting licenses required for the broadcasts of its TV stations under the Interstate Broadcasting Treaty (RStV). The licenses currently in effect are subject to expiration between 2015 and 2023. The Group is currently restructuring the corporate and licensing structure of its free-TV broadcasting operations in Germany. While the licenses of the free-TV broadcasters of the Group were previously held by various entities, it is planned that one of the Group's entities, ProSiebenSat.1 TV Deutschland, shall become the Group's sole TV license holder. The restructuring has already begun and the majority of the licenses is now held by ProSiebenSat.1 TV Deutschland. See also "Risk Factors – Legal, Regulatory and Taxation Risks – The ProSiebenSat.1 Group's business operations are dependent on broadcasting licenses issued by the competent authorities."
Overview of Media Regulation in Austria
Wireless and terrestrial television broadcasting (terrestrisches Fernsehen) and radio and television broadcasting via satellite (Satellitenrundfunk) as well as via cable networks (Kabelrundfunk) are regulated by the Austrian Act on Audiovisual Media Services (Bundesgesetz über audiovisuelle Mediendienste or AMD-G) dated October 1, 2010, as amended. Pursuant to the Austrian Act on Audiovisual Media Services (AMD-G), terrestrial television broadcasting and broadcasting via satellite (either radio or television), as well as the transmission of cable radio programs via satellite require broadcasting licenses if the network operator is domiciled in Austria.
The Communication Agency Austria (Kommunikationsbehörde Austria) is the responsible administrative authority for regulating broadcasting matters and it is also responsible for the management of radio frequencies.
For Austria, the German licenses of the Group's Free-TV-Programs (ProSieben, SAT.1, kabel eins, sixx, SAT.1 Gold and ProSieben MAXX) include the permission to include specific advertising windows for Austria. The Austrian program window licenses expire between June 2022 and October 2023. ProSieben Austria GmbH holds licenses for Austrian program slots embedded in the (German) programs ProSieben Austria and kabel 1 Austria, Austria 9 TV GmbH for Austrian program slots embedded in the (German) program sixx Austria. SAT.1 Privatrundfunk- und Programmgesellschaft mbH (a joint venture with Medicur (Raiffeisen) and Styria Media Group) holds a license for Austrian program slots embedded in the (German) TV station SAT.1. In Austria, Puls 4 TV GmbH & Co. KG holds an Austrian 24-hour full program license for PULS 4.
Overview of Media Regulation in Switzerland
Television in Switzerland is regulated by the Swiss Federal Act on Radio and Television (Bundesgesetz über Radio und Fernsehen or RTVG), dated March 24, 2006, as amended. On the basis of the Swiss Federal Act on Radio and Television (RTVG) the Radio and Television Regulation of March 9, 2007, as amended, has been issued. Pursuant to the Swiss Federal Act on Radio and Television (RTVG), terrestrial television broadcasting and specific types of broadcasting via satellite (either radio or television) as well as the transmission of cable radio programs via satellite require broadcasting licenses if the network operator is domiciled in Switzerland.
The Federal Office of Communications (Bundesamt für Kommunikation or "BAKOM") is the supervisory authority for radio and television broadcasters. It checks whether the license requirements, when applicable, and especially the legal provisions relating to financing (advertising/sponsorship) are being complied with. On the other hand, the review of complaints relating to program content falls within the competence of the Independent Complaints Authority (UBI).
For Switzerland, the German ProSiebenSat.1 Group licenses include the permission pertaining to advertising windows for the large TV-stations (ProSieben, SAT.1 and kabel eins) as well as sixx, SAT.1 Gold and
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ProSieben MAXX. The ProSiebenSat.1 Group TV stations in Switzerland are only required to register with BAKOM. Registered is ProSieben (Schweiz) AG for Swiss program slots embedded in the (German) program ProSieben CH and kabel1 CH, Sat.1 (Schweiz) AG for Swiss program slots embedded in the (German) program Sat.1 CH.
Material Contracts
The ProSiebenSat.1 Group considers the following contracts to be of particular importance, and thus material, to its business:
Existing Credit Facilities Agreement
On June 26, 2007, the Issuer as borrower and guarantor, certain subsidiaries of the Issuer as guarantors and, inter alia, Banc of America Securities Limited, Unicredit Bank AG (formerly known as Bayerische Hypo- und Vereinsbank AG), Crédit Agricole Corporate & Investment Bank Deutschland, Niederlassung einer französischen Société Anonyme (formerly known as Calyon Deutschland, Niederlassung einer französischen Société Anonyme), Credit Suisse, J.P. Morgan PLC, Lehman Brothers International (Europe), Morgan Stanley Bank International Limited and The Royal Bank of Scotland plc, Frankfurt Branch as arrangers (the "Arrangers"), a syndicate of financial institutions (which includes the following Managers or affiliates thereof: BNP PARIBAS, Commerzbank Aktiengesellschaft, Crédit Agricole Corporate and Investment Bank, ING Bank N.V., The Royal Bank of Scotland plc, Bayerische Landesbank, DNB Bank ASA, Mitsubishi UFJ Securities International plc, Skandinaviska Enskilda Banken AB (publ), UniCredit Bank AG and SMBC Nikko Capital Markets Limited) as lenders and Unicredit Bank AG as security agent and facility agent entered into a EUR 4,200 million credit facilities agreement, which was amended and restated on July 2, 2007, August 10, 2011, May 31, 2012 and on May 30, 2013 (the "Existing Credit Facilities Agreement"). The current borrowers under the Existing Credit Facilities Agreement are the Issuer and certain of its subsidiaries. However, the Issuer is the sole borrower with respect to which utilizations are outstanding.
The interest rate for each loan under the Existing Credit Facilities Agreement for each interest period is the percentage rate per annum which is equal to the total of (a) the applicable margin for the respective facility, (b) the reference interest rate (in the case of loans in euro, EURIBOR, or otherwise LIBOR) and (c) mandatory costs (for regulatory requirements), if any.
As of the date of the Prospectus, the following facilities exist under the Existing Credit Facilities Agreement:
- a euro-denominated term loan facility in an amount of EUR 1,859.7 million;
- an uncommitted term loan facility;
- a multicurrency revolving credit facility in an amount of EUR 600 million;
- a multicurrency extension revolving credit facility; and
- an uncommitted multicurrency revolving credit facility under which one or more new revolving facility tranches may be drawn from time to time.
The obligations under the Existing Credit Facilities Agreement and the interest hedge agreements are guaranteed by certain of the Issuer's subsidiaries and secured by pledges over the share capital of these guarantors. There is no other material asset security. The guarantors guaranteeing the Existing Credit Facilities Agreement are the Issuer, ProSiebenSat.1 TV Deutschland GmbH, SAT.1 Satelliten Fernsehen GmbH, ProSieben Television GmbH, kabel eins Fernsehen GmbH, P7S1 Erste SBS Holding GmbH, P7S1 Zweite SBS Holding GmbH, 9Live Fernsehen GmbH, ProSiebenSat.1 Digital & Adjacent GmbH, ProSiebenSat.1 Adjacent Holding GmbH and ProSiebenSat.1 Digital GmbH, P7S1 Broadcasting S.à. r.l., P7S1 Broadcasting Holding I B.V., P7S1 Broadcasting Holding II B.V., P7S1 Broadcasting Europe B.V. and P7S1 Nederland B.V.
The Existing Credit Facilities Agreement contains negative undertakings usual for facilities of that nature, subject to certain customary and other agreed exceptions and includes, among others, undertakings which limit the ability of the Group to grant further security with regard to current or future assets, to incur further financial indebtedness, to sell assets, to acquire commercial operations and also to issue guarantees and grant loans and other forms of credit. Any unremedied and continuing breach of these undertakings could allow for the termination of the Existing Credit Facilities Agreement by the lenders thereunder. As a result of the ratio of the Group's total net debt at the testing date to its EBITDA (as defined in the Existing Credit Facilities Agreement)
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being less than a certain threshold ratio, certain obligations and restrictions under the Existing Credit Facilities Agreement are suspended, including, but not limited to, the restrictions on financial indebtedness, to acquire commercial operations, to issue guarantees and grant loans, as well as certain prepayment obligations.
The Existing Credit Facilities Agreement also requires each obligor under the Existing Credit Facilities Agreement to comply with certain affirmative undertakings and mandatory prepayment obligations customary for a facility of that nature subject to materiality and other agreed exceptions. Included within the affirmative undertakings are the following financial covenants:
- net cash interest cover, i.e., the ratio of the Group EBITDA to the net cash interest payable, as defined in the Existing Credit Facilities Agreement; and
- the leverage ratio, i.e. the ratio of the Group's total net debt at the testing date to its EBITDA, as defined in the Existing Credit Facilities Agreement.
The Existing Credit Facilities Agreement contains a customary "change of control" clause, according to which any lender under the Existing Credit Facilities Agreement may demand repayment of all of its outstanding participations in a loan if a person or persons acting in concert acquires or acquire more than 50 % of the voting share capital of the Issuer or if a sale of all, or substantially all, of the business and/or assets of the Group taken as a whole occurs.
The Existing Credit Facilities Agreement contains a series of other customary termination grounds, such as the ability for the lenders to demand the immediate and full repayment of all amounts outstanding under the Existing Credit Facilities Agreement if any of the breaches of contract as specified in the Existing Credit Facilities Agreement occur and, where such breaches can be remedied, are not resolved within a specified period.
New Credit Facilities Agreement
On April 2, 2014, the Issuer as borrower and guarantor and, inter alia, a syndicate of financial institutions consisting of each of the Managers or their affiliates as coordinating bookrunners and mandated lead arrangers and lenders have entered into a EUR 2,000 million senior term and multicurrency revolving credit facilities agreement for the refinancing of the Existing Credit Facilities Agreement and financing general corporate purposes of the Group (the "New Credit Facilities Agreement"). Following the application of the gross proceeds from the issuance of the Notes against the indebtedness outstanding under the Existing Credit Facilities Agreement, the Issuer intends to repay the remainder of the indebtedness outstanding under the Existing Credit Facilities Agreement in full and to replace the Existing Credit Facilities Agreement by the New Credit Facilities Agreement. However, the closing of the New Credit Facilities Agreement has not yet occurred as of the date of this Prospectus. Following the closing of the New Credit Facilities Agreement, which is expected to occur on or about the Issue Date, the Issuer will be the initial borrower with an option for subsidiaries of the Issuer to accede as additional borrowers to the New Credit Facilities Agreement under the revolving facility. The New Credit Facilities Agreement provides for the following facilities:
- a euro-denominated term loan facility in an amount of EUR 1,400 million;
- a multicurrency revolving credit facility in an amount of EUR 600 million;
- an uncommitted term loan facility under which one or more new term facility tranches may be drawn from time to time; and
- an uncommitted multicurrency revolving credit facility under which one or more new revolving facility tranches may be drawn from time to time.
The interest rate for each loan under the New Credit Facilities Agreement for each interest period is the percentage rate per annum which is equal to the total of (a) the reference interest rate (in the case of loans in euro, EURIBOR, or otherwise LIBOR) and (b) the applicable margin for the respective facility.
There are no guarantees granted by subsidiaries of the Issuer and no asset security securing the obligations of the Issuer under the New Credit Facilities Agreement.
The New Credit Facilities Agreement contains negative undertakings usual for facilities of that nature, subject to certain customary and other agreed exceptions and includes, among others, undertakings which limit the ability
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of the Group to grant security with regard to current or future assets, to incur further financial indebtedness and to dispose of assets. Any unremedied and continuing breach of these undertakings could allow for the termination of the New Credit Facilities Agreement by the lenders thereunder. As long as the ratio of the Group's total net debt to its EBITDA (as defined in the New Credit Facilities Agreement) is less than a certain threshold ratio, certain obligations and restrictions under the New Credit Facilities Agreement are suspended.
The New Credit Facilities Agreement also requires each obligor under the New Credit Facilities Agreement to comply with certain affirmative undertakings. The affirmative undertakings contain a financial covenant which requires the Issuer to ensure that the leverage ratio, i.e. the ratio of the Group's total net debt to its EBITDA (as defined in the New Credit Facilities Agreement), does not exceed a certain threshold.
The New Credit Facilities Agreement contains a customary "change of control" clause, according to which any lender may demand repayment of all of its outstanding participations in a loan if a person or persons acting in concert acquires or acquire more than 50 % of the voting share capital of the Issuer.
The New Credit Facilities Agreement will contain a series of customary termination grounds, such as the ability for the lenders to demand the immediate and full repayment of all amounts outstanding under the New Credit Facilities Agreement if any of the breaches of contract as specified in the New Credit Facilities Agreement occur and, where such breaches can be remedied, are so remedied within a specified period.
Licence Agreements
The ProSiebenSat.1 Group acquires the predominant portion of its programming content (including feature films, television films and series) as commissioned productions or licensed programs, which accounts for the largest share of the ProSiebenSat.1 Group's program schedules (around 55 % for its three main stations), from third parties through multi-year license agreements, also referred to as output deals. Through such output agreements the ProSiebenSat.1 Group acquires the broadcasting rights for all future productions of a film producer or studio that are produced in a certain period. The acquisition of licensed films and series provides the TV stations of the ProSiebenSat.1 Group the rights to broadcast these programs in a set geographical region. In Germany, the programming rights are generally granted exclusively for German free-TV and typically on a non- exclusive basis for any other German-speaking license regions. The output agreements generally comprise several attractive and successful feature films, television films and series, but also include less attractive programs for broadcasting outside of prime time. The less attractive programming usually forms a part of licenses for popular content based on package deals offered to broadcasters.
With regard to licensed programming, the main portion of the inventory is sourced from major U.S. studios (e.g., FOX, Warner Bros., Paramount and CBS) or independent producers (e.g., Regency Enterprises). Popular programming content is in high demand and while the market is very competitive, the supply side is dominated by a handful of large Hollywood studios with significant bargaining power (see "Risk Factors – Risks related to the Business of the ProSiebenSat.1 Group and the Industry and Markets in which the ProSiebenSat.1 Group operates – Dependency on a steady supply of attractive programming content which is provided by only a limited number of international, particularly U.S., production companies, and which may become more expensive to acquire, if available at all.").
Supply Agreements with all major satellite and cable network operators in Germany, Austria and Switzerland
The ProSiebenSat.1 Group is dependent on the availability and adequate capacity of cable network distribution channels and satellite broadcasting infrastructure (see "Risk Factors – Risks related to the Business of the ProSiebenSat.1 Group and the Industry and Markets in which the ProSiebenSat.1 Group operates - The ProSiebenSat.1 Group's television broadcasting operations depend on sufficient technical reach via satellite and cable networks, as well as entry into transmission agreements on commercially reasonable terms.").
Satellite
The ProSiebenSat.1 Group contracts uplink services and satellite transponders from SES Platform Services GmbH. Uplink services include the multiplexing of individual channels, as well as encryption and transmission to satellites, and feed in to cable networks. There are approximately 18.1 million households with satellite connection Germany (source: Astra TV Monitor 2013, TNS Infratest), approximately 1.8 million in Austria (source: AGTT, GfK TELETEST, Evogenius Reporting) and 0.3 million households using satellite in German- speaking Switzerland (source: Mediapulse TV Panel).
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Germany, Austria and Switzerland all lie within the ASTRA1 satellite footprint of Société Européenne des Satellites S.A., Europe's leading satellite operator. Currently, the ProSiebenSat.1 Group has long term lease agreements for four transponders for the distribution of its standard definition and HD free-TV and pay-TV channels. These agreements expire between 2016 and 2021.
Cable
There are approximately 16.9 million households with a cable connection in Germany (source: Astra TV Monitor 2013, TNS Infratest), approximately 1.6 million in Austria (incl. IPTV; source: AGTT, GfK TELETEST, Evogenius Reporting) and 1.4 million households in Switzerland (source: Mediapulse TV Panel).
The ProSiebenSat.1 Group has secured access to the networks of Kabel Deutschland and UnitymediaKBW. Furthermore, it has secured access to cable networks through cable network operators that also operate smaller networks – under agreements with Deutsche Netzmarketing GmbH, members of the Fachverband Rundfunkempfangs- und Kabelanlagen e.V. The Group also has agreements directly with some smaller cable network operators, e.g., TeleColumbus, Primacom and Netcologne. The ProSiebenSat.1 Group has also entered into transmission agreements with Austria's major cable network operators UPC Broadband GmbH and LIWEST Kabelmedien GmbH, as well as mid-sized and small cable network operators. In the German-speaking part of Switzerland, the ProSiebenSat.1 Group secured agreements with UPC Cablecom, which is the leading cable network operator, Swisscable and numerous regional service providers.
Investments
Besides the ongoing and regular investments in programming rights and property, plant and equipment of the ProSiebenSat.1 Group, the ProSiebenSat.1 Group currently emphasizes on bolt-on acquisitions in the Digital & Adjacent and Content Production & Global Sales segments. Furthermore, the Issuer incorporated ProSieben Travel GmbH which consolidates all of the digital commerce activities of the travel business of the Group under one umbrella, including the online travel agencies weg.de and ferien.de (operated by Comvel GmbH) which have been consolidated since January 2014. In March 2014, the ProSiebenSat.1 Group acquired a 20 % stake in Collective Digital Studios (CDS), a multichannel network based in the United States. Furthermore, the Issuer acquired a majority interest in Half Yard Productions, a US based TV production company to further strengthen its content production business and acquired Aeria Games Europe through its online games subsidiary ProSiebenSat.1 Games GmbH to strengthen its online games business.
Notable digital commerce investments in 2013 by SevenVentures include majority participations in SilverTours GmbH, which operates billiger mietwagen.de, an aggregator/meta search for car rentals and functioning as a complementary asset to its existing infrastructure of travel services such as flights, hotels and events, with a current stake of 60 %, and mydays Group, which operates mydays.de, a market place for gift vouchers, with a current stake of 75.1 %.
The ProSiebenSat.1 Group intends to pursue further acquisitions in the Digital & Adjacent segment and in the Content Production & Global Sales segment in fiscal year 2014 and beyond. For fiscal year 2014 the Group expects to make an aggregate investment (including the investments already made) in excess of EUR 100 million.
Incorporation by Reference of Historical Annual Financial Information
The audited consolidated financial statements of the ProSiebenSat.1 Group for the fiscal years ending December 31, 2012 and December 31, 2013 and the respective unqualified audit reports thereon are incorporated by reference into this Prospectus.
Trend Information
There has been no material adverse change in the prospects of the Issuer since December 31, 2013, being the date to which the Issuer's most recent published audited financial statements have been prepared.
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Recent Developments and Outlook
From December 31, 2013 until the date of this Prospectus, the overall business of the ProSiebenSat.1 Group has continued its development in line with the 2013 fiscal year and there have been no material changes to the financial and competitive position of the ProSiebenSat.1 Group.
On February 25, 2014, the Group closed the disposal of its Hungarian broadcasting activities and in April 2014 the Group closed the disposal of its Romanian TV activities. Closing of the disposal of the Group's Romanian radio activities is expected for the second quarter of 2014. In March 2014, the ProSiebenSat.1 Group acquired a 20 % stake in Collective Digital Studios (CDS), a multichannel network based in the United States. Furthermore, the Issuer acquired a majority interest in Half Yard Productions, a US based TV production company to further strengthen its content production business and acquired Aeria Games Europe through its online games subsidiary ProSiebenSat.1 Games GmbH to strengthen its online games business. In April 2014, the Swiss streaming provider Zattoo and the ProSiebenSat.1 Group entered into an agreement for the transmission of linear TV broadcasts of its core TV stations ProSieben, SAT.1, kabel eins, sixx, SAT.1 Gold und ProSieben MAXX via the internet and mobile network.
The Issuer intends to pay a dividend of EUR 1.47 per common registered share of the Issuer (i.e. an expected total dividend payout of around EUR 313 million) for fiscal year 2013. The payment of such dividend is subject to the approval of the shareholders of the Issuer in the annual general shareholders' meeting of the Issuer expected to take place in June 2014.
Overall, based on current trading performance, the overall macro-economic picture and a start in the first quarter of 2014 in line with expectations, management currently expects full year operating performance for the Group to be in line with its full year outlook (as communicated in connection with the publication of the 2013 full year results on February 27, 2014). Furthermore, as per December 31, 2013, the ProSiebenSat.1 Group had already achieved 69 % of its growth targets as laid out in its mid-term revenue-growth plan for the period from 2010 to 2015 and 25 % of its growth targets as laid out in its mid-term revenue-growth plan for the period from 2012 to 2018. Further, the Group continues focusing its broadcasting business on the German-speaking markets.
No significant change in the financial or trading position
There has been no significant change in the financial or trading position of the Issuer or of the ProSiebenSat.1 Group since December 31, 2013.
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BUSINESS OF THE PROSIEBENSAT.1 GROUP
Overview
The ProSiebenSat.1 Group considers itself one of the leading media corporations in Europe reaching around 42 million TV households with TV stations in Germany, Austria and Switzerland. The Group's operations encompass its core free-TV business (including leading TV stations ProSieben and SAT.1) and a broad spectrum of digital entertainment activities including online video and online games operations. Through media and cash investments in its Digital Commerce unit, the Group is building its portfolio of participations in dedicated e-commerce clusters and in various business ventures through which the Group participates in revenues and/or equity of such ventures in exchange for provision of advertising space. The Group has already established a portfolio of digital commerce companies in the area of online travel and is looking for similar digital commerce opportunities in the area of beauty and lifestyle. In its adjacent activities the Group also operates music and other related activities. Further, the Group owns an international production and sales network with 15 production companies in nine countries. The ProSiebenSat.1 Group, which as of December 31, 2013 employs around 3,600 people (calculated on the basis of full-time equivalents) in more than 12 countries, pursues a growth strategy with the goal of becoming a "broadcasting, digital entertainment and commerce powerhouse".
The continuing operations of the ProSiebenSat.1 Group are organized in three operating segments: Broadcasting German-speaking, Digital & Adjacent and Content Production & Global Sales, all of which are strategically, economically and technically interrelated and managed by ProSiebenSat.1 Media AG.
Over the last three years, as part of its strategic plan to focus on the German-speaking markets and develop its digital entertainment, digital commerce and adjacent activities in the Group's core markets, the ProSiebenSat.1 Group has sold its television, radio and print media businesses in Belgium, The Netherlands and Northern Europe, and has sold the Group's Central and Eastern European ("CEE") broadcasting operations (closing of the disposal of the Romanian radio activities is expected for the second quarter of 2014). These businesses were/are reported as assets held for sale and as discontinued operations in the Issuer's consolidated financial statements.
In fiscal year 2012, the ProSiebenSat.1 Group generated revenues of EUR 2,356.2 million and recurring EBITDA of EUR 744.8 million, in each case on the basis of continuing operations. In fiscal year 2013, consolidated revenues amounted to EUR 2,605.3 million and recurring EBITDA was EUR 790.3 million, in each case based on continuing operations.
The Operating Segments of the ProSiebenSat.1 Group
The continuing operations of the ProSiebenSat.1 Group are divided into three segments, namely Broadcasting German-speaking, Digital & Adjacent and Content Production & Global Sales.
The core business of the ProSiebenSat.1 Group is free-TV with revenues predominantly from advertising and increasingly from distribution revenues in its German-speaking markets. All of the activities of the ProSiebenSat.1 Group outside the traditional TV business are grouped in the Digital & Adjacent and the Content Production & Global Sales segments. The Digital & Adjacent segment comprises the following key areas: Digital Entertainment (including the online video and online games business), Digital Commerce (including the media-for-revenue and media-for-equity business and the travel portfolio) and Adjacent (including the music and live entertainment business). The Content Production & Global Sales segment includes its international content production and sales business.
In Germany, SevenOne Media is acting as the advertising sales house for the TV stations of the ProSiebenSat.1 Group. SevenOne Media is also responsible for marketing the digital platforms (including pay-TV, video-on- demand, online, mobile services, podcast, games, teletext) as well as various third-party offers (teletext).
Broadcasting German-speaking
The ProSiebenSat.1 Group wide television activities in Germany, Austria and the German-speaking part of Switzerland are allocated to the Broadcasting German-speaking segment, which accounted for 81.7 % of the consolidated revenues from continuing operations in 2012 and 76.7 % in 2013, respectively. With a population of around 80 million, Germany is Europe's largest TV market. The ProSiebenSat.1 Group, acting through its sales subsidiaries SevenOne Media and SevenOne AdFactory, is a leader in the German TV advertising market. Alongside innovative and customized sales concepts, the high audience shares and broad reach of the ProSiebenSat.1 Group's TV stations are key to the Group's success in its main market, Germany. Due to their
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complementary programming, the advertising-financed TV stations ProSieben, SAT.1, kabel eins, sixx, SAT.1 Gold and ProSieben MAXX cover a broad audience. Having stations specialized on subsets of the ProSiebenSat.1 Group's general audience allows the ProSiebenSat.1 Group station family to better cater to an increasingly fragmented media market and allow advertisers to target tailored, commercially attractive audiences. With this portfolio, the ProSiebenSat.1 Group covers commercially relevant audience segments in its markets, offering both advertising customers and viewers a wide range of stations.
This segment also includes revenue opportunities derived from the ProSiebenSat.1 Group's distribution agreements with satellite, cable and IPTV network operators in Germany. On the basis of these agreements, the ProSiebenSat.1 Group generates revenues with the respective platform partners by providing its free-TV stations in HD signal quality and by providing its basic pay-TV stations to these platform operators or (premium) pay- TV operators.
All of the Group's TV stations work together under the umbrella of the Issuer's wholly owned subsidiary ProSiebenSat.1 TV Deutschland GmbH ("ProSiebenSat.1 Deutschland").
Free-TV Stations
ProSieben: ProSieben is the market-leading TV station among young viewers and targets a core audience of viewers aged between 14 and 39 years. The station shows Hollywood blockbusters, U.S. series and sitcoms, as well as TV event shows. At the end of 2013, ProSieben was available in 97.8 % of German households (corresponds to 35.91 million households) (source: AGF in cooperation with GfK, TV Scope 5.0). The technical reach of ProSieben was 91.4 % of households (corresponds to 3.27 million households) in Austria (source: AGTT, GfK TELETEST, Evogenius Reporting) and 96 % of households in the German-speaking part of Switzerland (corresponds to 2.4 million households) (source: Mediapulse TV Panel). In 2013, ProSieben achieved an average all-day audience share among the reference target group aged 14-49 years of 11.4 % in Germany (source: AGF in cooperation with GfK, TV Scope 5.0). For the prime-time window (8:00 p.m. to 11:00 p.m.), the corresponding audience share was 11.6 % (source: AGF in cooperation with GfK, TV Scope 5.0). In 2013, in its relevant audience target group of adults aged 14-39 years, ProSieben achieved an all-day audience share of 16.0 % in Germany (source: AGF in cooperation with GfK, TV Scope 5.0). For the prime-time window (8:00 p.m. to 11:00 p.m.) the corresponding audience share was 15.6 % (source: AGF in cooperation with GfK, TV Scope 5.0). According to the Group's own survey conducted in 2013, ProSieben was the most popular and appealing free-TV station in the target group of 14-49 year olds.
SAT.1: SAT.1 is positioned for general family entertainment, targeting the demographic group of 14-59 year olds with its wide variety of programming, including U.S. series, German comedy shows, German fiction series, news magazines and documentaries, TV films as well as in-studio shows. At the end of 2013, SAT.1 was available in 98.3 % of all German households (about 36.07 million households) (source: AGF in cooperation with GfK, TV Scope 5.0). In Austria and Switzerland, the technical reach of SAT.1 was 90.6 % of households in Austria (around 3.24 million households) (source: AGTT, GfK TELETEST, Evogenius Reporting) and in Switzerland, the technical reach of SAT.1 was around 96 % of households in the German-speaking part of Switzerland (around 2.4 million households) (source: Mediapulse TV Panel). In 2013, SAT.1 achieved an all- day audience share in the reference target group of adults aged 14-49 years of 9.4 % in Germany (source: AGF in cooperation with GfK, TV Scope 5.0). For the prime-time window (8:00 p.m. to 11:00 p.m.) the corresponding audience share was 10.1 % (source: AGF in cooperation with GfK, TV Scope 5.0). In 2013, in its relevant audience target group of adults aged 14-59 years, SAT.1 achieved an all-day audience share of 9.5 % in Germany (source: AGF in cooperation with GfK, TV Scope 5.0). For the prime-time window (8:00 p.m. to 11:00 p.m.) the corresponding audience share was 9.6 % (source: AGF in cooperation with GfK, TV Scope 5.0). Based on the 2012 In-house Survey, SAT.1 is leading in the genres breakfast television and investigative documentaries and is ranked second for comedy shows, just behind RTL. In addition, the station achieved strong ratings for German TV films and American crime series. kabel eins: kabel eins is the Group's second-generation TV station and is positioned as an entertainment station for the whole family with a focus on movie classics. kabel eins targets viewers aged 14-49 years. The TV station is largely known for showing classic American films, as well as other series, factual and reality formats. kabel eins currently also airs the UEFA Europa League. The station was available in 97.3 % of all German households (corresponds to 35.72 million households) by the end of 2013 (source: AGF in cooperation with GfK, TV Scope 5.0). In Austria and Switzerland, the technical reach of kabel eins was 90.7 % of households in Austria (corresponds to 3.24 million households) (source: AGTT, GfK TELETEST, Evogenius Reporting) and 96 % of households in the German-speaking part of Switzerland (corresponds to 2.4 million households) (source: Mediapulse TV Panel). In 2013, kabel eins reached an all-day audience share in Germany among its reference (and relevant) target group of adults aged 14-49 years of 5.6 % (source: AGF in cooperation with GfK, TV
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Scope 5.0). The station's corresponding audience share during the prime time hours (8:00 p.m. to 11:00 p.m.) was 5.1 % (source: AGF in cooperation with GfK, TV Scope 5.0). In the 2012 In-house Survey, viewers rated it "the most entertaining, most exciting, and most reliable TV station". sixx: sixx, launched in Germany in May 2010, targets primarily female viewers aged between 14 and 39 years and shows a number of current and classic series, commissioned productions, popular documentaries as well as entertainment/celebrity news. sixx had its Austrian premiere in July 2012, and has also been broadcast in Switzerland since the beginning of 2013. There are currently no local program windows for sixx in Austria and Switzerland. By the end of 2013, sixx was available in 73.9 % of all German households (corresponds to 27.14 million households) (source: AGF in cooperation with GfK, TV Scope 5.0). In Austria and Switzerland, the technical reach of sixx was 83.0 % of households in Austria (corresponds to 2.97 million households) (source: AGTT, GfK TELETEST, Evogenius Reporting) and 63.0 % of households in the German-speaking part of Switzerland (corresponds to 1.57 million households) (source: Mediapulse TV Panel). In 2013, the station achieved an average all-day audience share in the reference target group of adults aged 14-49 years of 1.2 % in Germany (source: AGF in cooperation with GfK, TV Scope 5.0). The corresponding share during prime-time hours (8:00 p.m. to 11:00 p.m.) was 1.1 % (source: AGF in cooperation with GfK, TV Scope 5.0). In 2013, in its relevant audience target group of females aged 14-39 years, the station achieved average all-day and prime-time (8:00 p.m. to 11:00 p.m.) audience shares of each 2.1 % in Germany (source: AGF in cooperation with GfK, TV Scope 5.0).
SAT.1 Gold: In early 2013, the Group launched SAT.1 Gold, with a target demographic audience of women aged 40-64 years. The TV station is currently focused purely on German movies, series and magazines, shows a mix of reality and fictional series, as well as family programs, documentaries and consumer advice programming. By the end of 2013, SAT.1 Gold was available in 45.3 % of German households (corresponds to 16.64 million) (source: AGF in cooperation with GfK, TV Scope 5.0). In 2013, i.e., the first year of the station's operation, SAT.1 Gold achieved an average all-day audience share among the target group of adults aged 14- 49 years of 0.4 % (source: AGF in cooperation with GfK, TV Scope 5.0). In prime-time (8:00 p.m. to 11:00 p.m.) the audience share among the target group of adults aged 14-49 years was 0.3 % (source: AGF in cooperation with GfK, TV Scope 5.0). In 2013, in its relevant audience target group female aged 40-64 years, SAT.1 Gold achieved an all-day audience share of 0.5 % in Germany (source: AGF in cooperation with GfK, TV Scope 5.0). For the prime-time window (8:00 p.m. to 11:00 p.m.) the corresponding audience share was 0.4 % (source: AGF in cooperation with GfK, TV Scope 5.0). SAT.1 Gold is currently only available in SD broadcast, not HD, and the TV station is currently not available in Austria and Switzerland.
ProSieben MAXX: In September 2013, the Group launched ProSieben MAXX in Germany, a free-TV station that targets a male audience between 30 and 59 years of age (also including offerings for children). By the end of 2013, ProSieben MAXX was available in 32.6 % of German households (corresponds to 11.98 million) (source: AGF in cooperation with GfK, TV Scope 5.0). In the fourth quarter of 2013, i.e., the first full quarter of the station's operation, ProSieben MAXX achieved an average all-day audience share among the target group of adults aged 14-49 years of 0.7 % (source: AGF in cooperation with GfK, TV Scope 5.0). In prime-time (8:00 p.m. to 11:00 p.m.) the audience share among the target group of adults aged 14-49 years was 0.5 % (source: AGF in cooperation with GfK, TV Scope 5.0). In the fourth quarter of 2013, in its relevant audience target group male aged 30-59 years, ProSieben MAXX achieved an all-day audience share of 0.7 % in Germany (source: AGF in cooperation with GfK, TV Scope 5.0). For the prime-time window (8:00 p.m. to 11:00 p.m.) the corresponding audience share was 0.4 % (source: AGF in cooperation with GfK, TV Scope 5.0). ProSieben MAXX is currently available in SD broadcast and HD broadcast via satellite. The TV station is currently not available in Austria and Switzerland.
PULS 4: The Austrian station PULS 4 was established in January 2008 and has been one of the fastest growing TV stations over the past five to six years. The main target group are viewers aged 12-49 years. In addition to "Best of Hollywood" movies and series, PULS 4 shows premium sports highlights, like UEFA Champions League and American Football, as well as international formats specially adapted for the Austrian market. PULS 4 is also well-known for its in-house production. By the end of 2013 PULS 4 was available in 96.8 % of all Austrian households (corresponds to 3.46 million households) (source: AGTT, GfK TELETEST, Evogenius Reporting). In 2013, the station achieved an average all-day audience share in the reference target group of adults aged 12-49 years of 4.0 % in Austria (source: AGTT, GfK TELETEST, Evogenius Reporting). The corresponding share during prime-time hours (8:00 p.m. to 11:00 p.m.) was 4.2 % (source: AGTT, GfK TELETEST, Evogenius Reporting). PULS 4 is not available in Germany and Switzerland.
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Basic Pay-TV stations
The ProSiebenSat.1 Group also operates a number of basic pay-TV stations in Germany, which currently include SAT.1 emotions, kabel eins classics and ProSieben FUN. The pay-TV stations are distributed through various pay-TV subscription packages of cable network and IPTV operators in Germany (e.g., Kabel Deutschland and Telekom Deutschland) and via satellite through Sky Deutschland. In Austria the ProSiebenSat.1 Group operates two basic pay-TV stations, which currently include SAT.1 emotions and kabel eins classics, distributed via satellite and IPTV operators. In Switzerland the ProSiebenSat.1 Group operates one basic pay-TV station (SAT.1 emotions) distributed via cable network and IPTV operators.
The number of pay-TV subscribers is growing rapidly. At year-end 2013, the number of basic pay-TV subscribers (for packages including all or some of the Group's basic pay-TV stations) reached approximately 4.0 million in German-speaking markets, compared to 3.8 million basic pay-TV subscribers at the end of 2012.
HD Broadcasts
All of the ProSiebenSat.1 Group's free-TV (except SAT.1 Gold) and basic pay-TV stations are available in Germany with HD signal quality via satellite, cable and IPTV transmission. In Austria ProSieben, SAT.1, kabel eins and PULS 4 are available in HD via cable, satellite and IPTV. In Switzerland ProSieben, SAT.1, kabel eins and sixx are available with HD signal quality via cable and IPTV. The HD channels are generally subject to an add-on technical access fee with the relevant platform-operators, providing a new opportunity for the ProSiebenSat.1 Group to monetize its signal rights. In Germany, the Group's free-TV and pay-TV HD stations are represented in the packages of most major cable, satellite, and IPTV operators. Based on agreements between the ProSiebenSat.1 Group and each operator, the Group takes a share in the technical access fees, which end customers pay to the cable, satellite (only HD), and IPTV network operators.
Digital & Adjacent
The Digital & Adjacent segment, currently the Group's strongest revenue-growth driver, accounted for 14.2 % of consolidated revenues in 2012 for continuing operations. In 2013, the segment's revenue share compared to Group revenues increased to 18.6 %. The Digital & Adjacent segment bundles the following key business units: Digital Entertainment units (including the online video and online games business), the Digital Commerce units (including the media-for-revenue and media-for-equity business and the travel portfolio) and the Adjacent units (including the music and live entertainment business). The ProSiebenSat.1 Group leverages the content, audience reach and cross-promotion power of its TV stations to develop products in the digital entertainment and commerce sphere and to build its adjacent business with distinct brands. A key element of this strategy is the use of unsold TV advertising inventory of its free-TV stations to cross-promote its Digital & Adjacent activities. Through its digital entertainment, digital commerce and adjacent activities, the ProSiebenSat.1 Group is also adapting to the changes in the traditional TV broadcasting model dominated by free-TV viewership by building brand awareness across multiple platforms and accessing a greater number of viewers and advertising demographics.
Digital Entertainment – Online Video
In the area of digital entertainment, the ProSiebenSat.1 Group operates maxdome, Germany's largest pay-VoD (video-on-demand) platform, as well as the advertising-financed free-VoD platform MyVideo. With maxdome and MyVideo, the ProSiebenSat.1 Group has become a leader in pay-VoD (excluding "download-to-own") and in-stream video advertising in Germany. In 2013, according to the Issuer's own calculations, the ProSiebenSat.1 Group had market shares in Germany of around 36 % in the combined transaction-based video-on-demand ("TVoD") and subscription-based video-on-demand ("SVoD") market excluding "download-to-own" and 48 % in the in-stream video ad market (MyVideo, based on gross advertising revenues) (source: Nielsen Media Research). Throughout all its internet platforms, collectively ProSiebenSat.1 Networld, the Group generated a total of 2.1 billion in-stream video views in 2013 (source: comScore, Video Metrix) and was ranked among number-one sales house for in-stream video advertising in Germany (source: AGOF, Internet Facts 2012-2013 – excludes Google's YouTube). In September 2013, the ProSiebenSat.1 Group has founded Studio71, a multi- channel network for the Group's online video business (leveraging its web only production business), which bundles the Group's range of formats produced exclusively for the web. In March 2014, the ProSiebenSat.1 Group acquired a 20 % stake in Collective Digital Studios (CDS), a multichannel network based in the United States.
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Digital Entertainment – Other Online Activities and Second-Screen Services
Through ProSiebenSat.1 Networld, an online network comprising (in addition to the Group's video and games portals) sites such as SAT1.de, ProSieben.de, ProSiebenMAXX.de, kabeleins.de, sixx.de, wetter.com, 12auto.de and reise.com, the ProSiebenSat.1 Group generates additional revenues from online advertising. In addition to marketing its own websites, the ProSiebenSat.1 also markets the online advertising inventory for clients such as Sport.1, N24.de, Zattoo.com, bundesliga.de and motor-talk.de. The advertising sales for ProSiebenSat.1 Networld are managed by SevenOne Media, the advertising sales subsidiary of the ProSiebenSat.1 Group. ProSiebenSat.1 Networld ranks as one of the most frequently visited networks in the German internet market. With a monthly average of 28.0 million unique users (as per AGOF standard measurement, source: AGOF Internet facts 2012 - 2013 (basis: 10+ year olds)), SevenOne Media, the ProSiebenSat.1 Group’s online sales company in Germany, is one of the sales companies with the highest reach. The Group coordinates and cross- promotes its online presence (ProSiebenSat.1 Networld) and its (linear) TV offerings in order to stimulate multi- screen use. For example, TV shows are complemented with additional information and catch-up services, while the TV stations of the ProSiebenSat.1 Group can be used to advertise offerings of the ProSiebenSat.1 Networld. The online business is complemented by ancillary activities such as audiotext, teletext, teleshopping and a mobile business.
Digital Entertainment – Online Games
The online games market is a dynamic segment of the digital entertainment industry and this business has become another area of growth for the Group. The ProSiebenSat.1 Group (through the subsidiary ProSiebenSat.1 Games GmbH) operates as a digital games publisher, meaning that it focuses on the Europe- wide licensing, marketing and selling of online games, as well as games partner acquisition. The ProSiebenSat.1 Group also engages in the development of games through its newly acquired subsidiary Aeria Games Europe, which bears significantly larger investment costs and risks. In the Online Games unit, the ProSiebenSat.1 Group generates most of its revenues through so-called "virtual item selling", where players purchase virtual items for use in the online games offered by the ProSiebenSat.1 Group. In addition, the Group generates revenues through commissions from third-party online game operators whose websites are linked to the online game portal of the ProSiebenSat.1 Group (so-called "channeling"). With the recent acquisition of online and mobile games publisher Aeria Games Europe, the Group is further strengthening its online and mobile games business. The acquisition covers the company's headquarter in Berlin, all international games licenses for personal computers and certain mobile games licenses. The Group aims to integrate its own Munich based online games activities into Aeria Games Europe with the common brand SevenGames.
While the online games business has shown strong growth, the ProSiebenSat.1 Group is also dependent on being able to enter into and maintain agreements with partners. One of the Group's contractual partners in its channeling business, Bigpoint, Inc., gave notice in 2013 of termination of its existing agreement with the ProSiebenSat.1 Group that was replaced by a new agreement only for new games launches. See "Risk Factors – Risks related to the Business of the ProSiebenSat.1 Group and the Industry and Markets in which the ProSiebenSat.1 Group operates - The strategy of the ProSiebenSat.1 Group for the growth of its digital entertainment, digital commerce and adjacent business may fail. Significant investments may lead to increased capital requirements; the growth strategy may have negative effects on the Group's profitability."
Digital Commerce
The ProSiebenSat.1 Group operates a significant part of its Digital Commerce business through its SevenVentures subsidiary. Through its Digital Commerce business, with its media-for-revenues/media-for- equity business models, the ProSiebenSat.1 Group has built a portfolio of partnerships and strategic investments over the last few years. Through these relationships, the Group provides media services primarily to start-up companies and receives a revenue and/or equity or equity-like participation in return, thereby monetizing idle advertising inventory from its TV stations. Additionally, the Group uses bolt-on cash acquisitions where appropriate to bolster its portfolio of emerging digital commerce ventures. As such, with the acquisition of online travel agencies weg.de and ferien.de (operated by Comvel GmbH), the Group has enhanced its own digital commerce cluster of online travel companies. The travel business is operated under the umbrella of ProSieben Travel GmbH. Additionally, the Group's digital commerce portfolio also includes stakes in a variety of online companies across the beauty and lifestyle spectrum, which are to become the next clusters in the Group's digital commerce strategy.
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Adjacent – Music Activities
The music activities are a part of the Group's adjacent activities within its Digital & Adjacent segment. The Issuer believes the ProSiebenSat.1 Group has the ability to develop and grow its music activities under the Starwatch Entertainment brand by building on the Group's success in promoting artists in the German market and expanding into the related area of live performance. The core of ProSieben's music operations are the music and entertainment brand Starwatch Entertainment and the Group's music cooperation agreements with other record labels. These cooperation agreements include Starwatch Music (with Warner), WE LOVE MUSIC (with Universal) and SevenOne Music (with Sony). Operating either through cooperations or through the Starwatch Entertainment joint-venture or through its own label Starwatch the Group promoted on average about 60 % of the top 20 albums in 2013. Currently, Starwatch Entertainment's activities make Starwatch the number one independent label in Germany.
Adjacent – Licensing Activities
In addition, the licensing activities form part of the adjacent business. The licensing (merchandising activities) of the ProSiebenSat.1 Group are conducted through its licensing company ProSiebenSat.1 Adjacent Holding GmbH. This subsidiary is responsible for the Group's entire internal and external licensing business. ProSiebenSat.1 Adjacent Holding GmbH grants customers license rights to channels and programs such as Germany's Next Topmodel, The Voice of Germany and Galileo, and covers the complete value creation chain for the license evaluation of TV formats and third-party rights. This includes license brand development and positioning, as well as product development and design. In addition, ProSiebenSat.1 Licensing organizes cross- brand cooperation activities with license partners. Alongside the management of the in-house format brands, ProSiebenSat.1 Licensing further expands its brands, especially in the entertainment and lifestyle areas.
Content Production & Global Sales
The Content Production & Global Sales segment covers the Group's German and international content production and sales business (Red Arrow Entertainment Group) and accounted for 4.1 % of consolidated revenues from continuing operations in 2012 and 4.8 % of consolidated revenues from continuing operations in 2013. Red Arrow entertainment Group has invested in production companies across the most important TV markets, including the United Kingdom and the USA. This group of production companies participates in the entire TV value chain, from development and production, to selling television programs. The segment's investment portfolio has been built over the last three years, most recently through acquisitions in key English- speaking markets. The Issuer believes that this expansion, resulting in a portfolio of currently 15 companies controlled by the ProSiebenSat.1 Group across nine countries, has positioned the Group very well for both fiction and non-fiction production in Germany and internationally.
More than 800 formats are currently under development at Red Arrow Entertainment Group, with over 450 pitch-ready titles. In 2013, the production arm produced more than 170 formats and pilots of scripted and non- scripted content. Also in 2013, Red Arrow Entertainment Group carried more than 600 titles in its catalogue and sold programs into more than 180 countries.
Programming Rights
The Group's programming comprises a mix of licensed programming, which is predominantly sourced from major U.S. studios or independent producers, commissioned and in-house productions and sports rights. As of December 31, 2013, the ProSiebenSat.1 Group had recorded programming rights in the amount of EUR 1,201.6 million on its balance sheet, of which licensed programming totaled EUR 1,016.7 million and commissioned programming totaled EUR 181.2 million.
Externally Acquired Programming Content and Licensed Productions
The business operations of the ProSiebenSat.1 Group depend on the steady supply of programming content and therefore the acquisition of programming rights is one of the primary investment activities. The ProSiebenSat.1 Group invested for its continuing operations approximately EUR 843.3 million in the acquisition of programming rights during 2012 and approximately EUR 860.2 million in 2013.
Commissioned and In-house Productions
In addition to the acquisition of broadcasting licenses, commissioned and in-house productions are significant for the operations of the ProSiebenSat.1 Group and represent important alternatives to licensed programming.
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These productions primarily consist of movies, series, entertainment formats, info magazine shows and news broadcasts. The share of commissioned and in-house productions in the program line-up of the ProSiebenSat.1 Group has been relatively constant in recent years. While the ProSiebenSat.1 Group airs a large share of licensed content, its sourcing of commissioned productions and its in-house production capacities afford the Group a lesser degree of dependence on the suppliers of international programming rights and greater flexibly to react to changes in audience preferences than if the Group were to rely exclusively on licensed programming.
Advertising Sales, Media Buying Agencies and Customers
The majority of the ProSiebenSat.1 Group's revenues are generated from the sale of TV advertising time. The sale of online advertising is also of growing importance. The wholly owned advertising sales company SevenOne Media, with approximately 300 employees by the end of 2013 (calculated on a full-time equivalent basis, including employees of its subsidiary SevenOne AdFactory), is responsible for marketing the advertising space of the ProSiebenSat.1 Group and acts as a service provider and business partner for media buying agencies and more than 500 advertising customers.
The ProSiebenSat.1 Group works with all of the major media buying agencies active in the German television market. Media buying agencies offer their advertising customers intensive and tailored consultation and various marketing and research services. The largest agency group, GroupM, a subsidiary of WPP Group, accounted for around of 42 % of media buying agency budgets spent on the ProSiebenSat.1 Group's TV stations in 2013.
The top 10 advertising customers of the ProSiebenSat.1 Group represented approximately 32 % of the gross advertising revenues of the ProSiebenSat.1 Group in the fiscal year 2013, while the top fifty advertising customers represented around 65 % in the same year. In 2013, the ProSiebenSat.1 Group increased revenues from new customers (i.e., customers who did not advertise on the ProSiebenSat.1 Group's stations for at least two years) to a gross figure exceeding EUR 100 million. Calculated by gross revenue, the Group's largest external advertising clients include Deutsche Telekom, Dr. Oetker, Ferrero, L'Oréal, Mars, Metro, Microsoft, Nestlé, Procter & Gamble and Volkswagen (excluding the Group's own advertising and advertising placed by the Group's ventures participations, source: Nielsen Media Research).
In Austria and Switzerland, market characteristics with regard to media buying agencies and customers' advertising are comparable. In Austria, the Group sells its TV advertising space through its subsidiary ProSiebenSat.1Puls 4 GmbH. In Switzerland, the Group sells its TV advertising space through a partner, Goldbach Media (Switzerland) AG.
Competitive Strengths
The ProSiebenSat.1 Group is a leading free-TV broadcaster in the German-speaking markets and the Issuer believes that it can capitalize on its strong market position to promote growth of its digital entertainment, digital commerce and adjacent business. By realizing synergies between its brand-name TV operations and its digital activities, as well as its growing portfolio of e-commerce ventures, the ProSiebenSat.1 Group possesses clearly defined growth opportunities. The Issuer believes that its growth outlook is further supported by its TV distribution model and the supplementary and independent TV production business. The Issuer believes that the main competitive strengths of the ProSiebenSat.1 Group include the following:
Leading position in German-speaking free-TV
The ProSiebenSat.1 Group, through its advertising sales house SevenOne Media, is one of the leading German free-TV broadcasters with a market share in gross TV advertising in Germany of approximately 43 % in 2012 and approximately 44 % in 2013 (source: Nielsen Media Research) and an audience share of 27.8 % and 28.1 % (viewers aged 14-49 years (all day)), average of all Group TV stations in Germany in 2012 and 2013 respectively (source: AGF in cooperation with GfK, TV Scope 5.0). The Group operates multiple brand-name TV stations, each with distinctive programming, and reaches attractive and complementary advertising demographics with its proven station strategy. The ProSiebenSat.1 Group's leading position in Germany is complemented by a strong position in Austria and a significant presence in the German-speaking part of Switzerland. A strong position and high brand recognition, based on a strong and targeted content proposition, are essential factors for commercial success in the increasingly fragmented media landscape.
In the German television advertising industry, commercial market leaders (so-called "first-generation broadcasters") are able to command advertising price premiums. The Group's main channels, ProSieben and SAT.1, both of which qualify as first-generation broadcasters, are among the most widely viewed TV stations in Germany (source: ProSiebenSat.1 TV Deutschland, Relevant Set). As one of the two leading commercial
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players (alongside RTL Group) in the established German free-TV market structure, the consistent high ranking of its TV stations allows the Group to monetize its content inventory through the sale of its advertising space to advertisers with attractive pricing. The Group's leading market position and its well-known TV stations also enable the Group to extend its brands into the digital sphere and pursue attractive opportunities in the digital entertainment industry.
Focus on attractive German-speaking markets with good macro-economic prospects and attractive television advertising industry
With its focus on the German-speaking markets (Germany, Austria and Switzerland), the ProSiebenSat.1 Group operates its television broadcasting and digital entertainment activities in what the Issuer believes are Europe's most attractive entertainment markets. The Group has successfully completed the divestment of its activities in Belgium, The Netherlands and Northern Europe and the disposition of its CEE broadcasting operations (closing of the disposal of the Romanian radio activities is expected for the second quarter of 2014). This allows the ProSiebenSat.1 Group to focus on developing its activities in the Group's core markets.
Furthermore, the ProSiebenSat.1 Group (or its respective predecessors) has been active in the German-speaking markets for almost 30 years. The Group's intimate knowledge of the German media market allows it to optimize its programming schedules for the German audience and to leverage its leading market position.
Solid and long-standing relationships with advertisers, content suppliers and distribution networks
The ProSiebenSat.1 Group has built its reputation and its relationships in the media and advertising industry over its close to 30-year presence in the German broadcasting market. Partnerships with the major media buying agencies and advertisers, long-standing relationships with major Hollywood studios and local producers offering access to the most attractive content, as well as long-term agreements with satellite and cable network operators securing broad reach, present a solid foundation for the Group's business, including its growth going forward.
Dynamic revenue-growth prospects in digital entertainment, digital commerce and adjacent business through synergies with leading linear TV business
The Issuer believes that it is the first European free-TV broadcaster to successfully focus on cross-synergies between TV and online by combining its high-margin and leading free-TV assets with a strong and evolving portfolio of digital entertainment, digital commerce and adjacent activities. The ProSiebenSat.1 Group has over the past years successfully diversified its free-TV broadcasting activities and managed to transfer and expand its portfolio of well-known brands into the digital sphere. The Group leverages its extensive free-TV content base, its brand recognition and broad reach, as well as its idle advertising inventory, cross-promotion and bundling capabilities to build its portfolio of digital entertainment and e-commerce assets.
With its innovative media investment model, the ProSiebenSat.1 Group owns an evolving and promising digital commerce portfolio currently comprising a range of opportunistic and strategic revenue and/or equity participations and a digital commerce cluster of online travel operations. These media investments are focused on e-commerce ventures that complement the core entertainment business of the ProSiebenSat.1 Group in defined investment clusters and draw on the mass reach of TV advertising for brand building / brand awareness. The current primary focus on a "cash and asset light" investment approach, i.e., by generally limiting investments to idle advertising space, reduces capital expenditure and risk exposure.
Integrated organization and experienced management team
The Issuer manages the majority of its companies as wholly owned subsidiaries and allows strategic coordination among the TV stations of its portfolio. This distinguishes the ProSiebenSat.1 Group from RTL Group, its main commercial competitor in the German market, and offers advantages in selling advertising space or acquiring programming rights. At the same time, the structure of the ProSiebenSat.1 Group creates synergies and supports the efficient use of resources through its integrated organization.
The executive management team of the Issuer, which has been led by CEO Thomas Ebeling since 2009, is able to contribute highly specialized knowledge to further develop and promote the Group's business. Mr. Ebeling and his team have initiated the transformation of the ProSiebenSat.1 Group from a pan-European broadcasting company into a focused broadcaster with a digital growth strategy in Europe's largest media market. Together with CFO Axel Salzmann, who joined the Group in 2008, Mr. Ebeling and their respective teams successfully led the Group through the financial crisis in 2008-2010, demonstrating their cost management capabilities.
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Strong margins and cash flow generation, mid-term revenue-growth plans
The ProSiebenSat.1 Group has established a track record of delivering stable mid-single digit revenue-growth, dynamic net income growth, as well as strong cash flows driven by sound operating and financial leverage. Over the last two years, the ProSiebenSat.1 Group increased its revenues from continuing operations, underlying net income from continuing operations and cash flows from operating activities on the basis of continuing operations (see "General Information on the Issuer and the ProSiebenSat.1 Group – Selected Financial Information about the Issuer and the ProSiebenSat.1 Group."). In its relevant peer group, the ProSiebenSat.1 Group has a comparatively strong EBITDA margin (2012 recurring EBITDA margin was 31.6 % and 2013 recurring EBITDA margin was 30.3 %) and cash flow conversion (defined as free cash flow before M&A as a percentage of recurring EBITDA) of 38.7 % in 2012 and 52.7 % in 2013 (in each case, based on continuing operations).
Furthermore, the Issuer sets itself apart from its peer group companies in the broadcasting and digital entertainment industry by operating on the basis of mid-term revenue-growth plans and communicating such plans to investors. These mid-term revenue-growth plans and their degree of achievement form part of the investor communication of the ProSiebenSat.1 Group. As per December 31, 2013, the ProSiebenSat.1 Group operates on a mid-term revenue-growth plan for the period from 2010 to 2015, which currently projects total revenue growth of more than EUR 800 million by 2015 as compared to revenues from continuing operations in 2010, of which 69 % were achieved as of December 31, 2013, and on the basis of a mid-term revenue-growth plan for the period from 2012 to 2018, which currently projects total revenue growth of more than EUR 1,000 million by 2018 as compared to revenues from continuing operations in 2012, of which 25 % were achieved as of December 31, 2013.
Strategy
The Issuer pursues a clearly defined growth strategy with the vision of becoming "a broadcasting, digital entertainment and commerce powerhouse". To this end, the Issuer is developing its traditional free-TV operations and targeting attractive and complementary advertising demographics with multiple brands on multiple screens. In its digital entertainment, digital commerce and adjacent business, the Issuer exploits opportunities by focusing on cross-synergies between TV and online and benefiting from its leading position in the German-speaking television markets. It uses its TV operations and idle advertising inventory to expand its footprint in the digital sphere - exploiting potential for organic growth and capturing opportunities through its innovative media investment model and/or cash acquisitions. This growth strategy is complemented, in particular, by the expansion of the Group's TV distribution model. Key strategic focus areas include the following:
Build on the Group's leading portfolio of TV stations to capture both mass audiences and niche markets
While the ProSiebenSat.1 Group already reaches mass audiences with its larger TV stations (ProSieben, SAT.1 and kabel eins) and works to maximize audience share in the respective relevant core target groups for its main TV stations (which are adults aged 14-39 years for ProSieben, adults aged 14-59 years for SAT.1 and adults aged 14-49 years for kabel eins), the Issuer has also identified opportunities for growth by capturing additional target groups with new TV stations in line with demographic developments and advertisers' interest in diversified target group portfolios. The Issuer believes that options for exploiting these opportunities include expanding the family of TV stations of the ProSiebenSat.1 Group beyond the commonly used reference target group of adults aged 14-49 years and beyond the relevant target age groups for its main TV stations, as well as addressing specific preferences of male and female viewers with tailored content.
In addition, the Issuer has identified additional revenue-growth opportunities within the traditional TV business that may evolve in the future. Such opportunities include the partial ban of sponsoring on public TV stations and new advertising categories, such as lottery and betting. The Issuer believes that the ProSiebenSat.1 Group is well positioned to capture any such new opportunities if and when they arise.
Expansion of non-advertising revenues through distribution business with HD and basic pay-TV offerings
In the past, distribution of the ProSiebenSat.1 Group's programming represented only a cost factor, with the Group paying significant amounts in particular to satellite and cable network operators for transmission of its broadcasts to households. Based on agreements with respect to the HD signal with SES-ASTRA for satellite, and with cable and IPTV network operators in Germany and Austria, the Issuer has been able to transform distribution from being a cost factor only into a revenue generator with significant growth potential - revenues from distribution are believed to have the potential to grow by more than EUR 50 million by 2015 compared to
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2010 and by more than EUR 100 million by 2018 compared to 2012. This is further supported by the analog satellite distribution switch-off in Germany and a gradual decline of analog cable distribution over time. This distribution business is based on the Group's HDTV and basic pay-TV stations, which are available to households on the distribution networks for a technical access fee (for HD) or against a subscription fee (basic pay-TV). The ProSiebenSat.1 Group generates revenues from the monetization of the HD signal and from a share (basic pay) in the subscription fee charged by the network operators to consumers. In Germany, all of the Group's free-TV stations (except for SAT.1 Gold) are available in HD and the Group currently offers three basic pay-TV stations, which are also available in HD signal quality (SAT.1 emotions, ProSieben FUN and kabel eins classics). According to estimates of the Issuer, the number of HD free-TV users and basic pay-TV subscribers in Germany will strongly increase in the coming years.
Further integration and cross-promotion between the Group's different offerings for multiple channels and screens
The ProSiebenSat.1 Group pursues a multi-channel/multi-screen strategy, which serves to improve services, capture audience share outside of its linear TV activities and make optimal use of the Group's inventory and cross-promotion power. This is supported by the fact that the Issuer wholly owns all its core assets and operates them through an integrated organization. This means that the Group draws on the strength of its TV brands to establish a complete spectrum of entertainment offerings via multiple distribution channels and services (i.e., linear TV, IPTV, the open internet, mobile etc. – with free and pay services including Hybrid broadcast broadband television ("HbbTV")) and on multiple screens (i.e., on different stationary and mobile devices such as traditional TV sets, smart-TVs, gaming consoles, personal computers, laptops, tablets, smartphones etc.).
Building the customer base, offering comprehensive advertising solutions supported by market research
In addition to maintaining the existing customer base, new customer business is vital for the sustainable financial success of the ProSiebenSat.1 Group. Alongside SevenOne Media, its TV advertising sales house, the subsidiary SevenOne AdFactory is also making a significant contribution to attracting new customers as the company develops individual cross-media marketing concepts for advertising customers, in which all of the Group's advertising forms and media platforms are integrated – from traditional sponsorship to product placement, online, mobile, and other applications such as HbbTV and social TV. The ProSiebenSat.1 Group seeks to extend its value chain by offering the implementation of audiovisual communication solutions. Thus, advertising customers have access to the complete range of services of a full-service provider, from idea conception to implementation and advertising solutions in both TV and online.
The Issuer also conducts extensive research and analyses on the impact of advertising, on trends in the advertising markets and media usage. It also assesses economic and other projections relevant for the advertising markets. The Issuer provides advertisers with valuable knowledge for marketing and advertising planning, which constitute an important basis for their investment decisions.
Enforcing leading digital entertainment activities for continued growth
In its strongest growing segment Digital & Adjacent, the Issuer is pursuing growth of the ProSiebenSat.1 Group's digital entertainment by building on its market leadership in online video (in-stream video advertising sales and pay-VoD) in Germany and expanding the Group's position as a leading publisher of online games through additional international media partnerships.
The ProSiebenSat.1 Group seeks to capture audiences and advertising share in the non-linear TV market by offering a compelling web-video proposition to media consumers, including a blend of professional and semi- professional content, and a broad range of TV series and shows, movies, music content, and, increasingly, also dedicated webstar channels and live events. As a TV broadcaster, the ProSiebenSat.1 Group can source content from its existing programming assets and offer editorial integration on its linear TV stations.
For its pay-VoD offering, bundled in the video-on-demand portal maxdome, the ProSiebenSat.1 Group intends to secure its market-leading position in Germany. The Issuer believes in significant growth potential of the video-on-demand market, which is expected to eventually replace a large part of the market for physical DVD and Blu-ray rentals and sales.
The ProSiebenSat.1 Group also intends to build on its strength as a leading publisher of online games through the expansion of its international media partnerships, which already contribute a large portion of online games revenues. The Issuer also believes there is potential in gearing up its online gaming activities through mobile aggregation apps and intends to continue to focus on the publication of online games.
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Capturing opportunities in Digital Commerce investments with idle TV advertising inventory and strategic acquisitions
In the ProSiebenSat.1 Group's Digital Commerce business, forming a second pillar of its growth strategy in the Digital & Adjacent segment (in addition to its digital entertainment activities), the Issuer believes that the ProSiebenSat.1 Group can tap into additional opportunities for significant growth in e-commerce while monetizing idle advertising inventory from its TV stations.
Through its Digital Commerce unit, the ProSiebenSat.1 Group has already entered into a number of partnerships and strategic investments. The Issuer believes that these partnerships and the business model itself offer great opportunities for growth, which can be multiplied through additional investments.
In addition to building its own digital commerce portfolio of strategic and opportunistic investments in various e-commerce/services areas such as travel or beauty and lifestyle, the ProSiebenSat.1 Group has established a start-up "incubator" in order to provide the Group with additional attractive opportunities of developing its own start-ups, which it will be able to promote and grow using the same rationale as its existing e-commerce investments - monetizing idle advertising inventory and leveraging the advertising potential of its TV stations. Due to their start-up character, the incubation companies are currently managed centrally as financial investments. To further build its digital commerce portfolio, the Issuer also intends to partner with strategic or financial investors for investments in digital commerce businesses.
Maintaining an efficient capital structure and using cash flows for growth and for returning value to shareholders
To accomplish its growth targets – in addition to its targeted organic growth – and when making investments, the ProSiebenSat.1 Group currently focuses on "cash and asset light" growth initiatives. In this context, the Group applies an innovative media investment model where investments in e-commerce start-ups in the Digital Commerce business unit are realized on the basis of its media-for-revenue and media-for-equity business. This approach is complemented by bolt-on cash acquisitions in the Digital & Adjacent segment and in the Content Production & Global Sales segment.
Moreover, the Issuer aims to stay within a financial leverage range of 1.5 times to 2.5 times net debt to recurring EBITDA, which exceeds the respective leverage ratio of some of its broadcasting peers. The Issuer believes that its leverage profile is compatible with its growth strategy and also believes in flexibility within the targeted range, e.g., in order to allow for debt-financed bolt-on acquisitions.
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MARKET OVERVIEW AND COMPETITION
Overview
The ProSiebenSat.1 Group considers itself one of the leading media corporations in Europe reaching around 42 million TV households with TV stations in Germany, Austria and Switzerland. The ProSiebenSat.1 Group's operations encompass its core free-TV business (including leading TV stations ProSieben and SAT.1) and a broad spectrum of digital entertainment activities including online video and online games operations. Through media and cash investments in its Digital Commerce unit, the Group is building its portfolio of participations in dedicated e-commerce clusters and in various business ventures through which the ProSiebenSat.1 Group participates in revenues and/or equity of such ventures in exchange for provision of advertising space. The Group has already established a portfolio of digital commerce companies in the area of online travel and is looking for similar digital commerce opportunities in the area of beauty and lifestyle. In its adjacent activities, the Group also operates music and related activities. Further, the ProSiebenSat.1 Group owns an international production and sales network with 15 production companies in nine countries. The ProSiebenSat.1 Group which as of December 31, 2013 employs around 3,600 people (calculated on the basis of full-time equivalents) in more than 12 countries, pursues a growth strategy with the goal of becoming a "broadcasting, digital entertainment and commerce powerhouse".
As such, the television broadcasting sector (primarily free-TV), the digital entertainment market (mainly online video and online games) as well as the ventures and digital commerce business, and, to a lesser extent, the audiovisual content production and distribution industry constitute the ProSiebenSat.1 Group's key markets. Geographically, the ProSiebenSat.1 Group's activities in television broadcasting, digital entertainment (with the exception of the online games business which also has a pan-European focus) and digital commerce are essentially focused on Germany, Austria and the German-speaking part of Switzerland. The following characteristics, developments and trends in these markets influence the ProSiebenSat.1 Group's business and the future development thereof.
Macro-economic Developments in the ProSiebenSat.1 Group's Markets
In fiscal year 2013, 87.2 % of the ProSiebenSat.1 Group's revenues from continuing operations were generated in Germany and 8.0 % of ProSiebenSat.1 Group revenues from continuing operations were generated in Austria and Switzerland. Moreover, 79.4 % of the ProSiebenSat.1 Group's revenues from continuing operations were generated from the sale of advertising space, including both TV and non-TV advertising. Demand for advertising space is strongly influenced by prevailing economic conditions and consumer sentiment. When the economic outlook is positive, advertising expenditure tends to rise in response to anticipated increases in consumer demand. Conversely, in periods of economic slowdown, advertisers react quickly to declining consumer demand by reducing their advertising budgets. Additional factors such as long-term domestic growth prospects, employment rates, consumer spending, purchasing power, access to credit, asset values, financial resources, and the overall investment climate may all affect advertising expenditures. Reported or anticipated declines in consumer spending, in particular, can reduce advertising expenditures if advertisers do not perceive sufficient consumer demand or purchasing power to warrant the cost of advertising. Difficult economic conditions and an uncertain outlook therefore have a pronounced effect on the ProSiebenSat.1 Group's business through decreasing demand for advertising space and increasing price pressure. As such, macro-economic developments in Germany, Austria and Switzerland have a significant impact on the ProSiebenSat.1 Group's business.
Linear Television Broadcasting
The core business of the ProSiebenSat.1 Group is linear free-TV, i.e., commercial television primarily financed by advertising in German-speaking countries. For the ProSiebenSat.1 Group's revenues, the reach of linear TV as an advertising medium is of key importance. In the 2013 fiscal year, the ProSiebenSat.1 Group derived 71.5 % of its total revenues (on the basis of continuing operations) from television advertising. The distribution of HD and basic pay-TV programming also contribute to revenues from linear TV broadcasts. In Germany, the ProSiebenSat.1 Group currently operates six free-TV stations and three pay-TV stations. In Austria and Switzerland, the ProSiebenSat.1 Group operates five and four free-TV stations and two and one basic pay-TV station, respectively. For this reason, TV consumption, the competitive landscape in the free-TV industry and the development of the TV advertising market and distribution landscape have a significant impact on the ProSiebenSat.1 Group's business.
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TV Consumption
The television industry is heavily dependent on its viewer base. Generally, the greater the number of viewers with commercial broadcasters in target groups relevant for advertisers, the greater is the demand for advertising space by advertisers, and consequently the potential to generate revenues from advertising. As such, demographic developments and the level of TV consumption are the inherent revenue drivers for television broadcasting companies.
The predominant form of TV consumption in the ProSiebenSat.1 Group's German-speaking markets is the consumption of so-called linear TV offerings, i.e., traditional broadcasts of scheduled television programs on a distinct TV station. In 2013, linear TV still accounted for 99.0 % of television consumption in Germany of viewers aged 3 years and above (source: AGF in cooperation with GfK, TV Scope 5.0), despite the rise of (non- linear) online media and related consumption. This can be explained by consumer habits, which tend to change slowly, and by the fact that scheduled TV broadcasts are still perceived as a convenient and intuitive way to watch audiovisual media. Linear TV is also perceived as a "lean-back" medium offering a "campfire" atmosphere, where families watch programs together, while non-linear content is more often watched individually and requires more interactivity. Furthermore, non-linear consumption is often complementing linear consumption (so-called "second-screen" usage). It is, however, likely that non-linear content consumption accelerates in the future, which may be driven by new media offerings, technical solutions, and audiences becoming more accustomed to non-linear content offerings. In addition to offering content through its (linear) free-TV stations, where the ProSiebenSat.1 Group predominantly competes for audiences with other established free-TV players, but also public broadcasters, the ProSiebenSat.1 Group also offers non-linear content through maxdome and MyVideo in Germany. These compete with a large and evolving number of free and pay (non- linear) offerings, such as Clipfish, iTunes, Lovefilm, RTL NOW, Videoload, Watchever, Snap, Amazon Prime and YouTube.
Features of the TV Market and Competitive Landscape
In each of Germany, Austria and Switzerland, the linear TV market can be divided into different categories. In each of these countries, there exists a public and a commercial sector. While commercial free-to-air broadcasters air their content at no charge to viewers (though distribution platforms may charge (access) fees for connectivity) and are predominantly advertising funded, public broadcasters in Germany, Austria and Switzerland are predominantly financed through mandatory levies charged to households. The commercial TV industry can further be divided into (advertising funded) free-TV and (subscription based) pay-TV.
Public and Commercial TV Broadcasters
Germany, the ProSiebenSat.1 Group's key market, is characterized by a large range of free-TV channels, which are further divided between public and commercial (private) broadcasters with different financing and regulatory models applicable to each category. Private free-TV broadcasting in Germany is predominantly advertising-funded, meaning that programming content is funded by a broadcaster who recoups the money by selling advertising space around this content. The overall net TV advertising spend in Germany was approximately EUR 4.051 billion in 2012 (source: ZAW, Werbung in Deutschland 2013), representing a 1.8 % growth versus the prior year figure of EUR 3.981 billion. According to estimates of the Issuer, the net TV advertising market has again grown in 2013 by a low single digit per cent. Public free television in Germany is predominantly financed via mandatory levies charged to households irrespective of their possession of broadcasting receivers or actual media consumption. Currently, German households are charged a monthly total fee for the reception of TV and radio in the amount of EUR 17.98. In total, the public broadcasters in Germany (excluding radio broadcasters) collect around EUR 4.7 billion in fees annually to finance their television operations (source: PwC, German Entertainment and Media Outlook: 2012-2016). In addition, certain public broadcasters' stations in Germany are also allowed to finance themselves through selling limited advertising space, including sponsoring. Based on their funding through mandatory broadcasting fees, these public broadcasters are significantly less dependent on advertising revenues and they have significant financial resources that enable them to secure attractive content, including major sports events (e.g., the Olympic Games or international football championships).
The two leading commercial free-TV broadcasting groups in Germany in 2013 by audience share were the ProSiebenSat.1 Group and RTL Group (majority-owned by Bertelsmann Group) through Mediengruppe RTL Deutschland (with five free-TV channels: RTL Television, VOX, Super RTL, N-TV and RTL Nitro) (source: AGF in cooperation with GfK, television Scope 5.0).
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In 2013, the ProSiebenSat.1 Group's free-TV stations achieved a combined all-day audience share in the reference target group of adults aged 14-49 years of 28.1 % (source: AGF in cooperation with GfK, TV Scope 5.0) while the ProSiebenSat.1 Group's main commercial competitor, RTL Group's free-TV stations, achieved an audience market share (excluding RTL 2 but including Super RTL) of 26.1 %. In the same period, the public broadcasters (ARD's "Das Erste", ZDF and Dritte) achieved a combined all-day audience share in the reference target group of adults 14-49 year olds of 18.4 %. In the most relevant time slot of the day, prime-time (from 8:00 p.m. to 11:00 p.m.), the ProSiebenSat.1 Group's free-TV stations achieved a combined audience share in the reference target group of adults 14-49 year olds of 28.4 % (source: AGF in cooperation with GfK, TV Scope 5.0) in 2013. RTL Group's free-TV stations, achieved a combined prime-time audience market share of 25.3% (excluding RTL 2 but including Super RTL, source: AGF in cooperation with GfK, TV Scope 5.0). In the same period, the public broadcasters (ARD's "Das Erste", ZDF and Dritte) achieved a combined prime-time audience share in the reference target group of adults aged 14-49 years of 23.6 %.
Premium Pay-TV and Basic Pay-TV Providers
There are several different types of pay-TV models/offers in the ProSiebenSat.1 Group's German-speaking markets. Some can be described as add-ons to cable, satellite or IPTV distribution services (often also referred to as "basic pay-TV"), while others are based on a separate subscription agreement with a distinct pay-TV provider, granting access to an extensive selection of pay-TV stations, which, depending on the content offered, are usually bundled in distinct packages. A number of these can be exclusive (referred to herein as "premium pay-TV" – although, there is no established definition or industry standard for pay-TV or the distinction between basic pay-TV and premium pay-TV).
The main premium pay-TV operator in Germany and Austria is Sky Deutschland, an affiliate of Twenty-First Century Fox, Inc., with approximately 3.7 million subscribers in Germany and Austria (source: Sky Deutschland AG, Preliminary Quarterly Report Q4 and Annual Report 2013). Deutsche Telekom Group also offers pay-TV through its Entertain offering which is distributed via IPTV. As of year-end 2013, Deutsche Telekom reported 2.2 million Entertain customers (source: Deutsche Telekom AG, Annual Report 2013). The largest pay-TV provider in Switzerland is Teleclub AG. While free-to-air broadcasters and (premium) pay-TV operators do not necessarily directly compete for content (as content owners usually sell TV content for linear broadcast on an exclusive basis in separate free-TV and pay-TV windows, typical exceptions being selected sports rights which may be available on both free – and pay-TV simultaneously), the main competitive impact by pay-TV in the ProSiebenSat.1 Group's markets remains a potentially growing subscriber base of pay-TV offerings and their impact on TV consumption and reach.
Technical Access Fees
Like the public broadcasters, the private free-TV broadcasters have started to air their stations in high-definition (HD) signal quality, in addition to broadcasting the standard definition (SD) signal. Many cable network and IPTV operators, charge for the distribution of the HD versions of private free-TV stations a supplemental fee in the form of either an add-on technical access fee (such as for ProSieben HD via HD+ or through the HD add-on offerings of cable and IPTV operators). The costs for such add-ons vary and there are often different add-on options (with different pricing) to choose from. In case of satellite transmission, private HD channels can only be received by consumers through payment of a technical access fee. In Austria, add-on HD stations are available through M7 Group with HD Austria (satellite), UPC (cable) and Telekom Austria (IPTV). In Switzerland, UPC Cablecom (cable) and Swisscom (IPTV) offer HD add-on versions. There is currently no private add-on HD offering available for satellite in Switzerland since Switzerland is not a satellite market.
Hybrid Broadcast Broadband TV (HbbTV)
Following its inception in June 2010, a new specification for a global standard for hybrid entertainment services, HbbTV, was approved by the European Telecommunications Standards Institute in November 2012. HbbTV is an industry standard providing an open and business neutral technology platform that seamlessly combines traditional broadcast TV, internet and connected devices (such as TV-sets and set-top boxes) through a single user interface, creating an open platform as an alternative to proprietary technologies. Services delivered through HbbTV include enhanced teletext, catch-up services, video-on-demand, electronic program guides, interactive advertising, personalization, voting, games, social networking, and other multimedia applications. HbbTV services are already in operation in Germany, Austria and Switzerland. However, overall, the prevalence of HbbTV and its impact on the TV industry is growing but is currently still limited.
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TV Distribution Platforms
Television content is distributed over various distribution platforms, including satellite, cable and digital terrestrial television systems, as well as through broadband internet access technologies such as VDSL or ADSL2+ or mobile broadband (3G or 4G/LTE). The (predominant) use of certain TV distribution platforms and the development of existing or new TV distribution platforms have an impact on the ProSiebenSat.1 Group's business as they determine the reach of the ProSiebenSat.1 Group's TV stations and general capacity limitations for TV broadcasts. In addition, the Issuer believes that they will influence the future development of the television industry and its competitive landscape.
In each of Germany, Austria and Switzerland, satellite and cable are the most important distribution platforms. Satellite was the leading television content distribution platform in Germany as of December 31, 2013 with approximately 18.1 million, or 47.0 %, of households watching TV via satellite. Cable was used by approximately 16.9 million, or 43.8 %, of households, followed by digital terrestrial transmission ("DTT"), with approximately 2.1 million, or 5.4 % of households, and IPTV with approximately 1.5 million, or 3.8 %, of households (source: Astra TV Monitor 2013, TNS Infratest). In Austria, satellite is the leading distribution platform, used by approximately 1.8 million, or 50.2 %, of households, followed by cable, used by 1.6 million, or 44.0 %, of households (incl. IPTV), DTT, used by 0.2 million, or 5.8 %, of households as of December 31, 2013 (source: AGTT, GfK TELETEST, Evogenius Reporting). In Switzerland in 2013, 55 % of individuals received television by cable, and 12 % by satellite, 1 % by DTT and already 25 % by IPTV (source: Mediapulse TV Panel).
Across these distribution platforms, 77.4 % of German (source: AGF in cooperation with GfK, TV Scope 5.0), 79.8 % of Austrian (source: AGTT, GfK TELETEST, Evogenius Reporting) and 80.5 % of Swiss (source: Mediapulse TV Panel) television households receive and use digital programming. To receive digital TV signals, consumers require either a set-top box, CI modules or an integrated digital TV set. Analog terrestrial TV has been switched off and completely replaced by DTT in Germany, Austria and Switzerland. The same is true for the TV signals broadcast via satellite, after the analog signal was switched off in April 2012. The digitalization rate of cable is lower. In Germany 55.9 % of the television households received digital cable TV signals in 2013 (source: Die Medienanstalten, Digitalisierungsbericht 2013). While, cable networks are now almost fully digitalized and digital signals are distributed in parallel to analog signals (cable users can opt between digital or analog TV), the full digitalization in cable is progressing more slowly, partly due to the fact that many households have analog cable TV included as a component of their rent and would have to actively opt-in to receive digital cable TV signals (source: Digital Fernsehen, Studie: Vollständige Digitalisierung des TV verzögert sich).
TV Advertising Market
Germany is Europe's largest advertising market. The Austrian and Swiss advertising markets are considerable smaller, but still rank among the largest European advertising markets. On the basis of 2012 advertising sales data as published by Zenith Optimedia, the German market was valued at USD 23.4 billion and the Austrian market was valued at USD 4.2 billion. The Swiss market was valued at USD 5.7 (source: Zenith Optimedia December 2013).
According to ZAW data, the overall German advertising market as it relates to net advertising expenditures (net of rebates, commissions and production costs) was valued at EUR 18.4 billion in 2012. This was EUR 599 million, or 3.2 %, less than 2011. In contrast to the overall shrinking advertising market in Germany, TV advertising showed growth of 1.8 % for the same period. Net advertising sales in the German TV advertising market amounted to approximately EUR 4.1 billion in 2012, of which EUR 3.8 billion (or 93 %) were generated by private broadcasters and EUR 0.3 billion (or 7 %) by public broadcasters (source: ZAW, Werbung in Deutschland 2013). The 2012 decline of the overall advertising market followed two years of growth. This two-year growth was a (partial) recovery from a sharp decline of almost 10 % of net advertising sales in 2009. Based on the ZAW data, this is particularly true for TV advertising, which is the only advertising medium other than online that significantly increased its net advertising sales when compared to 2009 (source: ZAW, Werbung in Deutschland 2013).
Advertising intensity (advertising market size divided by nominal GDP, expressed as a percentage) in Germany was 0.68 % in 2012. In Austria and Switzerland, the advertising intensity was 1.05 % and 0.89 %, respectively (source: Zenith Optimedia June 2013). Advertising intensity, connoting the overall advertising spending in a country relative to GDP, can be applied as an indicator of the importance of the advertising industry in the overall economy of a country and underlines the relative importance of advertising (source: ZAW, Werbung in Deutschland 2013).
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The allocation of advertising spending by advertisers among the various media (e.g., newspapers, magazines, TV, radio, cinema, outdoor and internet) is referred to as the "media mix". In the ProSiebenSat.1 Group's core German advertising market, television, representing the second most important advertising medium after print (including daily newspapers), has over the last five years moderately grown its share in the media mix (based on gross advertising revenues) from around 20 % in 2007 and to 22 % in 2012 (source: ZAW, Werbung in Deutschland 2013). In Austria, the share of television in the media mix was 20.4 % in 2011 and in Switzerland, the share was 18.2 % in 2010 – according to the most recent figures published by ZAW for Switzerland (source: ZAW, Werbung in Deutschland 2013 (for Austria) and ZAW, Werbung in Deutschland 2012 (for Switzerland)).
The predominant part of TV advertising space is purchased by major media buying agencies active in the German, Austrian and/or Swiss television market. Media buying agencies offer their advertising customers intensive and tailored consultation and various marketing and research services. Media buying agencies, such as GroupM, Aegis Media, Omnicom and Publicis Groupe Media, enjoy strong bargaining power due to their size. For example, the largest advertising media buying group, GroupM, a subsidiary of WPP Group, accounted for around 42 % of media buying agency budgets spent on the ProSiebenSat.1 Group's German TV stations in 2013. Further, in late July 2013, Omnicom and Publicis announced a planned merger, which, upon its consummation, will lead to further concentration of the media buying agency market.
Advertisers can be divided into different product/service sectors or industries, such as food, cosmetics & toiletries, motor vehicles, pharmaceuticals, financial services, beverages, etc. In Germany, the food industry is the largest purchaser of TV advertising space. The break-downs, and thus the rankings, may, however, vary. For example, the food industry can be broken down into subsectors, and beverages can be divided into different categories, such as non-alcoholic beverages, beer, coffee & tea. General economic or specific developments may have an effect on the volume of advertising investments by the individual sectors, and a decline in advertising spending of one sector may not necessarily be offset by higher spending of the other sectors. Regulatory developments may also impact advertising spending by entire sectors, an example being the broad ban on advertising for tobacco products in the European Union. A political debate on restrictions concerning advertisements for alcoholic beverages is ongoing.
Online Entertainment, Online Advertising and E-Commerce
The ProSiebenSat.1 Group is actively developing its digital entertainment, digital commerce and adjacent activities, which are bundled in the Digital & Adjacent segment and accounted for 14.2 % of the ProSiebenSat.1 Group's consolidated revenues in 2012 and 18.6 % in 2013, respectively. These activities include maxdome, Germany's largest video-on-demand platform (based on 2012 pay-VoD market share excluding "download to own"), an advertising-financed online network (including websites such as MyVideo), the ProSiebenSat.1 Group's online games business, as well as its digital commerce activities such as in the travel portfolio and the music and live entertainment business. The digital and new media industry, which is characterized by digital content and to a very large extent based on the internet, can be defined in different ways and subdivided into many markets. The following discussion centers around the VoD and the online games markets in Germany, Austria and Switzerland.
Online Entertainment
Video-on-Demand
The ProSiebenSat.1 Group's online revenues are to a significant degree derived from online advertising (e.g., MyVideo) in the video-on-demand market and from pay-VoD revenues (maxdome). Increased internet use complements the TV and video-on-demand market. More than 70 % of users who watch TV and use the internet simultaneously conduct some TV-related online activity. In 2013, the German video-on-demand market (TVoD, SVoD and EST) had a market size of EUR 154 million, which represents an increase of 24 % versus 2012 (source: GfK January – December 2013 - The digital video market). At the same time, the share of online video consumers increased from 44 % in 2011 to 58 % in 2013, for paid online video from 4 % to 12 % in the respective years (Universe: online users 14-49 years old, source: SevenOne Media/mindline media 2013).
Online Games
There are numerous online games offerings available to consumers in the German-speaking market. Between 2011 and 2012, the number of users visiting websites to play online games increased by 26.4 % in Germany. Approximately 16 % of the population play games on their mobile devices (i.e., smartphones or tablets) (source: ZAW, Werbung in Deutschland 2013). Online games are often purchased at retail outlets and then played online, or they are played online free of charge, with payments for "virtual items", or against a subscription fee. Another
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model is "free to play" where gamers can download a game or play within the web browser "for free" with the opportunity to buy virtual items in the games. This category of games is known for its micro-transactions, in which players purchase accessories and additional game content to enhance their experience. This concept is also known as "virtual item selling" and also referred to as "freemium" or "free-to-play". Other business models are based on so-called "channeling", where commissions or a share of revenues is paid by third-party online game operators to their business partners for referrals/links to the online game operators' services. Besides mobile games, online games are the fastest growing end user category in the video game market. Worldwide, the online games market is expected to total USD 30.2 billion in 2017 and will be besides console games the largest gaming category by 2017 (source: PwC, Global Entertainment and Media Outlook 2013-2017).
Online Advertising Market
The online advertising market is broad and growing fast. The advertising methods and technologies applied are diverse, but can be broadly divided into display advertising (with in-page advertising, such as banner and pop- up advertising, and in-stream video advertising as sub-segments), search marketing (or search word advertising) and affiliate marketing (or affiliate network advertising). While in-page advertising can be viewed as the traditional form of display online advertising, in-stream video has emerged with the growing consumption of (advertising-financed) video content on the internet. Search marketing, which was most successfully implemented by today's global market leader Google Inc., has created a new industry of advertising tailored to the user, by displaying advertisements that relate to the user's search query. Affiliate marketing, basically advertising that centers around links and referrals, has created an industry of market places and product information aggregators with price comparisons. Social media has also become an important online marketing tool, which has become an important element of marketing campaigns and brand building.
In Germany, the most important market for the ProSiebenSat.1 Group in terms of digital display advertising revenues is the in-stream video market (i.e., advertising clips embedded in video content) and, to a lesser degree, the in-page market. The ProSiebenSat.1 Group focuses on in-stream video as this digital advertising form is not only content-driven and TV-related, but also offers higher effectiveness to advertisers and therefore superior monetization as compared to in-page advertising. It does not operate in digital advertising segments such as search marketing (dominated in Germany by Google) or affiliate marketing. The total digital display advertising in Germany volume reached EUR 1.3 billion net in 2013, of which EUR 65 million net was display advertising on mobile devices. Traditional, i.e., digital display online advertising with 9% growth compared to the year 2012 saw the highest increase (source: BVDW/OVK).
In terms of net advertising revenues, the German online advertising market (excluding search marketing and affiliate marketing) reached the one billion euro mark for the first time in 2012. Net advertising revenues of online media increased by 9 % from EUR 990 million in 2011 to EUR 1,079 million in 2012 (source: ZAW, Werbung in Deutschland 2013). The market share in the overall German net advertising market reached 6 %. According to ZAW, a number of industries increased their online advertising spending significantly in 2012. The biggest spenders in terms of industry sectors were automobile manufacturers, which increased their online- net spending by 50 % to EUR 124.8 million in 2012, followed by the telecom and insurance sectors. Consumers and advertisers appreciate the opportunity for interaction offered by online advertising, which may be enhanced with links and other features rapidly providing information about products and services advertised. Growth in online advertising has continued in 2013.
E-Commerce Market
In the German e-commerce market, in which the ProSiebenSat.1 Group participates through its Digital Commerce business sales volumes and the number of transactions have increased dramatically over the last years. Based on data of the Trade Association of German Retailers (Bundesverband des Deutschen Versandhandels (bvh)), total e-commerce sales reached EUR 39.1 billion in 2013, an increase of over 41 % compared to the prior year. The biggest product group was clothing (EUR 11.56 billion), followed by books (EUR 5.31 billion) and entertainment electronics (EUR 3.96 billion). Among services sold online, airline tickets, other travel fare tickets, and event tickets accounted for EUR 7.8 billion in sales (source: bvh, Press Release dated February 18, 2014).
Audiovisual Content Production and Sales
With Red Arrow Entertainment Group, the ProSiebenSat.1 Group is active in content production and sales. Red Arrow Entertainment Group has invested in production companies across the most important TV markets, including the United Kingdom and the USA. This group of production companies participates in the entire TV value chain, from development and production to selling television programs. In 2013, more than 170 formats
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and pilots of both scripted and non-scripted content were produced. In 2013, programs produced by Red Arrow Entertainment Group were sold to more than 180 countries all over the world.
Significant Trends in the Television and Media Industry
The television and media industry is undergoing profound changes, which can also be observed in each of the ProSiebenSat.1 Group's markets. These changes center around the digitalization of content, its distribution and consumption and are driven by technological developments, new business models and lower barriers for new market entrants. While the media landscape of the future and the regulatory environment are difficult to predict, the Issuer believes that the following trends have, or may increasingly have, a significant impact on the television and media industry, and the ProSiebenSat.1 Group's activities:
– The market for audiovisual media entertainment is marked by increasing fragmentation and competition.
– Traditional TV will remain a mass entertainment medium.
– Social TV and second screen usage will support and complement traditional television.
– TV content and brands can be leveraged in the online video market.
– The effectiveness of advertising on television compared to other media will further support the relevance of television in the media mix.
– Content providers will continue to depend on linear TV as a distribution platform to monetize their content despite the rise of online video.
– Demand for premium television services such as HD, VoD and basic pay-TV will continue to rise.
– Traditional broadcasters will have to be able to address targeted audiences, to continuously adapt to demographic trends or offer programming to niche target groups.
– Advertising-financed television, digital entertainment offerings and convergent TV viewing measurement will grow more sophisticated.
– Digital-entertainment growth will continue to be driven by the roll-out of new services, changing consumer preferences and innovative distribution models.
– E-commerce will continue to grow dynamically and increasingly replace stationary sales of products and services; brands and reach will be the determining competitive advantages.
– The market for content production will remain highly fragmented and will continue to be influenced by growing demand for niche programming and cyclicality of hit formats.
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CONDITIONS OF ISSUE
Diese Anleihebedingungen (die These terms and conditions of the notes (the "Anleihebedingungen") sind in deutscher Sprache "Conditions of Issue") are written in the German abgefasst und mit einer englischen Übersetzung language and provided with an English language versehen. Der deutsche Wortlaut ist translation. The German text shall be the legally rechtsverbindlich. Die englische Übersetzung dient binding version. The English language translation nur zur Information. is provided for convenience only.
§ 1 Form und Nennbetrag § 1 Form and Denomination
(a) Die Emission der ProSiebenSat.1 Media AG (a) The issue by ProSiebenSat.1 Media AG (the (die "Emittentin") von "Issuer"), issued on April 15, 2014 (the Schuldverschreibungen im Gesamtnennbetrag "Issue Date") in the aggregate principal von amount of
EUR [] EUR []
(in Worten: EUR [] Millionen), (in words: EUR [] million),
begeben am 15. April 2014 (der is divided into [] notes in the principal "Begebungstag") ist in [] untereinander amount of EUR 1,000 (the "Specified gleichberechtigte, auf den lnhaber lautende Denomination") each payable to bearer Schuldverschreibungen (die and ranking pari passu with each other (the "Schuldverschreibungen" und jeweils eine "Notes" and each a "Note"). "Schuldverschreibung") im Nennbetrag von je EUR 1.000 (die "Festgelegte Stückelung") eingeteilt.
(b) Die Schuldverschreibungen lauten auf den (b) The Notes are being issued in bearer form. Inhaber.
(c) Die Schuldverschreibungen werden zunächst (c) The Notes are initially represented by a durch eine vorläufige auf den Inhaber temporary global note payable to bearer (the lautende Globalschuldverschreibung (die "Temporary Global Note") without "Vorläufige Globalurkunde") ohne interest coupons. The Temporary Global Zinsscheine verbrieft. Die Vorläufige Note will be exchanged for Notes in the Globalurkunde wird gegen Specified Denomination represented by a Schuldverschreibungen in der Festgelegten permanent global bond payable to bearer Stückelung, die durch eine permanente auf (the "Permanent Global Note", together den Inhaber lautende with the Temporary Global Note, each a Globalschuldverschreibung (die "Global Note") without interest coupons, "Dauerglobalurkunde", die Vorläufige on a date (the "Exchange Date") not earlier Globalurkunde und die Dauerglobalurkunde than 40 days after the Issue Date. Such jede für sich eine "Globalurkunde") ohne exchange shall only be made upon delivery Zinsscheine verbrieft sind, an einem Tag (der of certifications to the effect that the "Austauschtag") ausgetauscht, der nicht beneficial owner or owners of the Notes weniger als 40 Tage nach dem Begebungstag represented by the Temporary Global Note liegt. Ein solcher Austausch darf nur nach is not a U.S. person (other than certain Vorlage von Bescheinigungen erfolgen, financial institutions or certain persons wonach der oder die wirtschaftlichen holding Notes through such financial Eigentümer der durch die vorläufige institutions). Payment of interest on Notes Globalurkunde verbrieften represented by a Temporary Global Note Schuldverschreibungen keine U.S. Personen will be made only after delivery of such sind (ausgenommen bestimmte certifications. A separate certification shall Finanzinstitute oder bestimmte Personen, die be required in respect of each such payment Schuldverschreibungen über solche of interest. Any such certification received Finanzinstitute halten). Zinszahlungen auf on or after the 40th day after the Issue Date durch eine vorläufige Globalurkunde of the Notes represented by the Temporary verbriefte Schuldverschreibungen erfolgen Global Note will be treated as a request to
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erst nach Vorlage solcher Bescheinigungen. exchange such Temporary Global Note Eine gesonderte Bescheinigung ist für jede pursuant to subparagraph (c) of this § 1. solche Zinszahlung erforderlich. Jede Bescheinigung, die am oder nach dem 40. Tag nach dem Begebungstag der durch die vorläufige Globalurkunde verbrieften Schuldverschreibungen eingeht, wird als ein Ersuchen behandelt werden, diese vorläufige Globalurkunde gemäß Absatz (c) dieses § 1 auszutauschen.
(d) Die Vorläufige Globalurkunde und die (d) Each of the Temporary Global Note and the Dauerglobalurkunde sind jeweils nur Permanent Global Note shall only be valid wirksam, wenn sie die eigenhändigen if it bears the handwritten signatures of two Unterschriften von zwei durch die Emittentin duly authorized representatives of the bevollmächtigten Personen sowie die Issuer and the control signature of the eigenhändige Kontrollunterschrift der Principal Paying Agent. The issue of Hautzahlstelle tragen. Die Ausgabe von definitive certificates and interest coupons Einzelurkunden und Zinsscheinen ist shall be excluded. ausgeschlossen.
Die Globalurkunden werden bei dem Clearing The Global Notes shall be kept in custody System verwahrt, bis sämtliche by the Clearing System, until the Issuer has Verpflichtungen der Emittentin aus den satisfied and discharged all its obligations Schuldverschreibungen erfüllt sind. under the Notes.
(e) "Clearing System" bedeutet: Clearstream (e) "Clearing System" means: Clearstream Banking AG, Mergenthalerallee 61, 65760 Banking AG, Mergenthalerallee 61, 65760 Eschborn, Deutschland sowie jeder Eschborn, Germany, or any successor in Funktionsnachfolger. such capacity.
(f) "Gläubiger" bedeutet jeder Inhaber eines (f) "Holder" means any holder of a Miteigentumsanteils oder anderen proportionate co-ownership or other vergleichbaren Rechts an den beneficial interest or right in the Global Globalurkunden, die gemäß der Regeln und Notes which are transferred in accordance Bestimmungen des Clearing Systems with the rules and provisions of the übertragen werden. Clearing System.
§ 2 Status und Negativverpflichtung § 2 Status and Negative Pledge
(a) Status der Schuldverschreibungen (a) Status of the Notes
Die Schuldverschreibungen begründen nicht The Notes constitute unsubordinated and nachrangige und nicht besicherte unsecured obligations of the Issuer ranking Verbindlichkeiten der Emittentin, die pari passu among themselves and pari untereinander und mit allen anderen nicht passu with all other unsecured and besicherten und nicht nachrangigen unsubordinated obligations of the Issuer, Verbindlichkeiten der Emittentin gleichrangig unless such obligations are accorded sind, soweit diesen Verbindlichkeiten nicht priority under mandatory provisions of durch zwingende gesetzliche Bestimmungen statutory law. Vorrang eingeräumt wird.
(b) Negativverpflichtung der Emittentin (b) Negative Pledge of the Issuer
Die Emittentin verpflichtet sich, solange The Issuer undertakes, as long as any Notes Schuldverschreibungen ausstehen, jedoch nur are outstanding, but only up to the time all bis zu dem Zeitpunkt, an dem alle Beträge an amounts of principal and interest payable Kapital und Zinsen, die gemäß den under the Notes have been placed at the Schuldverschreibungen zu zahlen sind, der disposal of the Principal Paying Agent, not Hauptzahlstelle zur Verfügung gestellt to provide or maintain any mortgage, worden sind, keine Grund- und charge, pledge, lien or other form of in rem
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Mobiliarpfandrechte, sonstige Pfandrechte security interest (each a "Security oder sonstige dingliche Sicherungsrechte Interest") over the whole or any part of its (jeweils ein "Sicherungsrecht") in Bezug auf assets to secure any present or future ihr gesamtes Vermögen oder Teile davon zur Capital Market Indebtedness (as defined Besicherung von gegenwärtigen oder below) and the Issuer undertakes to procure zukünftigen Kapitalmarktverbindlichkeiten (unless this is legally impossible or illegal) (wie unten definiert) zu bestellen oder that none of its Material Subsidiaries (as fortbestehen zu lassen, und die Emittentin hat defined below) will provide Security ihre Wesentlichen Tochtergesellschaften (wie Interests over their assets to secure Capital unten definiert) zu veranlassen (es sei denn, Market Indebtedness without at the same dies ist rechtlich nicht möglich oder time letting the Holders share pari passu in unzulässig), keine solchen Sicherungsrechte such Security Interest or giving to the für Kapitalmarktverbindlichkeiten zu Holders an equivalent Security Interest. gewähren, ohne gleichzeitig die Gläubiger gleichrangig an einem solchen Sicherungsrecht zu beteiligen oder ihnen ein gleichwertiges Sicherungsrecht zu gewähren.
Diese Verpflichtung findet keine Anwendung This undertaking shall not apply to a auf Sicherungsrechte, die Security Interest which
(A) nach gesetzlichen Bestimmungen (A) has to be granted pursuant to vorgeschrieben sind, provisions of statutory law;
(B) als Voraussetzung für staatliche (B) has to be granted in order to obtain Genehmigungen verlangt werden, administrative or governmental authorisations or permits;
(C) von einer Tochtergesellschaft der (C) is granted by any subsidiary of the Emittentin für Forderungen bestellt Issuer for any claims of such werden, die dieser Tochtergesellschaft subsidiary vis-à-vis the Issuer or any aufgrund der Weiterleitung von aus dem subsidiary of the Issuer or any third Verkauf von party, whereas such claims exist now Kapitalmarktverbindlichkeiten in der or arise at any time in the future as a Form von result of the transfer of proceeds Wandelschuldverschreibungen erzielten derived from the sale of any Capital Erlösen gegen die Emittentin oder ihre Market Indebtedness in the form of Tochtergesellschaften oder sonstige convertible bonds Dritte gegenwärtig oder zukünftig (Wandelschuldverschreibungen) by zustehen, sofern solche Sicherheiten der that subsidiary, provided that any such Besicherung von Verpflichtungen aus security serves to secure obligations den jeweiligen under such Capital Market Kapitalmarktverbindlichkeiten dieser Indebtedness of that subsidiary; Tochtergesellschaft dienen,
(D) zum Zeitpunkt des Erwerbs von (D) exists on property at the time of the Vermögenswerten bereits an solchen acquisition thereof, provided that such Vermögenswerten bestehen, soweit Security Interest was not created in solche Sicherungsrechte nicht im connection with or in contemplation Zusammenhang mit dem Erwerb oder in of such acquisition and that the Erwartung des Erwerbs des jeweiligen amount secured by such Security Vermögenswertes bestellt wurden und Interest is not increased subsequently der durch das Sicherungsrecht to the acquisition of the relevant besicherte Betrag nicht nach Erwerb des property; or betreffenden Vermögenswertes erhöht wird, oder
(E) im Zusammenhang mit Asset-backed (E) granted in connection with asset Finanzierungen von der Emittentin oder backed securities transactions by the einer ihrer Tochtergesellschaften Issuer or any of its subsidiaries in an gewährt werden, bis zu einer Höhe von aggregate amount not exceeding
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insgesamt EUR 100.000.000. EUR 100,000,000.
"Kapitalmarktverbindlichkeit" bezeichnet "Capital Market Indebtedness" shall jede bestehende oder zukünftige mean any present or future indebtedness Verbindlichkeit (gleich ob Kapital, Aufgeld, (whether being principal, premium, interest Zinsen oder andere Beträge) bezüglich or other amounts) in respect of borrowed Geldaufnahmen in Form von, oder verbrieft money which is in the form of, or durch, Schuldverschreibungen, Anleihen oder represented by, bonds, notes or any similar ähnliche Wertpapiere, sofern sie an einer securities which are or are capable of being Börse oder einem anderen anerkannten und quoted, listed or traded on any stock regulierten Wertpapiermarkt notiert sind oder exchange or other recognised and regulated gehandelt werden oder werden können und securities market and certificates of Schuldscheindarlehen nach deutschem Recht. indebtedness (Schuldscheindarlehen) governed by German law.
"Wesentliche Tochtergesellschaft" "Material Subsidiary" means a (direct or bezeichnet jede direkte oder indirekte indirect) subsidiary of the Issuer whose Tochtergesellschaft der Emittentin, deren earnings before interest, tax, depreciation Anteile oder Stimmrechte (direkt oder and amortisation and exceptional items indirekt) von der Emittentin gehalten werden (calculated on the same basis as EBITDA) und deren Erträge vor Zinsen, Steuern, or gross assets exceed 7.5 % of the Abschreibungen und außerordentlichen consolidated EBITDA or the consolidated Aufwendungen oder Erträgen (berechnet auf gross assets of the Issuer, as determined derselben Grundlage wie EBITDA) oder from the most recent audited (consolidated) deren Bilanzsumme 7,5 % des konsolidierten financial statements of the Issuer and with EBITDA oder der konsolidierten respect to such Material Subsidiary based on Bilanzsumme der Emittentin übersteigen, so the data available for the respective financial wie sie bei dem letzten geprüften year which were used for consolidation. If (konsolidierten) Jahresabschluss der such data are not available with respect to Emittentin und auf der Grundlage der für das any newly acquired subsidiary, the most jeweilige Geschäftsjahr der jeweiligen recently delivered annual (audited as the Wesentlichen Tochtergesellschaft case may) financial statements of such verfügbaren Daten, die für Zwecke der newly acquired subsidiary shall be used. Konsolidierung genutzt wurden, festgestellt wurden. Stehen solche Daten für eine neu erworbene Tochtergesellschaft nicht zur Verfügung, ist auf den letzten (ggf. geprüften) Jahresabschluss dieser neu erworbenen Tochtergesellschaft abzustellen.
"EBITDA" bezeichnet das Ergebnis vor "EBITDA" means earnings before interest, Finanzergebnis, Ertragsteuern, taxes, depreciations, amortisations and Abschreibungen und außerordentlichen exceptional items. Aufwendungen oder Erträgen.
§ 3 Verzinsung § 3 Interest
(a) Die Schuldverschreibungen werden ab dem (a) The Notes shall bear interest on their 15. April 2014 (der "Zinslaufbeginn") mit principal amount at a rate of [●] % per [●] % jährlich (der "Zinssatz") auf ihren annum (the "Rate of Interest") as from Nennbetrag verzinst. Die Zinsen sind jährlich April 15, 2014 (the "Interest nachträglich am 15. April eines jeden Jahres Commencement Date"). Interest is payable (jeweils ein "Zinszahlungstag") zu zahlen. Die annually in arrears on 15 April in each year erste Zinszahlung ist am 15. April 2015 fällig. (each an "Interest Payment Date". The first interest payment will be due on April 15, 2015.
(b) Die Verzinsung der Schuldverschreibungen (b) The Notes shall cease to bear interest as endet mit Ablauf des Tages, der dem Tag from the expiry of the day preceding the day vorangeht, an dem sie zur Rückzahlung fällig on which they are due for redemption. If the sind. Falls die Emittentin die Issuer shall fail to redeem the Notes when
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Schuldverschreibungen bei Fälligkeit nicht due, interest shall continue to accrue on the einlöst, fallen auf den ausstehenden outstanding principal amount of the Notes Nennbetrag der Schuldverschreibungen ab beyond the due date until the actual dem Fälligkeitstag (einschließlich) bis zum redemption of the Notes at the default rate Tag der tatsächlichen Rückzahlung of interest established by law2. (ausschließlich) Zinsen zum gesetzlich festgelegten Satz für Verzugszinsen an1.
(c) Sofern Zinsen für einen Zeitraum von (c) If interest is required to be calculated for a weniger als einem Jahr zu berechnen sind, period of less than a full year, such interest erfolgt die Berechnung auf der Grundlage des shall be calculated on the basis of the Day Zinstagequotienten (wie nachstehend Count Fraction (as defined below). definiert).
"Zinstagequotient" bezeichnet im Hinblick "Day Count Fraction" means with regard auf die Berechnung eines Zinsbetrages auf to the calculation of interest on any Note for eine Schuldverschreibung für einen any period of time (the "Calculation beliebigen Zeitraum (der Period") the actual number of days in the "Zinsberechnungszeitraum") die Calculation Period divided by the actual tatsächliche Anzahl von Tagen im number of days in the respective interest Zinsberechnungszeitraum, dividiert durch die period. tatsächliche Anzahl von Tagen in der jeweiligen Zinsperiode.
§ 4 Zahlungen § 4 Payments
(a) Alle Zahlungen auf die (a) All payments on the Notes will be made in Schuldverschreibungen erfolgen in Euro an euro to the Principal Paying Agent for die Hauptzahlstelle zur Weiterleitung an das transfer to the Clearing System or to its Clearing System oder dessen Order zur order for credit to the accounts of the Gutschrift auf den Konten der jeweiligen relevant account holders of the Clearing Kontoinhaber des Clearing Systems. System. Payments made by the Issuer to the Zahlungen der Emittentin an das Clearing Clearing System or to its order shall System oder an dessen Order befreien die discharge the liability of the Issuer under Emittentin in Höhe der geleisteten Zahlungen the Notes to the extent of the sums so paid. von ihren Verbindlichkeiten aus den Payment of interest on Notes represented by Schuldverschreibungen. Die Zahlung von a Temporary Global Note shall be made Zinsen auf Schuldverschreibungen, die durch only upon the presentation of due eine vorläufige Globalurkunde verbrieft sind, certification by the relevant Holder as erfolgt nur nach Vorlage einer provided in § 1(d). A separate certification ordnungsgemäßen Bescheinigung durch den shall be required for each payment of jeweiligen Gläubiger gemäß § 1(d). Eine interest on Notes represented by a gesonderte Bescheinigung ist für jede Temporary Global Note. Zinszahlung auf Schuldverschreibungen, die durch eine vorläufige Globalurkunde verbrieft sind, erforderlich.
(b) Falls eine Zahlung in Bezug auf die (b) If the due date for payment of any amount Schuldverschreibungen an einem Tag fällig in respect of the Notes is not a Business wird, der kein Geschäftstag ist, so hat der Day, then the Holder will not be entitled to Gläubiger keinen Anspruch auf Zahlung vor payment until the next day which is a dem nachfolgenden Geschäftstag. In diesem Business Day. In such case the Holders Fall stehen den Gläubigern keine Ansprüche shall not be entitled to further interest, other auf zusätzliche Zinsen, sonstigen Zahlungen payments or to any other compensation on oder eine andere Ersatzleistung wegen dieser account of such postponement. Verschiebung zu.
1 Der gesetzliche Verzugszinssatz beträgt für das Jahr fünf Prozentpunkte über dem von der Deutsche Bundesbank von Zeit zu Zeit veröffentlichten Basiszinssatz, §§ 288 Absatz 1, 247 Bürgerliches Gesetzbuch. 2 The default rate of interest established by law is five percentage points above the basic rate of interest published by Deutsche Bundesbank from time to time, §§ 288(1), 247 German Civil Code (Bürgerliches Gesetzbuch).
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"Geschäftstag" ist jeder Tag (außer einem "Business Day" means a day (other than a Samstag oder Sonntag), an dem (a) das Trans- Saturday or Sunday) on which (a) the Trans- European Automated Real-time European Automated Real-time Grosssettlement Express Transfer System 2 Grosssettlement Express Transfer System 2 (TARGET 2) und (b) das Clearing System (TARGET 2) and (b) the Clearing System Zahlungen abwickeln. settle payments.
(c) Vorbehaltlich geltender steuerlicher und (c) Subject to applicable fiscal and other laws sonstiger gesetzlicher Regelungen und and regulations, payments of amounts due Vorschriften erfolgen zu leistende Zahlungen in respect of the Notes shall be made in auf die Schuldverschreibungen in Euro. Euro.
(d) Die Emittentin ist berechtigt, beim (d) The Issuer may deposit with the local court Amtsgericht München Zins- oder (Amtsgericht) in Munich principal or Kapitalbeträge zu hinterlegen, die von den interest not claimed by Holders within Gläubigern nicht innerhalb von zwölf twelve months after the Maturity Date, even Monaten nach dem Fälligkeitstermin though such Holders may not be in default beansprucht worden sind, auch wenn die of acceptance of payment. If and to the Gläubiger sich nicht in Annahmeverzug extent that the deposit is effected and the befinden. Soweit eine solche Hinterlegung right of withdrawal is waived, the respective erfolgt, und auf das Recht der Rücknahme claims of such Holders against the Issuer verzichtet wird, erlöschen die diesbezüglichen shall cease. Ansprüche der Gläubiger gegen die Emittentin.
§ 5 Rückzahlung § 5 Redemption
(a) Rückzahlung bei Endfälligkeit (a) Final Redemption
Die Schuldverschreibungen werden am 15. To the extent they have not previously been April 2021 (der "Fälligkeitstermin") zu redeemed or repurchased and cancelled, the ihrem Nennbetrag zuzüglich bis zum Notes will be redeemed on April 15, 2021 Fälligkeitstermin aufgelaufener Zinsen (the "Maturity Date") at their principal zurückgezahlt, soweit sie nicht vorher amount plus interest accrued until the zurückgezahlt oder zurückgekauft und Maturity Date. entwertet worden sind.
(b) Vorzeitige Rückzahlung aus steuerlichen (b) Early Redemption for reasons of Taxation. Gründen.
(i) Die Schuldverschreibungen können (i) If as a result of any change in, or insgesamt, jedoch nicht teilweise, nach amendment to, the laws or regulations of Wahl der Emittentin mit einer the Relevant Tax Jurisdiction (as defined Kündigungsfrist von nicht weniger als in § 6) in respect of the Issuer affecting 30 und nicht mehr als 60 Tagen taxation or the obligation to pay duties of gegenüber der Hauptzahlstelle und any kind, or any change in, or gegenüber den Gläubigern vorzeitig amendment to, an official interpretation gekündigt und zum Nennbetrag or application of such laws or zuzüglich bis zum für die Rückzahlung regulations, which amendment or change festgesetzten Tag (ausschließlich) is (in both cases) effective on or after the aufgelaufener Zinsen zurückgezahlt date on which the Notes were issued, the werden, falls die Emittentin als Folge Issuer is required to pay Additional einer Änderung oder Ergänzung der Amounts (as defined in § 6 herein) on Steuer- oder Abgabengesetze und - the next succeeding Interest Payment vorschriften der für die Emittentin Date (as defined in § 3(a)), and this Maßgeblichen Steuerjurisdiktion (wie in obligation cannot be avoided by the use § 6 definiert) oder als Folge einer of reasonable measures available to the Änderung oder Ergänzung der Issuer the Notes may be redeemed, in Anwendung oder der offiziellen whole but not in part, at the option of the Auslegung dieser Gesetze und Issuer, upon not more than 60 days' nor Vorschriften (vorausgesetzt, eine solche less than 30 days' prior notice of 107
Änderung oder Ergänzung wird am oder redemption given to the Principal Paying nach dem Tag, an dem die Agent and to the Holders, at the principal Schuldverschreibungen begeben werden, amount together with interest accrued to wirksam) am nächstfolgenden (but excluding) the date fixed for Zinszahlungstag (wie in § 3 (a) definiert) redemption. zur Zahlung von zusätzlichen Beträgen (wie in § 6 dieser Anleihebedingungen definiert) verpflichtet sein wird und diese Verpflichtung nicht durch das Ergreifen vernünftiger, der Emittentin zur Verfügung stehender Maßnahmen vermieden werden kann.
(ii) Die Kündigungserklärung darf nicht (i) (ii) No such call notice may be given (i) früher als 90 Tage vor dem Tag earlier than 90 days prior to the earliest erfolgen, an dem die Emittentin date on which the Issuer would be for the verpflichtet wäre, solche zusätzlichen first time obliged to pay the Additional Beträge erstmalig gemäß § 6 zu zahlen Amounts pursuant to § 6 or (ii) if at the oder (ii) erfolgen, wenn zu dem time such notice is given, such obligation Zeitpunkt, zu dem die Kündigung to pay such Additional Amounts is no erfolgt, die Verpflichtung zur Zahlung longer in effect. von zusätzlichen Beträgen nicht mehr wirksam ist.
(iii) Eine solche Erklärung hat gemäß § 9 zu (iii) Any such notice shall be given in erfolgen. Sie ist unwiderruflich, muss accordance with § 9. It shall be den für die Rückzahlung festgelegten irrevocable, must specify the date fixed Termin nennen und eine for redemption and must set forth a zusammenfassende Erklärung enthalten, statement in summary form of the facts welche die das Rückzahlungsrecht der constituting the basis for the right of the Emittentin begründenden Umstände Issuer so to redeem. darlegt.
(c) Vorzeitige Rückzahlung infolge eines (c) Early Redemption following a Change of Kontrollwechselereignisses. Control Event.
(i) Tritt ein Kontrollwechselereignis ein, (i) (i) If a Change of Control Event occurs (i) verpflichtet sich die Emittentin, the Issuer undertakes to (x) fix the unverzüglich (x) den Wahl- Optional Redemption Date (as defined Rückzahlungstag (wie nachstehend below) and (y) give notice to the definiert) zu bestimmen und (y) das Holders in accordance with § 9 and to Kontrollwechselereignis und den Wahl- the Principal Paying Agent of the Rückzahlungstag den Gläubigern durch Change of Control Event and the Mitteilung gemäß § 9 (die Optional Redemption Date (the "Kontrollwechselereignis-Mitteilung") "Change of Control Event Notice"), und der Hauptzahlstelle bekannt zu in each case without undue delay machen und (ii) hat jeder Gläubiger das (unverzüglich), and (ii) each Holder Recht (sofern nicht die Emittentin, bevor will have the option (unless, prior to die nachstehend beschriebene the giving of the Put Notice referred to Ausübungserklärung gemacht wird, die below, the Issuer gives notice to Rückzahlung der Schuldverschreibungen redeem the Notes in accordance with nach § 5(c) angezeigt hat), mit einer § 5(c)) to declare, on giving not less Frist von mindestens 30 Tagen mit than 30 days' notice, all of his Notes Wirkung zum Wahl-Rückzahlungstag due at the principal amount together sämtliche seiner Schuldverschreibungen with interest accrued to but excluding am Wahl-Rückzahlungstag zum the Optional Redemption Date, which Nennbetrag, zuzüglich aufgelaufener notice shall take effect on the Optional Zinsen bis zum Wahl-Rückzahlungstag Redemption Date. (ausschließlich) fällig zu stellen.
Ein "Kontrollwechselereignis" tritt ein, A "Change of Control Event" occurs
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wenn ein Kontrollwechsel (wie if a Change of Control (as defined nachstehend definiert) eintritt und es below) occurs and within the Change innerhalb des Kontrollwechselzeitraums of Control Period (as defined below) a (wie unten definiert) zu einer Absenkung Rating Downgrade (as defined below) des Ratings (wie unten definiert) kommt. occurs.
"Wahl-Rückzahlungstag" bezeichnet "Optional Redemption Date" means den von der Emittentin in der the date fixed by the Issuer in the Put Rückzahlungsereignis-Mitteilung Notice, which (i) must be a Business festgelegten Tag, der (i) ein Day and (ii) must fall not less than 60 Geschäftstag sein muss und (ii) nicht and not more than 90 days after weniger als 60 und nicht mehr als 90 publication of the Change of Control Tage nach Bekanntmachung der Event Notice. Kontrollwechselereignis-Mitteilung liegen darf.
(ii) Für Zwecke dieses § 5: (ii) For the purposes of this § 5:
gilt eine "Absenkung des Ratings" als A "Rating Downgrade" shall be eingetreten, deemed to have occurred
(A) wenn innerhalb des (A) if within the Change of Control Kontrollwechselzeitraums das Period the rating previously vorher für die assigned to the Notes by any Schuldverschreibungen vergebene Rating Agency (if only one rating Rating einer Rating-Agentur (falls exists) or the ratings assigned by nur ein Rating besteht) oder die at least two Rating Agencies (if Ratings von mindestens zwei two or more ratings exist) is (x) Rating-Agenturen (falls zwei oder withdrawn or (y) changed from mehr Ratings bestehen) (x) an investment grade rating (BBB- zurückgezogen oder (y) von einem by S&P or by Fitch or Baa3 by Investment Grade Rating (BBB- Moody's, or its equivalent for the von S&P oder Fitch oder Baa3 von time being, or better, an Moody's oder jeweils gleichwertig, "Investment Grade Rating") to oder besser, ein "Investment a non-investment grade rating Grade Rating") in ein Nicht- (BB+ by S&P or Fitch or Ba1 by Investment Grade Rating (BB+ von Moody's, or its equivalent for the S&P oder Fitch oder Ba1 von time being, or worse, a "Non- Moody's oder jeweils gleichwertig, Investment Grade Rating") and oder schlechter, ein "Nicht- not up-graded again to an Investment Grade Rating") Investment Grade Rating within geändert und nicht während des the Change of Control Period or Kontrollwechselzeitraums wieder (z) down-graded from a Non- auf ein Investment Grade Rating Investment Grade Rating heraufgestuft wird oder (z) von assigned to the Notes by one or einem Nicht-Investment Grade more notches (for clarification, Rating für die Ba1 to Ba2 or BB+ to BB being Schuldverschreibungen um eine one notch); or oder mehrere Stufen herabgestuft wird (zur Klarstellung: Ba1 zu Ba2 bzw. BB+ zu BB stellt eine Stufe dar) oder
(B) wenn zum Zeitpunkt des (B) if at the time of the Change of Kontrollwechsels kein Rating für Control, there is no rating die Schuldverschreibungen assigned to the Notes and no vergeben ist und keine Rating- Rating Agency assigns during the Agentur innerhalb des Change of Control Period an Kontrollwechselzeitraums ein Investment Grade Rating to the Investment Grade Rating für die Notes, Schuldverschreibungen vergibt,
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es sei denn, die Emittentin ist trotz unless the Issuer despite best zumutbarer Anstrengungen innerhalb endeavours, is unable to obtain an des Kontrollwechselzeitraums nicht in Investment Grade Rating or to der Lage ein Investment Grade Rating maintain the existing Non-Investment zu erhalten bzw. das bestehende Nicht- Grade Rating, within the Change of Investment Grade Rating beizubehalten, Control Period, provided that the in- ohne dass dies seine Ursache im ability is not a result of the Change of Kontrollwechsel hat; Control;
bezeichnet "Rating-Agentur" Standard "Rating Agency" means Standard & & Poor's Rating Services, eine Abteilung Poor's Rating Services, a division of von The McGraw-Hill Companies Inc. The McGraw-Hill Companies Inc. ("S&P"), Moody's Investors Services ("S&P"), Moody's Investors Services Limited ("Moody's") oder Fitch Ratings Limited ("Moody's") or Fitch Ratings Ltd. ("Fitch") oder eine ihrer jeweiligen Ltd. ("Fitch") or any of their Nachfolgegesellschaften; respective successors;
gilt ein "Kontrollwechsel" jedes Mal als A "Change of Control" shall be eingetreten, wenn die unmittelbare oder deemed to have occurred at each time mittelbare Beteiligung einer Person oder that the direct or indirect shareholding mehrerer Personen (die "relevante(n) in the share capital of the Issuer of any Person(en)"), die im Sinne von § 22 person or persons ("Relevant Absatz 2 WpHG abgestimmt handeln, Person(s)") acting in concert within am Grundkapital der Emittentin die the meaning of section 22 para. 2 of Schwelle von 50 % der Stimmrechte the German Securities Trading Act überschreitet. Ein Kontrollwechsel gilt (Wertpapierhandelsgesetz) exceeds the jedoch dann nicht als eingetreten, wenn threshold of 50 % of the voting rights. die relevante Person im Zeitpunkt des A Change of Control shall, however, Ereignisses, welches ansonsten einen be deemed not to have occurred if the Kontrollwechsel darstellen würde, von Relevant Person at the point in time of einer Person oder mehreren Personen the event, which would otherwise abhängig im Sinne von § 17 AktG ist, constitute a Change of Control, is deren unmittelbare oder mittelbare dependent within the meaning of Beteiligung am Grundkapital der section 17 of the German Stock Emittentin unmittelbar vor diesem Corporation Act (Aktiengesetz) on a Ereignis bei über 50 % der Stimmrechte person or persons whose direct or lag; indirect shareholdings in the share capital of the Issuer immediately prior to that event exceeded 50 % of the voting rights;
bezeichnet "Kontrollwechselzeitraum" "Change of Control Period" means den Zeitraum, der mit dem Tag der the period commencing on the date of ersten öffentlichen Bekanntmachung des the first public announcement of the eingetretenen Kontrollwechsels beginnt Change of Control having occurred und am 120. Tag (einschließlich) nach and ending on the 120th day (inclusive) dem Eintritt des Kontrollwechsels endet. after the occurrence of the relevant Change of Control.
(iii) Die wirksame Ausübung des Rechts auf (iii) The valid exercise of the option to Rückzahlung für eine require the redemption of a Note under Schuldverschreibung nach Maßgabe this § 5(c) is conditional upon the dieses § 5(c) setzt voraus, dass der Holder in observation of the notice Gläubiger unter Beachtung der period provided in § 5(c)(i): Kündigungsfrist gemäß § 5(c)(i)
(A) bei der angegebenen (A) submitting at the specified office Geschäftsstelle der Hauptzahlstelle of the Principal Paying Agent a eine ordnungsgemäß ausgefüllte duly signed and completed notice und unterzeichnete of exercise in the form (for the Ausübungserklärung einreicht, die time being current) obtainable
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in ihrer jeweils maßgeblichen Form from the specified office of the bei der angegebenen Niederlassung Principal Paying Agent (a "Put der Hauptzahlstelle erhältlich ist Notice"); and (die "Ausübungserklärung"); und
(B) seine Schuldverschreibung(en) an (B) delivering to the Principal Paying die Hauptzahlstelle liefert, und Agent the Note(s) by transferring zwar durch Lieferung (book-entry transfer) the Notes to (Umbuchung) der the account of the Principal Schuldverschreibungen auf das in Paying Agent with the Clearing der Ausübungserklärung System specified in the Put angegebene Konto der Notice. Hauptzahlstelle beim Clearing System.
Eine einmal abgegebene A Put Notice, once given, shall be Ausübungserklärung ist unwiderruflich. irrevocable. The Put Notice shall, Die Ausübungserklärung hat unter among other things: anderem die folgenden Angaben zu enthalten:
– Name und Anschrift des ausübenden – state the name and address of the Gläubigers; exercising Holder;
– die Zahl der Schuldverschreibungen, für – specify the number of Notes with die das Recht gemäß diesem § 5(c) respect to which the right under this ausgeübt werden soll; und § 5(c) shall be exercised; and
– die Bezeichnung eines auf Euro – designate a Euro denominated bank lautenden Bankkontos des Gläubigers, account of the Holder to which any auf das auf die Schuldverschreibungen payments on the Notes are to be made. zahlbare Beträge geleistet werden sollen.
(iv) Vorbehaltlich der Unterbreitung eines (iv) Subject to the submission of a Change Kontrollwechselangebots gemäß of Control Offer in accordance with § 5(c)(vii), wird die Emittentin § 5(c)(vii), the Issuer will make any Zahlungen in Bezug auf solchermaßen payment in respect of any Note so gelieferte Schuldverschreibung(en) am delivered to the Euro-account of the Wahl-Rückzahlungstag auf das Euro- Holder specified in the Put Notice on Bankkonto des Gläubigers, welches the Optional Redemption Date. dieser in der Ausübungserklärung ordnungsgemäß bezeichnet hat, überweisen.
(v) Wenn 75 % oder mehr des (v) If 75 % or more of the aggregate Gesamtnennbetrags der dann principal amount of the Notes then ausstehenden Schuldverschreibungen outstanding have been redeemed or gemäß dieses § 5 Absatz (c) purchased pursuant to the provisions zurückgezahlt oder zurückerworben of this § 5(c), the Issuer may, on not wurde, ist die Emittentin berechtigt, less than 30 or more than 60 days' nach vorheriger Bekanntmachung gemäß notice to the Holders according to § 9 § 9, die innerhalb von 30 Tagen nach given within 30 days after the Optional dem Wahl-Rückzahlungstag erfolgen Redemption Date, redeem, at its muss, gegenüber den Gläubigern mit option, the remaining Notes as a whole einer Frist von mindestens 30 und at the principal amount thereof plus höchstens 60 Tagen nach ihrer Wahl alle interest accrued to but excluding the ausstehenden Schuldverschreibungen date of such redemption. zum Nennbetrag zuzüglich bis zum Rückzahlungstag (ausschließlich) aufgelaufenen Zinsen zurück zu zahlen.
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(d) Vorzeitige Rückzahlung nach Wahl der (d) Early Redemption at the Option of the Emittentin Issuer
(i) Die Emittentin ist berechtigt, die (i) The Issuer may, on not less than 30 Schuldverschreibungen insgesamt, nor more than 60 days' prior notice of jedoch nicht teilweise, mit einer redemption given to the Holders in Kündigungsfrist von mindestens 30 und accordance with § 9, redeem, at its höchstens 60 Tagen gegenüber den option, the Notes, in whole but not in Gläubigern gemäß § 9 nach ihrer Wahl part, at the principal amount thereof vorzeitig zu kündigen und alle plus interest accrued to (but excluding) ausstehenden Schuldverschreibungen the date of such redemption, provided zum Nennbetrag zuzüglich bis zum that such redemption date does not fall Rückzahlungstag (ausschließlich) earlier than 90 days prior to the aufgelaufener Zinsen zurück zu zahlen, Maturity Date. wenn der Rückzahlungstag nicht länger als 90 Tage vor dem Fälligkeitstermin liegt.
(ii) Die Emittentin ist berechtigt, die (ii) The Issuer may at any time, on not less Schuldverschreibungen insgesamt, than 60 days' nor more than 90 days' jedoch nicht teilweise, mit einer prior notice of redemption given to the Kündigungsfrist von mindestens 60 und Holders in accordance with § 9, höchstens 90 Tagen gegenüber den redeem, at its option, the Notes, in Gläubigern gemäß § 9 nach ihrer Wahl whole but not in part, at their Early jederzeit vorzeitig zu kündigen und diese Call Redemption Amount (as defined zum Vorzeitigen Rückzahlungsbetrag below). The Issuer may not exercise (Call) (wie nachstehend definiert) such option in respect of any Note zurück zu zahlen. Der Emittentin steht which is the subject of the prior dieses Wahlrecht nicht in Bezug auf eine exercise by the Holder thereof of its Schuldverschreibung zu, deren option to require the redemption of Rückzahlung bereits der Gläubiger in such Note under § 5 (c). Ausübung seines Wahlrechts nach § 5 (c) verlangt hat.
(iii) Der "Vorzeitige Rückzahlungsbetrag (iii) The "Early Call Redemption (Call)" einer Schuldverschreibung Amount" of a Note shall be an amount entspricht der Summe aus: equal to the sum of:
(A) dem Nennbetrag der (A) the principal amount of the zurückzuzahlenden relevant Note to be redeemed; Schuldverschreibung; und and
(B) etwaigen aufgelaufenen und nicht (B) accrued but unpaid interest, if gezahlten Zinsen; und any; and
(C) der Anwendbaren Prämie (wie (C) the Applicable Premium (as nachstehend definiert). defined below).
Der Vorzeitige Rückzahlungsbetrag The Early Call Redemption Amount (Call) wird von der Hauptzahlstelle shall be calculated by the Principal berechnet. Paying Agent.
"Anwendbare Prämie" bezeichnet die "Applicable Premium" means the excess, etwaige Differenz zwischen if any, of
(i) dem Barwert zum Tag der Rückzahlung (i) the present value on such redemption date of
(A) des Nennbetrags der (A) the principal amount of the zurückzuzahlenden relevant Note, plus
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Schuldverschreibung; zuzüglich
(B) aller bis zum Fälligkeitstag (B) all remaining scheduled interest (ausschließlich) vorgesehenen und payments on such Note to (but noch fällig werdenden excluding) the Maturity Date Zinszahlungen,
abgezinst mit der Benchmark-Rendite discounted with the Benchmark Yield zuzüglich 0,40 % plus 0.40 %
und over
(ii) dem Nennbetrag der (ii) the principal amount of such Note on Schuldverschreibung zum Tag der the redemption date. Rückzahlung.
"Benchmark-Rendite" bezeichnet die am "Benchmark Yield" means the yield at the Rückzahlungs-Berechnungstag bestehende Redemption Calculation Date on the Rendite der entsprechenden Euro-Referenz- corresponding euro denominated Anleihe der Bundesrepublik Deutschland mit benchmark debt security of the Federal einer Laufzeit, die mit der verbleibenden Republic of Germany having a maturity Laufzeit der Schuldverschreibung bis zum comparable to the remaining term of the 15. April 2021 vergleichbar ist, und die im Note to April 15, 2021, that would be used Zeitpunkt der Auswahlentscheidung und at the time of selection and in accordance entsprechend der üblichen Finanzmarktpraxis with customary financial practice, in zur Preisbestimmung bei Neuemissionen von pricing new issues of corporate debt Unternehmensanleihen mit einer bis zum securities of comparable maturity to April 15. April 2021 vergleichbaren Laufzeit 15, 2021. verwendet werden würde.
"Rückzahlungs-Berechnungstag" ist der "Redemption Calculation Date" means dritte Geschäftstag vor dem Tag, an dem die the third Business Day prior to the date on Schuldverschreibungen gemäß diesem which the Notes are redeemed pursuant to § 5(d)(ii) zurückgezahlt werden. this §5 (d)(ii).
§ 6 Steuern § 6 Taxes
(a) Sämtliche auf die Schuldverschreibungen zu (a) All amounts payable in respect of the Notes zahlenden Beträge sind ohne Einbehalt oder shall be made, without withholding or Abzug von oder im Hinblick auf deduction for or on account of any present gegenwärtige(n) oder künftige(n) Steuern or future taxes or duties of whatever nature oder sonstige(n) Abgaben gleich welcher Art imposed or levied by way of withholding or zu leisten, die von oder in einem Land oder deduction by or on behalf of any Territorium, in welchem eine Zahlung unter jurisdiction from or through which payment den Schuldverschreibungen getätigt wird oder on the Notes is made or in which the Issuer in dem die Emittentin gegründet ist oder als is organised or otherwise considered to be ansässig angesehen wird oder Geschäfte aus resident or conducts business for tax steuerlicher Sicht tätigt (jeweils eine purposes (each a "Relevant Tax "Maßgebliche Steuerjurisdiktion") oder von Jurisdiction"), as the case may be, or any oder für Rechnung einer politischen political subdivision or any authority of a Untergliederung oder Steuerbehörde einer Relevant Tax Jurisdiction or therein having Maßgeblichen Steuerjurisdiktion, jeweils im power to tax unless such withholding or Wege des Einbehalts oder Abzugs, auferlegt deduction is required by law. oder erhoben werden, es sei denn, ein solcher Einbehalt oder Abzug ist gesetzlich vorgeschrieben.
(b) Ist ein solcher Einbehalt oder Abzug (b) If such withholding or deduction is required gesetzlich vorgeschrieben, so wird die by law, the Issuer will pay such additional Emittentin diejenigen zusätzlichen Beträge amounts (the "Additional Amounts") as (die "Zusätzlichen Beträge") zahlen, die shall be necessary in order that the net
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erforderlich sind, damit die den Gläubigern amounts received by the Holders, after such zufließenden Nettobeträge nach diesem withholding or deduction shall equal the Einbehalt oder Abzug jeweils den Beträgen respective amounts which would otherwise entsprechen, die ohne einen solchen Einbehalt have been receivable in the absence of such oder Abzug von den Gläubigern empfangen withholding or deduction; except that no worden wären; die Verpflichtung zur Zahlung such Additional Amounts shall be payable solcher Zusätzlicher Beträge besteht jedoch on account of any taxes or duties which: nicht im Hinblick auf Steuern und Abgaben, die
(i) die von einer als Depotbank oder (i) that are to be withheld by any person Inkassobeauftragter des Gläubigers acting as custodian bank or handelnden Person einzubehalten oder collecting agent of the Holder, or sonst auf andere Weise zu entrichten otherwise payable in any manner sind als dadurch, dass die Emittentin other than by a deduction or selbst auf die von ihr zu leistenden withholding by the Issuer, as the case Zahlungen einen Abzug oder Einbehalt may be, from payments made by it; vornimmt; oder or
(ii) die wegen einer anderen (ii) are payable by reason of the Holder gegenwärtigen oder früheren having, or having had, some personal persönlichen oder geschäftlichen or business connection with a Beziehung des Gläubigers zu einer Relevant Tax Jurisdiction and not Maßgeblichen Steuerjurisdiktion zu merely by reason of the fact that zahlen sind und nicht allein deshalb, payments in respect of the Notes are, weil Zahlungen auf die or for purposes of taxation are Schuldverschreibungen aus Quellen in deemed to be, derived from sources einer Maßgeblichen Steuerjurisdiktion in, or are secured in, a Relevant Tax stammen (oder für Zwecke der Jurisdiction; or Besteuerung so behandelt werden) oder dort besichert sind; oder
(iii) deren Einbehalt oder Abzug stattfindet (iii) where such withholding or deduction auf der Grundlage (x) einer Richtlinie is imposed pursuant to (x) any oder Verordnung der Europäischen European Union Directive or Union betreffend die Besteuerung von Regulation concerning the taxation Zinserträgen oder (y) einer of interest income, or (y) any zwischenstaatlichen Vereinbarung international treaty or understanding oder Verständigung über die relating to such taxation and to Besteuerung von Zinserträgen, an der which the Relevant Tax Jurisdiction die Maßgebliche Steuerjurisdiktion or the European Union is a party, or oder die Europäische Union beteiligt (z) any provision of law ist, oder (z) einer gesetzlichen implementing, or complying with, or Vorschrift, die diese Richtlinie, introduced to conform with, such Verordnung, Vereinbarung oder Directive, Regulation, treaty or Verständigung umsetzt oder entspricht understanding; or oder zu diesem Zweck eingeführt wurde oder
(iv) deren Einbehalt oder Abzug ein (iv) where a Holder or a third party on its Gläubiger oder ein in dessen Namen behalf could lawfully avoid (but has handelnder Dritter durch rechtmäßiges not so avoided) such deduction or Handeln vermeiden könnte (ihn aber withholding by complying or nicht vermieden hat), indem er die procuring that any third party acting gesetzlichen Vorschriften beachtet on its behalf complies with any (insbesondere die einschlägigen statutory requirements (in particular, Informations- und Nachweispflichten the applicable information and bezüglich der Staatsangehörigkeit, des reporting requirements concerning Wohnsitzes oder der Identität des the nationality, residence or identity Gläubigers) oder sicherstellt, dass of the Holder) or by making or jeder in seinem Namen handelnde procuring that any such third party
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Dritte die gesetzlichen Vorschriften makes a declaration of non-residence beachtet, oder indem er eine or other claim for exemption to any Nichtansässigkeitserklärung abgibt tax authority or by making the oder den Dritten veranlasst, eine payment by another paying agent; or solche Erklärung abzugeben oder eine Befreiung gegenüber den Steuerbehörden geltend macht oder indem er die Zahlung von Beträgen von einer anderen Zahlstelle veranlasst; oder
(v) die aufgrund einer Rechtsänderung zu (v) that are payable by reason of a zahlen sind, welche später als 30 Tage change in law that becomes effective nach dem späteren der beiden more than 30 days (x) after the folgenden Ereignisse wirksam wird: relevant payment becomes due or (y) (x) Fälligkeit der betreffenden Zahlung after the relevant payment is duly und (y) ordnungsgemäßer provided for and notice thereof is Bereitstellung aller fälligen Beträge published in accordance with § 9, und einer diesbezüglichen whichever occurs later, or Bekanntmachung gemäß § 9 wirksam wird, oder
(vi) durch eine Zahlstelle von einer (vi) are withheld or deducted by a paying Zahlung einbehalten oder abgezogen agent from a payment if the payment werden, wenn die Zahlung von einer could have been made by another anderen Zahlstelle ohne den Einbehalt paying agent without such oder Abzug hätte vorgenommen withholding or deduction. werden können.
Die in der Bundesrepublik Deutschland The (withholding) tax on capital investment geltende Kapitalertragsteuer (und zwar auch, income (Kapitalertragsteuer) currently in soweit diese als sog. Abgeltungssteuer effect in the Federal Republic of Germany erhoben wird und unabhängig davon, wer zur (including the final withholding tax Zahlung bzw. zum Einbehalt verpflichtet ist; (Abgeltungsteuer) and irrespective of the einschließlich des Solidaritätszuschlags auf entity that has to make the respective die Kapitalertragsteuer sowie etwaig payment/deduction); solidarity surcharge einzubehaltender Kirchensteuer), und jede (Solidaritätszuschlag) thereon, and church andere Steuer, welche die Kaitalertragsteuer tax (Kirchensteuer) (if applicable under the ersetzt, sind Steuereinbehalte durch eine als withholding regime)), as well as any other Depotbank oder Inkassostelle des Gläubigers tax that replaces the (withholding) tax on handelnde Person im Sinne von § 6(b)(i). capital investment income (Kapitalertragsteuer) from time to time constitute Taxes to be withheld by any person acting as custodian bank or collecting agent of the Holder within the meaning of § 6(b)(i).
§ 7 Kündigungsgründe § 7 Events of Default
(a) Jeder Gläubiger ist berechtigt, seine (a) Each Holder shall be entitled to declare his Schuldverschreibung zu kündigen und deren Notes due and demand immediate sofortige Rückzahlung zu ihrem Nennbetrag redemption thereof at par plus accrued zuzüglich (etwaiger) bis zum Tage der interest (if any) to the date of repayment, in Rückzahlung aufgelaufener Zinsen zu the event that: verlangen, falls:
(i) die Emittentin Kapital oder Zinsen (i) the Issuer fails to pay principal or oder eine andere Zahlung in Bezug auf interest or any other amount in die Schuldverschreibungen nicht respect of the Notes within 10 innerhalb von 10 Geschäftstagen nach Business Days from the relevant due dem betreffenden Fälligkeitstag zahlt; date;
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(ii) die Emittentin irgendeine andere (ii) the Issuer fails to duly perform any Verpflichtung aus den other obligation arising from the Schuldverschreibungen nicht Notes, as the case may be, and such ordnungsgemäß erfüllt und die default continues unremedied for Unterlassung länger als 45 Tage more than 45 days after the Issuer fortdauert, nachdem die Emittentin has received notice thereof from a eine diesbezügliche Mitteilung von Holder through the Principal Paying einem Gläubiger durch die Agent, such notice being Hauptzahlstelle nach Maßgabe von substantially in the form as specified Absatz (c) dieses § 7 erhalten hat; in subparagraph (c) of this § 7;
(iii) eine Finanzverbindlichkeit der (iii) any Financial Indebtedness of the Emittentin oder eine ihrer jeweiligen Issuer or any of its respective Wesentlichen Tochtergesellschaften Material Subsidiaries (other than any (ausgenommen Financial Indebtedness owed to any Finanzverbindlichkeiten gegenüber Subsidiary of the Issuer) is not paid einer Tochtergesellschaft der when due or, as the case may be, Emittentin) wird bei Fälligkeit bzw. within any originally applicable innerhalb einer etwaigen Nachfrist grace period, or any Financial nicht bezahlt oder eine Indebtedness of the Issuer or any of Finanzverbindlichkeit der Emittentin its respective Material Subsidiaries oder eine ihrer jeweiligen (other than any Financial Wesentlichen Tochtergesellschaften Indebtedness owed to any Subsidiary (ausgenommen of the Issuer) is declared to be due Finanzverbindlichkeiten gegenüber and payable prior to its specified einer Tochtergesellschaft der maturity for reason of the occurrence Emittentin) wird aus einem anderen of an event of default (howsoever Grund vor dem vorgesehenen defined), or the Issuer or any of its Fälligkeitstermin aufgrund des respective Material Subsidiaries fails Vorliegens einer Nichterfüllung oder to pay when due or, as the case may eines Verzuges (unabhängig davon, be, within any applicable grace wie eine solche bzw. ein solcher period any amount payable by it definiert ist) vorzeitig fällig gestellt under any present or future guarantee oder die Emittentin oder eine ihrer or indemnity for any Financial jeweiligen Wesentlichen Indebtedness (other than any Tochtergesellschaften einen Betrag, Financial Indebtedness owed to any der unter einer bestehenden oder Subsidiary of the Issuer), provided zukünftigen Garantie oder that in each case that the relevant Gewährleistung im Zusammenhang aggregate amount of all such mit einer Finanzverbindlichkeit Financial Indebtedness in respect of (ausgenommen which one or more of the events Finanzverbindlichkeiten gegenüber mentioned above in this paragraph einer Tochtergesellschaft der (iii) has or have occurred equals or Emittentin) zu zahlen ist, bei Fälligkeit exceeds EUR 50,000,000 or its oder innerhalb einer etwaigen equivalent in any other currency and Nachfrist nicht zahlt, jeweils such default continues for more than vorausgesetzt, dass der Gesamtbetrag 30 days after the Issuer has received der betreffenden notice thereof from a Holder through Finanzverbindlichkeit, bezüglich derer the Principal Paying Agent, such eines oder mehrere der in diesem notice being substantially in the form Absatz (iii) genannten Ereignisse as specified in subparagraph (c) of eintritt, mindestens dem Betrag von this § 7. This paragraph (iii) shall not EUR 50.000.000 (oder dessen apply, where the Issuer or any of its entsprechenden Gegenwert in einer respective Material Subsidiaries oder mehreren anderen Währung(en)) contests its relevant payment entspricht oder diesen übersteigt und obligation in good faith; or der jeweilige Kündigungsgrund nicht innerhalb von 30 Tagen, nachdem die Emittentin eine diesbezügliche Mitteilung von einem Gläubiger durch die Hauptzahlstelle nach Maßgabe von
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Absatz (c) dieses § 7 erhalten hat, behoben wird. Dieser Absatz (iii) ist jedoch nicht anwendbar, wenn die Emittentin oder eine ihrer jeweiligen Wesentlichen Tochtergesellschaften ihre betreffenden Zahlungsverpflichtungen in gutem Glauben bestreitet; oder
(iv) die Emittentin oder eine ihrer (iv) the Issuer or any of its respective jeweiligen Wesentlichen Material Subsidiaries suspends its Tochtergesellschaften ihre Zahlungen payments or announces its inability einstellt oder ihre Zahlungsunfähigkeit to meet its financial obligations, or bekannt gibt, oder
(v) ein zuständiges Gericht gegen die (v) a competent court opens insolvency Emittentin oder eine ihrer jeweiligen proceedings against the Issuer or any Wesentlichen Tochtergesellschaften of its respective Material ein Insolvenzverfahren eröffnet, das Subsidiaries which has not been nicht innerhalb von 60 Tagen nach dismissed or stayed within 60 days dessen Eröffnung aufgehoben oder after the commencement thereof, or ausgesetzt worden ist, oder die the Issuer or any of its respective Emittentin oder eine ihrer jeweiligen Material Subsidiaries institutes such Wesentlichen Tochtergesellschaften a proceeding, or ein solches Verfahren beantragt, oder
(vi) die Emittentin in Liquidation tritt, es (vi) the Issuer is wound up, unless this is sei denn, dies geschieht im effected in connection with a merger Zusammenhang mit einer or another form of amalgamation Verschmelzung oder einer anderen with another company or in Form des Zusammenschlusses mit connection with a restructuring, and einer anderen Gesellschaft oder im the other or the new company Zusammenhang mit einer assumes all obligations of the Issuer Umwandlung und die andere oder neue arising in connection with the Notes; Gesellschaft übernimmt alle or Verpflichtungen, die die Emittentin im Zusammenhang mit den Schuldverschreibungen eingegangen ist; oder
(vii) in der Bundesrepublik Deutschland ein (vii) any law, governmental order, decree Gesetz, eine Verordnung oder or enactment will enter into force in behördliche Anordnung in Kraft tritt, the Federal Republic of Germany durch welche die Emittentin rechtlich whereby the Issuer is legally gehindert ist, die von ihr gemäß diesen prevented from performing its Anleihebedingungen begründeten obligations as set forth in these Verpflichtungen zu erfüllen und diese Conditions of Issue respectively, and Lage nicht binnen 90 Tagen behoben this situation is not cured within 90 ist (die unter (i) bis (vii) aufgeführten days (each of the events set out Ereignisse, jeweils ein under (i) to (vii) above, an "Event of "Kündigungsgrund"). Default").
Das Kündigungsrecht erlischt, falls der The right to declare Notes due shall Kündigungsgrund vor Ausübung des Rechts terminate if the situation giving rise to it geheilt wurde. has been cured before such right is exercised.
"Finanzverbindlichkeit" bezeichnet (i) jede "Financial Indebtedness" means (i) any Kapitalmarktverbindlichkeit (wie in § 2 Capital Market Indebtedness (as defined in definiert) und (ii) die valutierten § 2) and (ii) the disbursed principal amount Kapitalbeträge aller Gelder, die als Darlehen of all moneys borrowed from banks.
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von Banken aufgenommen wurden.
(b) In den Fällen des § 7(a)(ii) oder (iii) wird eine (b) In the events specified in § 7(a)(ii) or (iii), Kündigung, sofern nicht bei deren Eingang any notice declaring Notes due shall, unless zugleich einer der in § 7(a)(i) und (iv) bis (vii) at the time such notice is received any of the bezeichneten Kündigungsgründe vorliegt, erst events specified in § 7(a)(i) and (iv) to (vii) wirksam, wenn bei der Hauptzahlstelle entitling Holders to declare their Notes due Kündigungserklärungen von Gläubigern von has occurred, become effective only when Schuldverschreibungen im Nennbetrag von the Principal Paying Agent has received mindestens 10 % der dann ausstehenden such notices from the Holders of at least Schuldverschreibungen eingegangen sind. 10 % in the principal amount of Notes then outstanding. (c) Eine Benachrichtigung, einschließlich einer Kündigung der Schuldverschreibungen gemäß (c) Any notice, including any notice declaring Absatz (a) ist schriftlich in deutscher oder Notes due, in accordance with subparagraph englischer Sprache gegenüber der (a) shall be made by means of a written Hauptzahlstelle zu erklären, zusammen mit declaration in the German or English dem Nachweis durch eine Bescheinigung der language delivered by hand or registered Depotbank (wie in § 14 (e) beschrieben) oder mail to the specified office of the Principal in einer anderen geeigneten Weise, dass der Paying Agent together with a proof that Benachrichtigende zum Zeitpunkt der such notifying Holder at the time of such Benachrichtigung ein Gläubiger der notice is a holder of the relevant Notes by betreffenden Schuldverschreibung ist, und means of a statement of his Custodian (as persönlich oder per Einschreiben an deren described in § 14(e)) or any other bezeichnete Geschäftsstelle zu übermitteln. appropriate manner.
§ 8 Zahlstelle § 8 Paying Agent
(a) Die Commerzbank Aktiengesellschaft ist die (a) Commerzbank Aktiengesellschaft will be Hauptzahlstelle (die "Hauptzahlstelle", und the principal paying agent (the "Principal gemeinsam mit etwaigen von der Emittentin Paying Agent", and together with any nach § 8(b) bestellten zusätzlichen additional paying agent appointed by the Zahlstellen, die "Zahlstellen"). Die Issuer in accordance with § 8(b), the Geschäftsräume der Hauptzahlstelle befinden "Paying Agents"). The address of the sich unter der folgenden Adresse: specified office of the Principal Paying Agent:
Hauptzahlstelle: Principal Paying Agent: Commerzbank Aktiengesellschaft Commerzbank Aktiengesellschaft Kaiserstraße 16 (Kaiserplatz) Kaiserstraße 16 (Kaiserplatz) 60311 Frankfurt am Main 60311 Frankfurt am Main Bundesrepublik Deutschland Federal Republic of Germany
Jede Zahlstelle ist von den Beschränkungen Each Paying Agent will be exempt from the des § 181 BGB und etwaigen gleichartigen restrictions set forth in § 181 of the German Beschränkungen des anwendbaren Rechts Civil Code (Bürgerliches Gesetzbuch) and anderer Länder befreit. similar restrictions of other applicable laws.
In keinem Fall dürfen sich die Geschäftsräume In no event will the specified office of any einer Zahlstelle innerhalb der Vereinigten Paying Agent be within the United States. Staaten befinden.
(b) Die Emittentin wird dafür sorgen, dass stets (b) The Issuer will procure that there will at all eine Hauptzahlstelle vorhanden ist. Die times be a Principal Paying Agent. The Emittentin ist berechtigt, andere international Issuer is entitled to appoint other banks of anerkannte Banken als Zahlstellen zu international standing as Paying Agents. bestellen. Die Emittentin ist weiterhin Furthermore, the Issuer is entitled to berechtigt, die Bestellung einer Bank zur terminate the appointment of any Paying Zahlstelle zu beenden. Im Falle einer solchen Agent. In the event of such termination or
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Beendigung oder falls die bestellte Bank nicht such bank being unable or unwilling to mehr als Zahlstelle tätig werden kann oder continue to act as Paying Agent, the Issuer will, bestellt die Emittentin eine andere will appoint another bank of international international anerkannte Bank als Zahlstelle standing as Paying Agent in the relevant in der jeweiligen Funktion. Eine solche capacity. Such appointment or termination Bestellung oder Beendigung der Bestellung will be published without undue delay in ist unverzüglich gemäß § 9 oder, falls dies accordance with § 9, or, should this not be nicht möglich sein sollte, durch eine possible, be published in another öffentliche Bekanntmachung in sonstiger appropriate manner. geeigneter Weise bekannt zu machen.
(c) Jede Zahlstelle ist in dieser Funktion (c) Each Paying Agent acting in such capacity, ausschließlich Beauftragte der Emittentin. acts only as agent of the Issuer. There is no Zwischen einer Zahlstelle und den Gläubigern agency or fiduciary relationship between besteht kein Auftrags- oder any Paying Agent and the Holders. Treuhandverhältnis.
§ 9 Mitteilungen § 9 Notices
(a) Alle Mitteilungen, die die (a) All notices regarding the Notes shall be Schuldverschreibungen betreffen, werden published (so long as the Notes are listed on (solange die Schuldverschreibungen an der the Luxembourg Stock Exchange and the Luxemburger Wertpapierbörse notiert sind rules of that exchange so require) on the und die Regularien dieser Börse dies website of the Luxembourg Stock Exchange verlangen) auf der Internet-Seite der on www.bourse.lu. Any notice will become Luxemburger Börse unter www.bourse.lu effective for all purposes on the date of the veröffentlicht. Für das Datum und die first such publication. Rechtswirksamkeit sämtlicher Bekanntmachungen ist die erste Veröffentlichung maßgeblich.
(b) Die Emittentin ist berechtigt, alle die (b) The Issuer shall be entitled to deliver all Schuldverschreibungen betreffenden notices concerning the Notes to the Clearing Mitteilungen an das Clearing System zur System for communication by the Clearing Weiterleitung an die Gläubiger zu System to the Holders to the extent that the übermitteln, sofern die Regularien der Börse rules of the stock exchange so permit. dies zulassen.
(c) Mitteilungen, die von einem Gläubiger (c) Notices to be given by any Holder shall be gemacht werden, müssen schriftlich erfolgen made by means of a written declaration to und zusammen mit dem Nachweis seiner be delivered by hand or registered mail Inhaberschaft per Kurier oder per together with the evidence of the Holder's Einschreiben an die Hauptzahlstelle geleitet entitlement to the Principal Paying Agent. werden. Solange Schuldverschreibungen So long as any of the Notes are represented durch eine Globalurkunde verbrieft sind, kann by a global note, such notice may be given eine solche Mitteilung von einem Gläubiger by any Holder to the Principal Paying Agent an die Hauptzahlstelle über das Clearing through the Clearing System in such manner System in der von der Hauptzahlstelle und as the Principal Paying Agent and the dem Clearing System dafür vorgesehenen Clearing System may approve for such Weise erfolgen. purpose.
§ 10 Begebung weiterer Schuldverschreibung § 10 Issue of Additional Notes and Purchase und Ankauf
(a) Die Emittentin behält sich vor, von Zeit zu (a) The Issuer reserves the right from time to Zeit ohne Zustimmung der Gläubiger weitere time without the consent of the Holders to Schuldverschreibungen mit gleicher issue additional Notes with identical terms Ausstattung (mit Ausnahme, unter anderem, (save for inter alia the issue date and the des Tags der Begebung und des interest commencement date), so that the Verzinsungsbeginns) in der Weise zu same shall be consolidated, form a single begeben, dass sie mit diesen series with and increase the aggregate
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Schuldverschreibungen zusammengefasst principal amount of these Notes. The term werden, eine einheitliche Serie mit ihnen "Notes" shall, in the event of such increase, bilden und ihren Gesamtnennbetrag erhöhen. also comprise such additionally issued Der Begriff "Schuldverschreibungen" Notes. umfasst im Falle einer solchen Erhöhung auch solche zusätzlich begebenen Schuldverschreibungen.
(b) Die Emittentin und ihre verbundenen (b) The Issuer and any of its affiliates may at Unternehmen sind jederzeit berechtigt, any time purchase Notes, in the open market Schuldverschreibungen am Markt oder auf or otherwise. Any purchase shall be made in sonstige Weise anzukaufen. Ein Ankauf accordance with applicable laws and erfolgt in Übereinstimmung mit den regulations, including applicable stock anwendbaren Gesetzen und Bestimmungen, exchange regulations. einschließlich der anwendbaren Börsenregeln.
(c) Schuldverschreibungen, die die Emittentin (c) Any Notes purchased by the Issuer or any of oder eines ihrer verbundenen Unternehmen its affiliates may be held, resold or gekauft haben, können diese halten, surrendered to the Principal Paying Agent wiederveräußern oder bei der Hauptzahlstelle for cancellation. zwecks Entwertung einreichen.
§ 11 Ersetzung der Emittentin § 11 Substitution of the Issuer
(a) Die Emittentin (oder die (a) The Issuer (or the Substitute Debtor) may, Nachfolgeschuldnerin) ist jederzeit berechtigt, without the consent of the Holders, if no sofern sie sich nicht mit einer Zahlung von payment of principal or of interest or any Kapital oder Zinsen einer anderen Zahlung other amount in respect of the Notes is in aus den Schuldverschreibungen in Verzug default, at any time substitute for the Issuer, befindet, ohne Zustimmung der Gläubiger any other company of which more than jede andere Gesellschaft, deren 75 % of the voting shares or other equity stimmberechtigte Gesellschaftsanteile zu mehr interests are directly or indirectly owned by als 75 % direkt oder indirekt von der the Issuer as principal debtor in respect of all Emittentin gehalten werden, an Stelle der obligations arising from or in connection Emittentin als Hauptschuldnerin (die with the Notes (the "Substitute Debtor"), "Nachfolgeschuldnerin") für alle provided that: Verpflichtungen aus und im Zusammenhang mit dieser Emission einzusetzen, vorausgesetzt, dass:
(i) die Nachfolgeschuldnerin alle (i) the Substitute Debtor assumes all Verpflichtungen der Emittentin in obligations of the Issuer in respect of Bezug auf die Schuldverschreibungen the Notes; übernimmt;
(ii) die Nachfolgeschuldnerin alle (ii) the Substitute Debtor has obtained erforderlichen behördlichen all necessary governmental Genehmigungen erhalten hat und authorizations and may transfer to berechtigt ist, an die Hauptzahlstelle the Principal Paying Agent in Euro die zur Erfüllung der and without being obligated to Zahlungsverpflichtungen auf die deduct or withhold any taxes or other Schuldverschreibungen zu zahlenden duties of whatever nature levied by Beträge in Euro zu zahlen, ohne the country in which the Substitute verpflichtet zu sein, jeweils in dem Debtor or the Issuer has its domicile Land, in dem die or tax residence, all amounts Nachfolgeschuldnerin oder die required for the fulfilment of the Emittentin ihren Sitz oder Steuersitz payment obligations arising under haben, erhobene Steuern oder andere the Notes; Abgaben jeder Art abzuziehen oder einzubehalten;
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(iii) die Nachfolgeschuldnerin sich (iii) the Substitute Debtor has agreed to verpflichtet hat, jeden Gläubiger indemnify and hold harmless each hinsichtlich solcher Steuern, Abgaben Holder against any tax, duty, oder behördlichen Lasten freizustellen, assessment or governmental charge die einem Gläubiger infolge der imposed on such Holder as a result Ersetzung auferlegt werden; of such substitution;
(iv) die ProSiebenSat.1 Media AG (iv) ProSiebenSat.1 Media AG unwiderruflich und unbedingt irrevocably and unconditionally gegenüber den Gläubigern die Zahlung guarantees in favour of each Holder aller von der Nachfolgeschuldnerin auf the payment of all sums payable by die Schuldverschreibungen zahlbaren the Substitute Debtor in respect of Beträge garantiert; und the Notes; and
(v) der Hauptzahlstelle jeweils ein oder (v) there shall have been delivered to the mehrere Rechtsgutachten bezüglich Principal Paying Agent an opinion or der betroffenen Rechtsordnungen von opinions with respect to the relevant anerkannten Rechtsanwälten vorgelegt jurisdictions of lawyers of werden, das bestätigt bzw. die recognized standing to the effect that bestätigen, dass die Bestimmungen in the provisions of § 11(a) above have dem vorstehenden § 11(a) erfüllt been satisfied. wurden.
(b) Jede Ersetzung ist gemäß § 9 (b) Notice of any such substitution shall be bekanntzumachen. Im Zeitpunkt der published in accordance with § 9. Upon Veröffentlichung der Bekanntmachung wird, publication of such notice and provided that sofern die Voraussetzungen gemäß § 11(a) the requirements pursuant to § 11(a) have erfüllt sind, die Ersetzung wirksam und die been fulfilled, the substitution shall take Emittentin von sämtlichen Verpflichtungen effect and the Issuer shall be discharged aus den Schuldverschreibungen befreit. from any and all obligations under the Notes.
(c) Im Falle einer Ersetzung gilt jede (c) In the event of any such substitution, any Bezugnahme in diesen Anleihebedingungen reference in these Conditions of Issue to the auf die Emittentin ab dem Zeitpunkt der Issuer shall from then on be deemed to refer Ersetzung als Bezugnahme auf die to the Substitute Debtor and any reference to Nachfolgeschuldnerin und jede Bezugnahme the country in which the Issuer is domiciled auf das Land, in dem die Emittentin ihren Sitz or resident for taxation purposes shall from oder Steuersitz hat, gilt ab diesem Zeitpunkt then on be deemed to refer to the country of als Bezugnahme auf das Land, in dem die domicile or residence for taxation purposes Nachfolgeschuldnerin ihren Sitz oder of the Substitute Debtor. Furthermore, in the Steuersitz hat. Des Weiteren gilt im Falle event of such substitution the following shall einer Ersetzung Folgendes: apply:
(i) In § 6 und § 5 (b) gilt eine alternative (i) In § 6 and § 5 (b) an alternative Bezugnahme auf die Bundesrepublik reference to the Federal Republic of Deutschland als aufgenommen Germany shall be deemed to have (zusätzlich zu der Bezugnahme nach been included in addition to the Maßgabe des vorstehenden Satzes auf reference according to the preceding das Land, in dem die sentence to the country of domicile Nachfolgeschuldnerin ihren Sitz oder or residence for taxation purposes of Steuersitz hat) und in § 7 (a)(iii) bis the Substitute Debtor and in (vi) gilt eine alternative Bezugnahme § 7(a)(iii) to (vi) an alternative auf die Emittentin in ihrer Eigenschaft reference to the Issuer in its capacity als Garantin als aufgenommen as guarantor shall be deemed to have (zusätzlich zu der Bezugnahme auf die been included (in addition to the Nachfolgeschuldnerin). reference to the Substitute Debtor).
(ii) Die Emittentin ist berechtigt, die (ii) The Issuer is authorized to adapt the Globalurkunde und die Global Note and the Conditions of Anleihebedingungen ohne Issue without the consent of the
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Zustimmung der Gläubiger Holders to the extent necessary to anzupassen, soweit dies erforderlich reflect the changes resulting from the ist, um die Wirkungen der Ersetzung substitution. Appropriately adjusted nachzuvollziehen. Entsprechend Global Notes or Conditions of Issue angepasste Globalurkunden oder will be deposited with or on behalf Anleihebedingungen werden bei dem of the Clearing System. oder für das Clearing System hinterlegt.
§ 12 Vorlegungsfrist, Verjährung § 12 Presentation Period, Prescription
Die Vorlegungsfrist gemäß § 801 Absatz 1 The period for presentation of the Notes Satz 1 BGB für die Schuldverschreibungen pursuant to § 801(1) sentence 1 of the beträgt zehn Jahre. Die Verjährungsfrist für German Civil Code (Bürgerliches Ansprüche aus den Schuldverschreibungen, Gesetzbuch) will be ten years. The period die innerhalb der Vorlegungsfrist zur Zahlung of limitation for claims under the Notes vorgelegt wurden, beträgt zwei Jahre von dem presented during the period for presentation Ende der betreffenden Vorlegungsfrist an. will be two years calculated from the expiration of the relevant presentation period.
§ 13 Änderung der Anleihebedingungen § 13 Amendments to the Conditions of Issue durch Beschluss der Gläubiger by resolution of the Holders
(a) Die Anleihebedingungen können mit (a) The Conditions of Issue may, with the Zustimmung der Emittentin nach Maßgabe der consent of the Issuer, as the case may be, be §§ 5 ff. bzw. § 22 i.V.m. §§ 5 ff des Gesetzes amended pursuant to § 5 et seqq. or, as the über Schuldverschreibungen aus case may be, pursuant to § 22 in connection Gesamtemissionen ("SchVG") in seiner with §§ 5 et seqq. of the German Act on jeweiligen gültigen Fassung geändert werden. Issues of Debt Securities (Gesetz über Die Gläubiger können insbesondere einer Schuldverschreibungen aus Änderung wesentlicher Inhalte der Gesamtemissionen - "SchVG"), as amended Anleihebedingungen, einschließlich der in from time to time. In particular, the Holders § 5 Absatz 3 SchVG vorgesehenen may consent to amendments which Maßnahmen, mit Ausnahme der Ersetzung der materially change the substance of the Emittentin, die in § 11 abschließend geregelt Conditions of Issue, including such ist, mit den in dem nachstehenden § 13(b) measures as provided for under § 5(3) of the genannten Mehrheiten zustimmen. Ein SchVG, (except for the substitutive of the ordnungsgemäß gefasster Mehrheitsbeschluss Issuer which is exhaustively regulated in ist für alle Gläubiger gleichermaßen § 11) by resolutions passed by such majority verbindlich. Ein Mehrheitsbeschluss der of the votes of the Holders as stated under § Gläubiger, der nicht gleiche Bedingungen für 13(b) below. A duly passed majority alle Gläubiger vorsieht, ist unwirksam, es sei resolution shall be equally binding upon all denn die benachteiligten Gläubiger stimmen Holders. Resolutions which do not provide ihrer Benachteiligung ausdrücklich zu. for identical conditions for all Holders are void, unless Holders who are disadvantaged have expressly consented to their being treated disadvantageously.
(b) Die Gläubiger entscheiden mit einer Mehrheit (b) Resolutions shall be passed by a majority of von 75 % der an der Abstimmung not less than 75 % of the votes cast. teilnehmenden Stimmrechte. Beschlüsse, Resolutions relating to amendments of the durch welche der wesentliche Inhalt der Conditions of Issue which are not material Anleihebedingungen nicht geändert wird und and which do not relate to the matters listed die keinen Gegenstand der § 5 Absatz 3 Nr. 1 in § 5 para. 3 nos. 1 to 8 of the SchVG bis Nr. 8 des SchVG betreffen, bedürfen zu require a simple majority of the votes cast. ihrer Wirksamkeit einer einfachen Mehrheit der an der Abstimmung teilnehmenden Stimmrechte.
(c) Alle Abstimmungen werden ausschließlich im (c) All votes will be taken exclusively by voting
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Wege der Abstimmung ohne Versammlung without a meeting. A meeting of Holders durchgeführt. Eine Gläubigerversammlung and the assumption of the fees by the Issuer und eine Übernahme der Kosten für eine for such a meeting will only take place in solche Versammlung durch die Emittentin the circumstances of § 18 para. 4 sentence 2 findet ausschließlich im Fall des § 18 Absatz 4 of the SchVG. Satz 2 SchVG statt.
(d) Die Abstimmung wird von einem von der (d) The vote will be chaired by a notary Emittentin beauftragten Notar oder, falls der appointed by the Issuer or, if the Holders' Gemeinsame Vertreter (wie in Absatz (f) Representative (as defined in sub-paragraph dieses § 13 definiert) zur Abstimmung (f) of this § 13) has convened the vote, by aufgefordert hat, vom Gemeinsamen Vertreter the Holders' Representative. geleitet.
(e) An Abstimmungen der Gläubiger nimmt jeder (e) Each Holder participating in any vote shall Gläubiger nach Maßgabe des Nennwerts oder cast votes in accordance with the nominal des rechnerischen Anteils seiner Berechtigung amount or the notional share of its an den ausstehenden Schuldverschreibungen entitlement to the outstanding Notes. teil.
(f) Die Gläubiger können durch (f) The Holders may by majority resolution Mehrheitsbeschluss zur Wahrnehmung ihrer appoint a common representative (the Rechte einen gemeinsamen Vertreter für alle "Holders' Representative") to exercise the Gläubiger (der "Gemeinsame Vertreter") Holders' rights on behalf of each Holder. bestellen.
Der Gemeinsame Vertreter hat die Aufgaben The Holders' Representative shall have the und Befugnisse, welche ihm durch Gesetz duties and powers provided by law or oder von den Gläubigern durch granted by majority resolution of the Mehrheitsbeschluss eingeräumt wurden. Er Holders. The Holders' Representative shall hat die Weisungen der Gläubiger zu befolgen. comply with the instructions of the Holders. Soweit er zur Geltendmachung von Rechten To the extent that the Holders' der Gläubiger ermächtigt ist, sind die Representative has been authorised to assert einzelnen Gläubiger zur selbständigen certain rights of the Holders, the Holders Geltendmachung dieser Rechte nicht befugt, shall not be entitled to assert such rights es sei denn, der Mehrheitsbeschluss sieht dies themselves, unless explicitly provided for ausdrücklich vor. Über seine Tätigkeit hat der in the relevant majority resolution. The Gemeinsame Vertreter den Gläubigern zu Holders' Representative shall provide berichten. Für die Abberufung und die reports to the Holders on its activities. The sonstigen Rechte und Pflichten des provisions of the SchVG apply with regard Gemeinsamen Vertreters gelten die to the removal and the other rights and Vorschriften des SchVG. obligations of the Holders' Representative.
§ 14 Schlussbestimmungen § 14 Final Clauses
(a) Form und Inhalt der Schuldverschreibungen (a) The form and content of the Notes and the sowie die Rechte und Pflichten der Gläubiger rights and duties of the Holders and the und der Emittentin bestimmen sich in jeder Issuer will in all respects be governed by the Hinsicht nach dem Recht der Bundesrepublik laws of the Federal Republic of Germany. Deutschland.
(b) Erfüllungsort ist Frankfurt am Main, (b) Place of performance is Frankfurt am Main, Bundesrepublik Deutschland. Federal Republic of Germany.
(c) Gerichtsstand für sämtliche im (c) To the extent legally permitted, the district Zusammenhang mit den court (Landgericht) in Munich, Federal Schuldverschreibungen entstehenden Klagen Republic of Germany will have jurisdiction oder sonstigen Verfahren ist, soweit rechtlich for any action or other legal proceedings zulässig, das Landgericht München, arising out of or in connection with the Bundesrepublik Deutschland. Notes.
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(d) Das Amtsgericht München ist gemäß (d) The local court (Amtsgericht) in Munich § 9 Abs. 3 SchVG zuständig für alle shall, pursuant to section 9 para. 3 of the Verfahren nach §§ 9 Abs. 2, 13 Abs. 3 und 18 SchVG, have jurisdiction for all judgements Abs. 2 SchVG. Das Landgericht München ist in accordance with sections 9 para. 2, 13 gemäß § 20 Abs. 3 SchVG ausschließlich para. 3 and 18 para. 2 of the SchVG. The zuständig für Klagen im Zusammenhang mit district court (Landgericht) in Munich shall der Anfechtung von Beschlüssen der have exclusive jurisdiction for all judgments Gläubiger. over contested resolutions by Noteholders SchVG in accordance with section 20 para. 3 of the SchVG.
(e) Jeder Gläubiger ist berechtigt, in jedem (e) Any Holder may in any proceedings against Rechtsstreit gegen die Emittentin oder in the Issuer, or to which the Holder and the jedem Rechtsstreit, in dem der Gläubiger und Issuer are parties, protect and enforce in his die Emittentin Partei sind, seine Rechte aus own name his rights arising under his Notes diesen Schuldverschreibungen im eigenen on the basis of: Namen geltend zu machen gegen Vorlage:
(i) einer Bescheinigung der Depotbank, (i) a certificate issued by his Custodian die (A) den vollen Namen und die (A) stating the full name and address volle Anschrift des Gläubigers of the Holder, (B) specifying the bezeichnet, (B) den gesamten aggregate principal amount of Notes Nennbetrag von credited on the date of such Schuldverschreibungen angibt, die am statement to such Holder's securities Ausstellungstag dieser Bescheinigung account(s) maintained with his den bei dieser Depotbank bestehenden Custodian and (C) confirming that Depots dieses Gläubigers his Custodian has given a written gutgeschrieben sind und (C) bestätigt, notice to the Clearing System and the dass die Depotbank dem Clearing Principal Paying Agent containing System und der Hauptzahlstelle eine the information specified in (A) and schriftliche Mitteilung gemacht hat, (B) and bearing acknowledgements die die Angaben gemäß (A) und (B) of the Clearing System and the enthält und Bestätigungsvermerke des relevant account holder in the Clearing Systems sowie des Clearing System; and betroffenen Kontoinhabers bei dem Clearing System trägt sowie
(ii) einer von einem (ii) a copy of the Global Note relating to Vertretungsberechtigten des Clearing the Notes, certified as being a true Systems oder der Hauptzahlstelle copy by a duly authorised officer of beglaubigten Ablichtung der the Clearing System or the Principal Globalurkunde; oder Paying Agent; or
(iii) eines anderen, in Rechtsstreitigkeiten (iii) any other means of proof permitted in dem Land der Geltendmachung in legal proceedings in the country of zulässigen, Beweismittels. enforcement.
(f) Die deutsche Version dieser (f) The German version of these Conditions of Anleihebedingungen ist bindend. Die Issue is binding. The English translation is englische Übersetzung dient nur for information purposes only. Informationszwecken.
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DESCRIPTION OF THE RULES REGARDING RESOLUTIONS OF HOLDERS
The Conditions of Issue provide that the Holders may agree to amendments or decide on other matters relating to the Notes by way of resolution to be passed by taking votes without a meeting. Any such resolution duly adopted by resolution of the Holders shall be binding on each Holder, irrespective of whether such Holder took part in the vote and whether such Holder voted in favour or against such resolution.
The following is a brief description of some of the statutory rules regarding the taking of votes without meetings and the convening and conduct of meetings of Holders, the passing and publication of resolutions as well as their implementation and challenge before German courts.
Specific Rules regarding Votes without Meeting
The voting shall be conducted by the person presiding over the taking of votes. Such person shall be (i) a notary public appointed by the Issuer, (ii) in case a Holders' Representative has been appointed, the Holders' Representative, if the vote was solicited by the Holders' Representative, or (iii) a person appointed by the competent court.
The notice soliciting the Holders' votes shall set out the period within which votes may be cast. During such voting period, the Holders may cast their votes to the person presiding over the taking of votes. Such notice shall also set out in detail the conditions to be met for the votes to be valid.
The person presiding over the taking of votes shall ascertain each Holder's entitlement to cast a vote based on evidence provided by such Holder and shall prepare a list of the Holders entitled to vote. If it is established that no quorum exists, the person presiding over the taking of votes may convene a meeting of the Holders. Within one year following the end of the voting period, each Holder participating in the vote may request a copy of the minutes of such vote and any annexes thereto from the Issuer.
Each Holder participating in the vote may object in writing to the result of the vote within two weeks following the publication of the resolutions passed. The objection shall be decided upon by the person presiding over the taking of votes. If he remedies the objection, the person presiding over the taking of votes shall promptly publish the result. If the person presiding over the taking of votes does not remedy the objection, he shall promptly inform the objecting Holder in writing.
The Issuer shall bear the costs of the vote and, if the court has convened a meeting, also the costs of such proceedings.
Rules regarding Holders' Meetings applicable to Votes without Meeting
In addition, the statutory rules applicable to the convening and conduct of Holders' meetings will apply mutatis mutandis to any vote without a meeting. The following summarizes some of such rules.
Meetings of Holders may be convened by the Issuer or any Holders' Representative. Meetings of Holders must be convened if one or more Holders holding 5 % or more of the outstanding Notes so require for specified reasons permitted by statute.
Meetings may be convened not less than 14 days prior to the date of the meeting. Attendance and exercise of voting rights at the meeting may be made subject to prior registration of Holders. The convening notice will provide what proof will be required for attendance and voting at the meeting. The place of the meeting is the place of the Issuer's registered offices, provided, however, that where the Notes are listed on a stock exchange within the European Union or the European Economic Area, the meeting may be held at the place of such stock exchange.
The convening notice shall be made publicly available together with the agenda of the meeting setting out the proposals for resolution.
Each Holder may be represented by proxy. A quorum exists if Holders' representing by value not less than 50 % of the outstanding Notes. If the quorum is not reached, a second meeting may be called at which no quorum will be required, provided that where a resolution may only be adopted by a qualified majority, a quorum requires the presence of at least 25 % of the aggregate principal amount of outstanding Notes.
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All resolutions adopted must be properly published. Resolutions which amend or supplement the Conditions of Issue have to be implemented by supplementing or amending the Global Note.
In insolvency proceedings instituted in Germany against the Issuer, any Holders' Representative is obliged and exclusively entitled to assert the Holders' rights under the Notes. Any resolutions passed by the Holders are subject to the provisions of the Insolvency Code (Insolvenzordnung).
If a resolution constitutes a breach of the statute or the Conditions of Issue, Holders may bring an action to set aside such resolution. Such action must be filed with the competent court within one month following the publication of the resolution.
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TAXATION
The following section is a general description of certain tax consequences resulting from the investment in the Notes. This section does not purport to be a comprehensive description of all the tax considerations which may be relevant to a decision to purchase, hold and/or dispose of the Notes. In particular, this section does not consider any specific facts or circumstances that may apply to a particular purchaser or holder of Notes but is of a general nature only and neither intended as, nor to be understood as, legal or tax advice. This summary is based on the applicable laws in force and their interpretation as at the date of this Prospectus, all of which are subject to change, including changes with retroactive effect or possibly differing interpretations. Although any information given hereafter reflects the view of the Issuer, it must not be misunderstood as a representation or guarantee, and courts or other relevant authorities may come to different interpretations of the applicable laws. Further, the information given hereafter is not intended as a sole basis for an investment in the Notes, and the individual tax position of the investor should always be investigated.
Prospective holders of Notes ("Holders") are urged to consult their own tax advisers as to the particular tax consequences of subscribing, purchasing, holding and disposing the Notes, including the application and effect of any federal, state or local taxes, under the tax laws of the Federal Republic of Germany ("Germany"), Austria, The Netherlands and the Grand Duchy of Luxembourg and each country of which they are residents or citizens. Due consideration to a Holder's fact-related circumstances can only be given within the scope of an individual tax consultancy.
Taxation in the Federal Republic of Germany
Withholding Tax
Interest payments on the Notes are subject to German withholding tax if the Notes are kept or administered in a securities deposit account with a German branch of a German or non-German credit or financial services institution (inländisches Kredit- oder Finanzdienstleistungsinstitut), or with a German securities trading business (inländisches Wertpapierhandelsunternehmen) or a German securities trading bank (inländische Wertpapierhandelsbank) (altogether the "Domestic Disbursing Agent") which pays or credits the interest (inländische Zahlstelle). Withholding tax is withheld by the Domestic Disbursing Agent at a rate of 25 % plus 5.5 % solidarity surcharge thereon (in total 26.375 %), and, if applicable, church tax (as from 1 January 2015 the church tax on capital investment income is generally also automatically collected by way of withholding unless the investor has validly filed a blocking notice (Sperrvermerk) with the German Federal Central Tax Office (Bundeszentralamt für Steuern)).
Generally, no withholding tax will be levied with respect to the capital investment income of a German resident private investor if such investor has filed a withholding tax exemption certificate (Freistellungsauftrag) with the Domestic Disbursing Agent provided that the total capital investment income of the investor (including capital investment income with respect to the Notes) does not exceed the maximum exemption amount shown on the withholding tax exemption certificate. Currently, the maximum amount shown on a withholding tax exemption certificate corresponds to the amount of the saver's lump sum tax allowance, i.e., EUR 801 or EUR 1,602 (for married couples filing joint tax returns). Similarly, no withholding will be made if a certificate of non- assessment (NV-Bescheinigung) has been submitted to the Domestic Disbursing Agent.
For private investors, the above withholding tax regime should apply also to capital gains resulting from the sale or redemption of the Notes if the Notes are kept or administered with a Domestic Disbursing Agent. The tax base for the withholding is generally determined as the balance between the sales / redemption proceeds and the acquisition costs with expenses incurred directly in connection with the sale / redemption also being deductible (i.e., generally identical to the determination for purposes of a tax assessment, see below). If, however, the securities deposit account has changed after the acquisition of the Notes, the withholding tax is imposed on 30 % of the proceeds from the sale or redemption of the Notes, unless evidence on the investor's actual acquisition data (Anschaffungsdaten) has been validly provided to the new Domestic Disbursing Agent.
Private Investors
For German tax resident private investors (i.e., individuals whose residence or habitual abode is in Germany) holding the Notes as private assets (Privatvermögen), interest payments on the Notes and capital gains from the sale or redemption of the Notes constitute capital investment income (Einkünfte aus Kapitalvermögen). Respective income is generally subject to a flat tax (Abgeltungsteuer) of 25 % (plus 5.5 % solidarity surcharge thereon, resulting in a total tax charge of 26.375 %, and, if applicable, church tax).
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Gains and losses from the sale and redemption of the Notes are determined as the balance between the sales / redemption price and the acquisition costs with expenses incurred directly (unmittelbarer sachlicher Zusammenhang) in connection with the sale / redemption also being deductible. Losses resulting from the sale or redemption can generally be set-off against other capital investment income and, if this should not be possible in the relevant assessment period, can be carried forward into subsequent tax assessment periods to be set-off against positive capital investment income realized in the respective tax assessment period.
The deduction of expenses incurred in connection with capital investment income is generally (safe from expenses directly incurred in connection with the sale or the redemption of the Notes, see above) not possible. Private investors are, however, entitled to a saver's lump sum tax allowance for capital investment income of EUR 801 per year (EUR 1,602 for married couples filing joint tax returns). Under certain circumstances, the investor should also be able to set-off negative capital investment income, e.g., resulting from interest already accrued upon acquisition of the Notes (Stückzinsen), with positive capital investment income.
The flat tax (Abgeltungsteuer) is generally collected by way of withholding (see above paragraph – Withholding Tax). Conceptually, the tax withheld shall satisfy a German resident private investor's tax liability with respect to the capital gain or interest income, as the case may be. If, however, the withholding was not made or not made sufficiently, the investor has to declare the respective capital investment income in his income tax return for the relevant tax assessment period and the respective amount of tax will be collected by way of assessment. In addition, the investor may opt for the inclusion of capital investment income in his tax return and a respective tax assessment under application of the flat tax regime (i.e., in particular, the flat tax rate), e.g., if the total amount of tax withheld during the relevant tax assessment period exceeds the investor's total flat tax liability for capital investment income (which could be the case, for example, due to the investor's saver's lump sum tax allowance not being fully utilized or because of the availability of foreign tax credits). In case the investor's total income tax liability for all items of income (including capital investment income) in the relevant tax assessment period falls short of 25 %, the investor may opt to be taxed at his (lower) marginal tax rate also with respect to the capital investment income.
Business Investors
For investors (individuals or corporate entities) holding the Notes as business assets, interest paid / accrued under the Notes and capital gains / losses in connection with the investment in the Notes are subject to (corporate) income tax (currently 15 % for corporate entities and progressive tax rates of up to 45 % for individuals) plus solidarity surcharge of 5.5 % thereon (and in the case of individuals, if applicable, church tax). If the Notes are attributable to a German permanent establishment, trade tax will also be levied upon interest accrued or capital gains realized (with the general possibility of an individual to credit, subject to certain qualifying criteria, the trade tax, fully or partially (depending, inter alia, on the applicable trade tax multiplier), against his income tax liability) by way of a lump-sum method.
Withholding tax is generally withheld under the withholding tax regime as described above. Exceptions, however, apply to capital gains resulting from the sale or redemption of the Notes derived by (i) Holders which are corporate investors (in certain cases subject to the provision of evidence on the corporate status) or (ii) other investors after notification of the Domestic Disbursing Agent by use of an officially registered form (Erklärung zur Freistellung vom Kapitalertragsteuerabzug) about the allocation of the Notes to a business in Germany (i.e., for these investors withholding tax is only levied on interest payments). Any withholding tax withheld is generally creditable against the investor's (corporate) income tax liability or refundable, respectively.
Taxation of Foreign Resident Holders
As a rule, interest paid / accrued to a Holder not resident in Germany as well as income of a Holder not resident in Germany arising from the redemption or disposal of Notes is not taxable in Germany and, in principle and subject to formal requirements, no tax deduction is made (even if the Notes are held in custody with a Domestic Disbursing Agent). Exceptions apply e.g.. (i) in the case of certain over-the-counter transactions, (ii) when the Notes are held as business assets in a German permanent establishment of the investor (in which case the income on the Notes may also be subject to trade tax) or a fixed base maintained in Germany by the Holder, or if (iii) the respective income of the Holder does otherwise constitute German source income.
Inheritance and Gift Tax
The receipt of Notes in case of succession upon death, or by way of a gratuitous transfer among living persons, is subject to German inheritance or gift tax, if the deceased, donor and / or the recipient is a German resident. German inheritance and gift tax is also triggered if neither the deceased, the donor nor the recipient of the Notes
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are German residents, if the Notes are attributable to German business activities and if for such business activities a German permanent establishment is maintained or a permanent representative is appointed in Germany. In specific situations, German expatriates may also be subject to inheritance and gift tax. Double taxation treaties may provide for exceptions to the domestic inheritance and gift tax regulations.
Other Taxes
No stamp, issue, registration or similar direct or indirect taxes or duties will be payable in Germany in connection with the issuance, delivery or execution of the Notes. Currently, net assets tax (Vermögensteuer) is not levied in Germany.
The European Commission and certain EU Member States (including Germany) are intending to introduce a financial transaction tax ("FTT"). The actual scope of application of the FTT is not yet finally clear as the discussions among the involved EU Member States are still ongoing. It is conceivable that the FTT may apply to certain transactions relating to the Notes. Prospective Holders are therefore strongly advised to seek their own tax advice with respect to the FTT.
German Implementation of the Savings Directive
By legislative regulations dated 26 January 2004 (Zinsinformationsverordnung), the German Federal Government enacted provisions implementing the information exchange on the basis of the Savings Directive (see "EU Savings Tax Directive" below) into German law. The provisions take effect from 1 July 2005 on.
Taxation in Austria
Income tax
The general remarks above the caption Taxation in the Federal Republic of Germany also apply to this caption Taxation in Austria. The following only addresses Austrian tax residents, unless explicitly stated otherwise. Individuals having a domicile or their habitual abode in Austria or corporations having their corporate seat or their place of management in Austria are considered residents for Austrian income and corporate income tax law purposes, respectively.
Private Individual Investors
Generally income arising with respect to the Notes in the form of either interest payments (Zinserträge) or realized capital gains (Einkünfte aus realisierten Wertsteigerungen), qualifies as 'investment income' (Einkünfte aus Kapitalvermögen) and, as such, is taxed under a special regime at a flat 25 %-rate.
Realized capital gains are the difference between (a) the amount realized (e.g., the sale proceeds, the redemption or other pay-off amount, or the fair market value in case of a deemed realization) and (b) the acquisition costs; in both cases (amount realized and acquisition costs) including accrued interest, if any. For Notes held as private assets, the acquisition costs do not include ancillary acquisition costs (Anschaffungsnebenkosten). An average price is determined regarding Notes not acquired at the same time, but held in the same securities account with the same securities identification number. Expenses and costs (Aufwendungen und Ausgaben) that are directly connected with investment income are not tax effective.
Capital gains are not only taxed upon an actual disposition or redemption of the Notes, but also upon a deemed realization, particularly upon losing the residency status in Austria (i.e. move abroad) or upon withdrawals (Entnahmen) and other transfers of Notes from one securities account to another one. For both cases exemptions are in place, in particular in the case of moving to another EU Member State or, upon the transfer to another deposit account, under the following conditions: Exempt from such "deemed realization" is the transfer of the Notes to a securities account held by the same taxpayer (i) with the same Austrian bank or (ii) with another Austrian bank, if the account holder instructs the transferring bank to disclose the acquisition costs to the receiving bank, or (iii) with a non-Austrian bank, if the account holder instructs the transferring bank to transmit specific information to the competent tax authority, or (iv) with a non-Austrian bank, if the Notes are transferred from a non-Austrian bank and the account holder notifies the competent Austrian tax authority within one month; exempt is further the gratuitous transfer of the Notes to a securities account held by another taxpayer, if the gratuitous transfer is evidenced to the custodian agent or the agent is instructed to notify the Austrian tax authority of the relevant data or, in case the Notes are gratuitously transferred from a non-Austrian bank, the taxpayer notifies the competent Austrian tax authority within one month.
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If an Austrian custodian (inländische depotführende Stelle, also referred to as 'securities account keeping agent') or an Austrian paying agent (auszahlende Stelle) is involved in paying investment income (interest or capital gains), 25 % withholding taxation is imposed. The 25 % withholding tax generally results in a final income taxation; certain exceptions apply (in particular for investors whose regular personal income tax rate is lower than 25 %). If no withholding tax is imposed (e.g., because the Notes are held through a foreign paying agent), the investment income arising from the Notes generally has to be included into the income tax return in accordance with the law.
Losses from Notes held as private assets may only offset investment income (excluding, inter alia, interest income from bank deposits and other claims against banks) and must not offset any other income. Mandatory loss-offsetting rules to be handled by Austrian custodians apply. A carry-forward of losses is not possible in this context.
Notes Held as Business Assets by Individuals
Generally, the same rules as described in the previous heading (Income Tax – Private Individual Investors) apply regarding Notes that are held as business assets by tax residents who are individuals. The most important differences are the following:
- Realized capital gains, contrary to interest income, have to be included in the tax return, since despite a 25 % withholding taxation that is also imposed in the context of Notes held as business assets if an Austrian custodian is involved, no final income taxation applies. - Writedowns and realized losses regarding the Notes held as business assets are offset with positive income from realized capital gains that are investment income in the first place; 50 % of the remaining losses may be offset or carried forward against any other income. - The acquisition costs of Notes held as business assets may also include ancillary costs incurred upon the acquisition. - No loss-offsetting may be made by an Austrian custodian.
It is noted that expenses and costs (Aufwendungen und Ausgaben) directly connected with investment income are also not tax effective in case the Notes held as business assets.
Notes held as business assets by corporations
Corporate investors deriving business income from the Notes may avoid the application of withholding tax by filing a declaration of exemption (Befreiungserklärung) with the Austrian withholding tax agent. Income derived from the Notes by corporate investors (including any capital gains) is subject to corporate income tax at the general corporate income tax rate of 25 %.
A special tax regime applies for private foundations (Privatstiftungen).
No Withholding by Issuer
As the Issuer does not use a branch or permanent establishment in Austria for the payment of interest under the Notes, the Issuer will not have any liability to withhold and remit Austrian withholding tax on payments in connection with the Notes as outlined above.
Taxpayers Not Resident in Austria
Individuals who have neither a domicile nor their habitual abode in Austria or corporate investors who have neither their corporate seat nor their place of management in Austria ("non-residents") are not taxable in Austria provided the income is not attributable to a permanent establishment in Austria and the income from the Notes is not secured by Austrian assets. If non-residents receive income from the Notes through an Austrian permanent establishment, they are to a large extent subject to the same tax treatment as resident investors.
Non-resident investors who are resident individuals of an EU Member States and who hold the Notes through an Austrian paying agent have to consider the regime implemented in Austria based on the EU Council Directive 2003/48/EC dated 3 June 2003 on the taxation of savings income in the form of interest payments (the "EU Savings Tax Directive"). Based on this regime withholding taxation at a rate of 35 % might be imposed, unless an exchange of information procedure is fulfilled. For more details see below ("EU Savings Tax Directive").
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Non-resident investors from outside the EU who receive income from the Notes through an Austrian withholding tax agent (i.e. an Austrian paying agent or an Austrian custodian) may be subject to Austrian withholding taxation at a rate of 25 % or a lower double tax treaty rate.
Gift tax notification requirements
The Austrian inheritance and gift tax (Erbschafts- und Schenkungssteuer) was abolished in 2008. However, certain gift notification requirements might apply.
Other Taxes
No stamp, issue, registration or similar direct or indirect taxes or duties will be payable in Austria in connection with the issuance, delivery or execution of the Notes. Currently, net assets tax (Vermögensteuer) is not levied in Austria.
The European Commission and certain EU Member States (including Austria) are intending to introduce a financial transaction tax ("FTT"). The actual scope of application of the FTT is not yet finally clear as the discussions among the involved EU Member States are still ongoing. It is conceivable that the FTT may apply to certain transactions relating to the Notes. Prospective Holders are therefore strongly advised to seek their own tax advice with respect to the FTT.
Taxation in The Netherlands
General
The following is a general summary of certain Netherlands tax consequences of the acquisition, holding and disposal of the Notes. This summary does not purport to describe all possible tax considerations or consequences that may be relevant to a holder or prospective holder of Notes and does not purport to deal with the tax consequences applicable to all categories of investors, some of which (such as trusts or similar arrangements) may be subject to special rules. In view of its general nature, it should be treated with corresponding caution. Holders or prospective holders of Notes should consult with their tax advisers with regard to the tax consequences of investing in the Notes in their particular circumstances. The discussion below is included for general information purposes only.
Except as otherwise indicated, this summary only addresses Netherlands national tax legislation and published regulations, whereby The Netherlands means the part of the Kingdom of The Netherlands located in Europe, as in effect on the date hereof and as interpreted in published case law until this date, without prejudice to any amendment introduced at a later date and implemented with or without retroactive effect.
Withholding tax
All payments of principal and/or interest made by the Issuer under the Notes may be made free of withholding or deduction of, for or on account of any taxes of whatever nature imposed, levied, withheld or assessed by The Netherlands or any political subdivision or taxing authority thereof or therein.
Taxes on income and capital gains
Please note that the summary in this section does not describe The Netherlands tax consequences for:
(i) holders of Notes if such holders, and in the case of individuals, his/her partner or certain of their relatives by blood or marriage in the direct line (including foster children), have a substantial interest or deemed substantial interest in the Issuer under The Netherlands Income Tax Act 2001 (in Dutch: "Wet inkomstenbelasting 2001"). Generally speaking, a holder of securities in a company is considered to hold a substantial interest in such company, if such holder alone or, in the case of individuals, together with his/her partner (as defined in The Netherlands Income Tax Act 2001), directly or indirectly, holds (i) an interest of 5 % or more of the total issued and outstanding capital of that company or of 5 % or more of the issued and outstanding capital of a certain class of shares of that company; or (ii) rights to acquire, directly or indirectly, such interest; or (iii) certain profit sharing rights in that company that relate to 5 % or more of the company's annual profits and/or to 5 % or more of the company's liquidation proceeds. A deemed substantial interest arises if a
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substantial interest (or part thereof) in a company has been disposed of, or is deemed to have been disposed of, on a non-recognition basis;
(ii) pension funds, investment institutions (in Dutch: "fiscale beleggingsinstellingen"), exempt investment institutions (in Dutch: "vrijgestelde beleggingsinstellingen") (as defined in The Netherlands Corporate Income Tax Act 1969; in Dutch: "Wet op de vennootschapsbelasting 1969") and other entities that are exempt from Netherlands corporate income tax; and
(iii) holders of Notes who are individuals for whom the Notes or any benefit derived from the Notes are a remuneration or deemed to be a remuneration for activities performed by such holders or certain individuals related to such holders (as defined in The Netherlands Income Tax Act 2001).
Residents of The Netherlands
Generally speaking, if the holder of Notes is an entity that is a resident or deemed to be resident of The Netherlands for Netherlands corporate income tax purposes, any payment under the Notes or any gain or loss realized on the disposal or deemed disposal of the Notes is subject to Netherlands corporate income tax at a rate of 20 % with respect to taxable profits up to EUR 200,000 and 25 % with respect to taxable profits in excess of that amount.
If a holder of Notes is an individual, resident or deemed to be resident of The Netherlands for Netherlands income tax purposes (including the non-resident individual holder who has made an election for the application of the rules of The Netherlands Income Tax Act 2001 as they apply to residents of The Netherlands), any payment under the Notes or any gain or loss realized on the disposal or deemed disposal of the Notes is taxable at the progressive income tax rates (with a maximum of 52 %), if:
(i) the Notes are attributable to an enterprise from which the holder of Notes derives a share of the profit, whether as an entrepreneur or as a person who has a co-entitlement to the net worth (in Dutch: "medegerechtigd tot het vermogen") of such enterprise without being a shareholder (as defined in The Netherlands Income Tax Act 2001); or
(ii) the holder of Notes is considered to perform activities with respect to the Notes that go beyond ordinary asset management (in Dutch: "normaal, actief vermogensbeheer") or derives benefits from the Notes that are taxable as benefits from other activities (in Dutch: "resultaat uit overige werkzaamheden").
If the above-mentioned conditions (i) and (ii) do not apply to the individual holder of Notes, such holder will be taxed annually on a deemed income of 4 % of his/her net investment assets for the year at an income tax rate of 30 %. The net investment assets for the year are the fair market value of the investment assets less the allowable liabilities on 1 January of the relevant calendar year. The Notes are included as investment assets. A tax free allowance may be available. An actual gain or loss in respect of the Notes is not subject to Netherlands income tax.
Non-residents of The Netherlands
A holder of Notes that is neither resident nor deemed to be resident of The Netherlands nor has made an election for the application of the rules of The Netherlands Income Tax Act 2001 as they apply to residents of The Netherlands will not be subject to Netherlands taxes on income or capital gains in respect of any payment under the Notes or in respect of any gain or loss realized on the disposal or deemed disposal of the Notes, provided that:
(i) such holder does not have an interest in an enterprise or deemed enterprise (as defined in The Netherlands Income Tax Act 2001 and The Netherlands Corporate Income Tax Act 1969) which, in whole or in part, is either effectively managed in The Netherlands or carried on through a permanent establishment, a deemed permanent establishment or a permanent representative in The Netherlands and to which enterprise or part of an enterprise the Notes are attributable; and
(ii) in the event the holder is an individual, such holder does not carry out any activities in The Netherlands with respect to the Notes that go beyond ordinary asset management and does not derive benefits from the Notes that are taxable as benefits from other activities in The Netherlands.
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Gift and inheritance taxes
Residents of The Netherlands
Gift or inheritance taxes will arise in The Netherlands with respect to a transfer of the Notes by way of a gift by, or on the death of, a holder of such Notes who is resident or deemed resident of The Netherlands at the time of the gift or his/her death.
Non-residents of The Netherlands
No Netherlands gift or inheritance taxes will arise on the transfer of Notes by way of gift by, or on the death of, a holder of Notes who is neither resident nor deemed to be resident in The Netherlands, unless the transfer is otherwise construed as a gift or inheritance made by, or on behalf of, a person who, at the time of the gift or death, is or is deemed to be resident in The Netherlands.
Value added tax (VAT)
No Netherlands VAT will be payable by the holders of the Notes on (i) any payment in consideration for the issue of the Notes or (ii) the payment of interest or principal by the Issuer under the Notes.
Other taxes and duties
No Netherlands registration tax stamp duty or any other similar documentary tax or duty will be payable by the holders of the Notes in respect of (i) the issue of the Notes or (ii) the payment of interest or principal by the Issuer under the Notes.
Taxation in the Grand Duchy of Luxembourg
Withholding Tax
Non-Resident Holders
Under Luxembourg general tax laws currently in force and subject to the laws of 21 June 2005 (the "Laws") mentioned below, there is no withholding tax on payments of principal, premium or interest made to non- resident Holders, nor on accrued but unpaid interest in respect of the Notes, nor is any Luxembourg withholding tax payable upon redemption or repurchase of the Notes held by non-resident Holders.
Under the Laws implementing the Savings Directive (as defined above in the paragraph EU Savings Tax Directive) and ratifying the treaties entered into by Luxembourg and certain dependent and associated territories of EU Member States (the "Territories"), payments of interest or similar income made or ascribed by a paying agent established in Luxembourg to or for the immediate benefit of an individual beneficial owner or a residual entity, as defined by the Laws, which are resident of, or established in, an EU Member State (other than Luxembourg) or one of the Territories will be subject to a withholding tax unless the relevant recipient has adequately instructed the relevant paying agent to provide details of the relevant payments of interest or similar income to the fiscal authorities of his/her/its country of residence or establishment, or, in the case of an individual beneficial owner, has provided a tax certificate issued by the fiscal authorities of his/her country of residence in the required format to the relevant paying agent. Where withholding tax is applied, it is currently levied at a rate of 35 %. Responsibility for the withholding of the tax will be assumed by the Luxembourg paying agent. Payments of interest under the Notes are currently subject to withholding tax of 35 %. The Luxembourg government has announced its intention to elect out of the withholding system in favour of an automatic exchange of information with effect as from 1 January 2015.
Resident Holders
Under Luxembourg general tax laws currently in force and subject to the law of 23 December 2005, as amended (the "Law"), there is no withholding tax on payments of principal, premium or interest made to Luxembourg resident Holders, nor on accrued but unpaid interest in respect of the Notes, nor is any Luxembourg withholding tax payable upon redemption or repurchase of Notes held by Luxembourg resident Holders.
Under the Law payments of interest or similar income made or ascribed by a paying agent established in Luxembourg to or for the benefit of an individual beneficial owner who is resident of Luxembourg or to a
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foreign residual entity established in an EU Member State (other than Luxembourg) or one of the Territories and securing the interest payment for such individual will be subject to a withholding tax of 10 %. Such withholding tax will be in full discharge of income tax if the beneficial owner is an individual acting in the course of the management of his/her private wealth. Responsibility for the withholding of the tax will be assumed by the Luxembourg paying agent. Payments of interest under the Notes coming within the scope of the Law would be subject to withholding tax of 10 %.
Income Tax
Gains realized by a non-resident Holder, who does not have a permanent establishment or fixed place of business in Luxembourg, to which the Notes are attributable, on the sale or disposal of Notes are not subject to Luxembourg income tax.
Private Investors
An individual Holder, acting in the course of the management of his/her private wealth, is subject to Luxembourg income tax in respect of interest or any other income received, except if withholding tax has been levied on such payments in accordance with the Law.
Under Luxembourg domestic tax law, gains realized by an individual Holder, who acts in the course of the management of his private wealth and who is a resident of Luxembourg for tax purposes, on the sale or disposal, in any form whatsoever, of the Notes are not subject to Luxembourg income tax, provided this sale or disposal took place six months after the acquisition of the Notes. An individual Holder, who acts in the course of the management of his private wealth and who is a resident of Luxembourg for tax purposes, has further to include the portion of the gain corresponding to accrued but unpaid interest in respect of the Notes in his taxable income, except if (i) withholding tax has been levied on such payments in accordance with the Law, or (ii) the individual Holder has opted for the application of a 10 % tax in full discharge of income tax in accordance with the Law, which applies if a payment of interest has been made or ascribed by a paying agent established in an EU Member State (other than Luxembourg), or in a Member State (other than an EU Member State), or in a state that has entered into a treaty with Luxembourg relating to the Savings Directive.
Business Investors
An individual Holder who is a resident of Luxembourg for tax purposes or who has a permanent establishment or a fixed place of business in Luxembourg, to which the Notes are attributable, is subject to Luxembourg income tax and trade tax in respect of the interest paid or accrued on, or any other income derived from, the Notes as well as on any capital gain realized on the sale or disposal, in any form whatsoever, of the Notes. The above mentioned 10 %withholding tax can be credited against the overall income tax liability.
Gains realized by a corporate Holder, who is a resident of Luxembourg for tax purposes or who has a permanent establishment or a fixed place of business in Luxembourg, to which the Notes are attributable, on the sale or disposal, in any form whatsoever, of Notes are subject to Luxembourg income tax.
A Luxembourg Holder that is governed by the law of 11 May 2007 on family estate companies, as amended by the laws of 20 December 2002 or 17 December 2010 on undertakings for collective investment, as amended, or by the law of 13 February 2007 on specialized investment funds, will not be subject to any Luxembourg income tax and trade tax in respect of interest received or accrued on the Notes, or on gains realized on the sale or disposal, in any form whatsoever, of Notes.
Other Taxes
Net Wealth Tax
An individual Holder, whether he/she is resident of Luxembourg or not, is not subject to Luxembourg net wealth tax on Notes.
A corporate Holder, whether it is a resident of Luxembourg for tax purposes or, if not, it maintains a permanent establishment or a permanent representative in Luxembourg to which such Notes are attributable, is subject to Luxembourg net wealth tax on such Notes, except if the Holder is governed by the law of 11 May 2007 on family estate companies, as amended, by the laws of 20 December 2002 or 17 December 2010 on undertakings for collective investment, as amended, by the law of 13 February 2007 on specialized investment funds, or is a securitization company governed by the law of 22 March 2004 on securitization, as amended.
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Inheritance and Gift Tax
Under present Luxembourg tax law, in the case where a Holder of Notes is a resident for tax purposes of Luxembourg at the time of his death, the Notes are included in his taxable estate, for inheritance tax purposes and gift tax may be due on a gift or donation of Notes, if the gift is recorded in a Luxembourg deed.
EU Savings Tax Directive
On 3 June 2003 the Economic and Financial Affairs Council of the European Union (ECOFIN Council) adopted directive 2003/48/EC on taxation of savings income in the form of interest payments ("Savings Directive"). Under the Savings Directive and from 1 July 2005 on, each EU Member State is required to provide the tax authorities of another EU Member State with details of payments of interest and other similar income paid by a person in one EU Member State to an individual resident in another EU Member State. However, during a transitional period, Luxembourg and Austria may instead (unless during that period they elect otherwise) operate a withholding system in relation to such payments (the ending of such transitional period being dependent upon the conclusion of certain other agreements relating to information exchange with certain other countries). A number of non-EU countries and territories including Switzerland and certain British and Dutch dependent or associated territories have adopted or have agreed to adopt similar measures (a withholding system in the case of Switzerland).
On 10 April 2013, the Prime Minister of Luxembourg announced Luxembourg's intention to abolish the withholding tax procedure with effect as of 1 January 2015 in favor of an automatic exchange of information procedure as provided for by the Savings Directive.
The European Commission has proposed certain amendments to the Savings Directive, which may, if implemented, amend or broaden the scope of the requirements described above.
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SUBSCRIPTION, SALE AND OFFER OF THE NOTES
General
The Issuer has agreed in an agreement (the "Subscription Agreement") to be signed prior to the Issue Date to sell to BNP PARIBAS, Commerzbank Aktiengesellschaft, Crédit Agricole Corporate and Investment Bank, ING Bank N.V. and The Royal Bank of Scotland plc (the "Global Coordinators") and Bayerische Landesbank, DNB Markets, a division of DNB Bank ASA, Mitsubishi UFJ Securities International plc, Société Générale, Skandinaviska Enskilda Banken AB (publ) and UniCredit Bank AG (the "Bookrunners" and together with the Global Coordinators, the "Joint Bookrunners") and SMBC Nikko Capital Markets Limited (the "Co- Manager" and together with the Joint Bookrunners, the "Managers"), and the Managers have agreed, subject to certain customary closing conditions, to purchase, the Notes on or about April 15, 2014 at a price of [●] % of their principal amount (the "Issue Price"). The Issuer will receive the gross proceeds of the offering of the Notes. Commissions of up to 0.565 % of the principal amount of the Notes will be paid separately to the Managers. The Issuer has furthermore agreed to reimburse the Managers for certain expenses incurred in connection with the issue of the Notes.
The Managers are entitled, under certain circumstances, to terminate the agreement reached with the Issuer. In such event, no Notes will be delivered to investors. Furthermore, the Issuer has agreed to indemnify the Managers against certain liabilities in connection with the offer and sale of the Notes.
The Managers or their affiliates have provided from time to time, and expect to provide in the future, investment services to the Issuer and its affiliates, for which the Managers or their affiliates have received or will receive customary fees and commissions. The Managers (except for Société Générale) or their affiliates are lenders under the Existing Credit Facilities Agreement of the Issuer. The Issuer intends to use the gross proceeds which it receives from the issuance of the Notes to repay in part the indebtedness outstanding under the Existing Credit Facilities Agreement. Furthermore, the Issuer has entered into a New Credit Facilities Agreement with each of the Managers or their affiliates for the purposes of refinancing the remainder of the indebtedness outstanding under the Existing Credit Facilities Agreement and to finance the general corporate purposes of the Group.
There are no interests of natural and legal persons other than the Issuer involved in the issue, including conflicting ones, that are material to the issue.
Offer of the Notes
Offer to the public, offer period and determination of pricing details
The Notes will be offered to institutional investors and retail investors in compliance with the restrictions set out in the subsection entitled "Subscription, Sale and Offer of the Notes - Selling Restrictions" applicable to an offer to the public by the Managers during an offer period which is expected to commence on or about April 10, 2014 to, and including, April 15, 2014 (the "Offer Period"), subject to a shortening or extension of the Offer Period agreed by the Issuer and the Global Coordinators. Should the Issuer and the Global Coordinators determine any shortening or extension of the Offer Period (e.g.. due to changing market conditions), such changes will be published on the website of the Luxembourg Stock Exchange (www.bourse.lu).
The Notes will be offered to the public in Luxembourg and, following the effectiveness of the Notification of this Prospectus by the CSSF according to Article 18 of the Prospectus Directive also in Austria, Germany and The Netherlands.
The aggregate principal amount of Notes to be issued will be determined on the basis of the number and volume of orders received which offer a yield acceptable to the Issuer. The Issue Price and the interest rate will be determined as described in the subsection entitled "Method of determination of the pricing details" and set out below on the pricing date which is expected to be on or about April 10, 2014 (the "Pricing Date"). Such information as well as the aggregate principal amount, the number of Notes, the issue proceeds and the yield will be set out in a notice (the "Pricing Notice") which will be filed with the CSSF and published on the website of the Luxembourg Stock Exchange (www.bourse.lu) on or after the Pricing Date and prior to the Issue Date.
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Conditions of the offer
There are no conditions to which the offer is subject. Subscription rights for the Notes will not be issued. Therefore, there are no procedures in place for the exercise of any right of pre-emption, the negotiability of subscription rights and the treatment of subscription rights not exercised.
Technical details of the offer
During the Offer Period investors may submit offers to purchase Notes to the Managers using commonly used information systems, such as, and in particular, the information system Bloomberg. In the case of an order prior to the determination of the pricing details, the investors shall specify at which price they would be prepared to purchase which amount of Notes. Following determination and notification of the pricing details the Managers will offer the Notes in Austria, Germany, Luxembourg and The Netherlands.
Method of determination of the pricing details
The Issue Price and the interest rate will be determined on the Pricing Date on the basis of a yield which is determined by adding a credit spread (the "Pricing Credit Spread") to the level of the Midswaps (as defined below) at the time of pricing. The Pricing Credit Spread will be fixed on the basis of the orders received and confirmed by the Global Coordinators. The level of the Midswaps will be determined as the average yield of the bid and ask prices of Interest-Swap Transactions ("Midswaps") with a maturity similar to the maturity of the Notes shown on Reuters page ICAPEURO and/or Bloomberg page ICAE1 or on any other screen page which is conventionally used to price Eurobond transactions at the time of pricing.
The resulting yield will be used to determine the Issue Price (which is expected to be less than par) and the rate of interest (which is expected to be a percentage figure which can be evenly divided by 1/8 of a full per cent. and which will be correspondingly higher if a higher Issue Price is determined and which will be correspondingly lower if a lower Issue Price is determined), all to correspond to the yie1d which reflects the level of the Midswaps and the Pricing Credit Spread. In the event that the figures for the relevant Midswaps will not be shown as set out above, the Midswaps will be determined in a manner which banks and other institutional market participants apply at that time.
Confirmation of offers placed by, and allotments to, investors
Each investor who has submitted an order in relation to the Notes and whose order is accepted by the Global Coordinators will receive a confirmation by electronic mail, fax or through commonly used information systems setting out its respective allotment of Notes. Before an investor receives a confirmation from the Global Coordinators that its offer to purchase Notes has been accepted, the investor may reduce or withdraw its purchase order.
Delivery of the Notes to investors
Following the determination of the pricing details and confirmation which orders have been accepted and which amounts have been allotted to particular investors, delivery and payment of the Notes will be made within three business days after the date of pricing of the Notes and the confirmation of the allotment to investors. The Notes so purchased will be delivered via book-entry through the Clearing System and their depository banks against payment of the Issue Price.
Costs and expenses relating to the offer
The Issuer will not charge any costs, expenses or taxes directly to any investor. Investors must, however, inform themselves about any costs, expenses or taxes in connection with the Notes which are generally applicable in their respective country of residence, including any charges their own depository banks charge them for purchasing or holding securities.
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Selling Restrictions
General
Each Manager has acknowledged that other than explicitly mentioned in this Prospectus no action is taken or will be taken by the Issuer in any jurisdiction that would permit a public offering of the Notes, or possession or distribution of any offering material relating to them, in any jurisdiction where action for that purpose is required.
Each Manager has represented and agreed that it will comply with all applicable laws and regulations in each jurisdiction in which it purchases, offers, sells or delivers Notes or has in its possession or distributes any offering material relating to them.
European Economic Area
In relation to each Member State of the European Economic Area (each a "Member State"), each Manager has represented, warranted and agreed that with effect from and including the date on which the Prospectus Directive is implemented in that Member State (the "Relevant Implementation Date") it has not made and will not make an offer of Notes which are the subject of the offering contemplated by this Prospectus to the public in that Member State other than the offers contemplated in the Prospectus in Austria, Germany, Luxembourg and The Netherlands from the time the Prospectus has been approved by the competent authority in Luxembourg and published and notified to the relevant competent authorities in accordance with the Prospectus Directive as implemented in Austria, Germany, Luxembourg and The Netherlands until the Issue Date, and provided that the Issuer has consented in writing to the use of the Prospectus for any such offers, except that it may, with effect from and including the Relevant Implementation Date, make an offer of such Notes to the public in that Member State:
(a) to any legal entity which is a qualified investor as defined in the Prospectus Directive;
(b) to fewer than 100, or, if the Member State has implemented the relevant provision of the 2010 PD Amending Directive, 150 natural or legal persons (other than qualified investors as defined in the Prospectus Directive), as permitted under the Prospectus Directive, subject to obtaining the prior consent of the Managers; or
(c) in any other circumstances falling within Article 3(2) of the Prospectus Directive; provided that no such offer of the Notes shall require the Issuer or any Manager to publish a prospectus pursuant to Article 3 of the Prospectus Directive or supplement a prospectus pursuant to Article 16 of the Prospectus Directive.
For the purposes of this provision, the expression an "offer of Notes to the public" in relation to any Notes in any Member State means the communication in any form and by any means of sufficient information on the terms of the offer and the Notes to be offered so as to enable an investor to decide to purchase or subscribe the Notes, as the same may be varied in that Member State by any measure implementing the Prospectus Directive in that Member State and the expression "Prospectus Directive" means Directive 2003/71/EC (and amendments thereto, including the 2010 PD Amending Directive, to the extent implemented in the Member State), and includes any relevant implementing measure in the Member State and the expression "2010 PD Amending Directive" means Directive 2010/73/EU.
United States of America and its Territories
The Notes have not been and will not be registered under the Securities Act, and are subject to U.S. tax law requirements. Subject to certain exceptions, the Notes may not be offered, sold or delivered within the United States or to U.S. persons. Each Manager has represented and agreed that it has not offered, sold or delivered and will not offer, sell or deliver any of the Notes within the United States or to U.S. persons, except as permitted by the Subscription Agreement.
In addition, until 40 days after the commencement of the offering of the Notes, an offer or sale of the Notes within the United States by any dealer (whether or not participating in the offering) may violate the registration requirements of the Securities Act.
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United Kingdom of Great Britain and Northern Ireland
Each Manager has represented and agreed that:
(a) it has only communicated or caused to be communicated and will only communicate or cause to be communicated any invitation or inducement to engage in investment activity (within the meaning of section 21 of the Financial Services and Markets Act 2000 (the "FSMA")) received by it in connection with the issue or sale of the Notes in circumstances in which section 21(1) of the FSMA does not apply to the Issuer; and
(b) it has complied and will comply with all applicable provisions of the FSMA with respect to anything done by it in relation to the Notes in, from or otherwise involving the United Kingdom.
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GENERAL INFORMATION / INCORPORATION BY REFERENCE
1. Authorisations:
The creation and issue of the Notes has been authorised by a resolution of the management board (Vorstand) of the Issuer on March 31, 2014.
2. Clearing System:
Payments and transfers of the Notes will be settled through Clearstream Banking AG, Mergenthalerallee 61, 65760 Eschborn, Germany ("Clearstream").
The Notes have the following securities codes:
ISIN: DE000A11QFA7
Common Code: 105548087
German Securities Code (WKN): A11QFA
3. Luxembourg Listing and Admission to Trading:
Application has been made to the Luxembourg Stock Exchange for the Notes to be listed on the Official List and to be admitted to trading on the Luxembourg Stock Exchange's regulated market.
4. Rating:
The Notes have not been rated.
5. Documents incorporated by reference:
The pages specified below of the following documents which have previously been published or are published simultaneously with this Prospectus and which have been filed with the CSSF are incorporated by reference into this Prospectus:
(a) ProSiebenSat.1 Group – Annual Report 2013
Consolidated financial statements:
– Income Statement page 162
– Statement of Comprehensive Income page 163
– Statement of Financial Position pages 164 - 165
– Cash Flow Statement pages 166 - 167
– Statement of Changes in Equity page 168
– Notes pages 169 - 280
– Auditors' report page 282
(b) ProSiebenSat.1 Group – Annual Report 2012
Consolidated financial statements:
– Income Statement page 154
– Statement of Comprehensive Income page 155
– Statement of Financial Position pages 156 - 157
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– Cash Flow Statement pages 158 - 159
– Statement of Changes in Equity page 160
– Notes pages 161 - 254
– Auditors' report page 256
Any information not listed in the cross-reference list above, but included in the documents incorporated by reference, is given for information purposes only. The information incorporated by reference that is not included in the cross-reference list above, is considered as additional information and is not required by the relevant schedules of the Prospectus Regulation.
Copies of documents incorporated by reference into this Prospectus may be obtained (without charge) from the registered office of the Issuer and the website of the Luxembourg Stock Exchange (www.bourse.lu).
6. Documents on Display:
For so long as any Note is outstanding, copies of the following documents may be inspected in physical form during normal business hours at the registered office of the Issuer:
(a) the articles of association of the Issuer;
(b) this Prospectus; and
(c) the documents specified in the section "Documents incorporated by Reference" above.
The Prospectus will be published on the website of the Luxembourg Stock Exchange (www.bourse.lu).
7. Yield to Maturity:
For the subscribers, the yield to maturity of the Notes is [●] % per annum, calculated on the basis of the Issue Price. Such yield is calculated in accordance with the ICMA (International Capital Markets Association) Method.
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NAMES AND ADDRESSES
Issuer ProSiebenSat.1 Media AG Medienallee 7 85774 Unterföhring Federal Republic of Germany
Principal Paying Agent Commerzbank Aktiengesellschaft Kaiserstraße 16 (Kaiserplatz) 60311 Frankfurt am Main Federal Republic of Germany
Listing Agent Commerzbank Aktiengesellschaft Kaiserstraße 16 (Kaiserplatz) 60311 Frankfurt am Main Federal Republic of Germany
Global Coordinators BNP Paribas Commerzbank Crédit Agricole ING Bank N.V. The Royal Bank of 10 Harewood Avenue Aktiengesellschaft Corporate and Foppingadreef 7 Scotland plc London NW1 6AA Kaiserstraße 16 (Kaiserplatz) Investment Bank 1102 BD Amsterdam 135 Bishopsgate United Kingdom The Netherlands 60311 Frankfurt am Main 9 quai du Président Paul Doumer London EC2M 3UR
Federal Republic of Germany 92920 Paris - La-Défense Cedex United Kingdom France
Bookrunners Bayerische DNB Markets, a Mitsubishi UFJ Société Générale Skandinaviska UniCredit Bank Landesbank division of DNB Securities 29, boulevard Haussmann Enskilda Banken AG Brienner Straße 18 Bank ASA International plc 75009 Paris AB (publ) Arabellastrasse 12 France 80333 München Dronning Eufemias Gate 30 Ropemaker Place, Kungsträdgårdsgatan 8, 81925 Munich Federal Republic of N-0021 Oslo 25 Ropemaker Street, 106 40 Stockholm Federal Republic of Germany Norway London EC2Y 9AJ Sweden Germany United Kingdom
The Global Coordinators and the Bookrunners together, the "Joint Bookrunners".
Co-Manager SMBC Nikko Capital Markets Limited One New Change London EC4M 9AF United Kingdom
Auditors KPMG AG Wirtschaftsprüfungsgesellschaft Ganghoferstraße 29 80339 Munich Federal Republic of Germany
Legal Advisors To the Issuer To the Managers Milbank, Tweed, Hadley & McCloy LLP Clifford Chance Partnerschaftsgesellschaft Taunusanlage 15 Mainzer Landstraße 46 60325 Frankfurt am Main 60325 Frankfurt am Main Federal Republic of Germany Federal Republic of Germany
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