Prosiebensat.1 Media AG Page 3 I
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ProSiebenSat.1 Media Media AG AG FinancialJahresabschluss* Statements zum and 31. Management Dezember Report 2011 2012 * vorläufig und ungeprüft 2 Content Management Report of ProSiebenSat.1 Media AG Page 3 I. Business Operations and Business Conditions Page 3 II. Business Performance in 2012 Page 22 III. Employees Page 32 IV. Compensation Report Page 33 V. The ProSiebenSat.1 Share Page 41 VI. Non-financial Performance Indicators Page 46 VII. Events after the Reporting Period Page 55 VIII. Risk Report Page 56 IX. Outlook Page 87 Annual Financial Statements of ProSiebenSat.1 Media AG Page 94 Balance Sheet of ProSiebenSat.1 Media AG Page 94 Income Statement of ProSiebenSat.1 Media AG Page 96 Notes to the Financial Statements of ProSiebenSat.1 Media AG Page 97 Responsibility Statement of the Executive Board Page 130 Auditor’s Report Page 131 Editorial Information and Financial Calendar Page 133 3 Management Report of ProSiebenSat.1 Media AG for the Financial Year 2012 I. Business Operations and Business Conditions General management statement on business operations and business conditions In 2012, the German economy posted slight growth despite the limited global economic development and the ongoing European sovereign debt crisis. Key factors were again the good consumer climate and the robust export market. Against this backdrop, advertising investments in Germany developed positively. The ProSiebenSat.1 Group continued to extend its lead in the TV advertising market and in the sale of video content online. This also had a positive impact on the operating profits of ProSiebenSat.1 Media AG’s subsidiaries, which were transferred to the former via control and profit transfer agreements. The result of the fiscal year 2012 was negatively influenced by non-recurring items. Due to write-offs related to carrying amounts of financial assets of Group companies ProSiebenSat.1 Media AG had to take over non-operating losses of these subsidiaries, which led to a net loss of the year 2012. Corporate structure and business area ProSiebenSat.1 Media AG is a management holding company that conducts its own operating activities at a low level. It is responsible for ProSiebenSat.1 Group management functions as well as investment administration and central financing tasks. To this are added service functions such as corporate strat- egy and risk management. Furthermore, ProSiebenSat.1 Media AG is the tax group parent for the majority of the domestic subsidiaries. Its major income items are income from subsidiaries’ profit transfer agreements and income from internal services charged. In addition, revenue is generated in particular from the sale of ancillary programming rights. The ProSiebenSat.1 Group is one of the leading media corporations in Europe. Every day we reach 85 million people with our free TV stations in Germany, Austria and Switzerland. Free TV financed by advertising is our core business. Alongside a strong digital and ventures portfolio, the Group also has an international production network. This means, ProSiebenSat.1 has a broad and solid revenue and profit basis. 4 Our free TV stations SAT.1, ProSieben, kabel eins, sixx and SAT.1 Gold are positioned to complement each other and reach all commercially relevant target groups in the German-speaking countries. With our successful stations and far-reaching digital services, we are the leading video sales company in Germany. Our digital activities range from Germany’s largest video-on-demand portal maxdome, the online platform MyVideo and online games from ProSiebenSat.1 Games to SevenVentures GmbH, which is establishing an attractive investment portfolio of media investments. In addition, with Starwatch we own an independent music label. With the Red Arrow Entertainment Group, we produce international TV programs and sell them to TV stations worldwide. Red Arrow is represented with 18 production companies in nine countries. Our headquarters are located in Unterföhring near Munich. ProSiebenSat.1 Media AG was established in 2000. The Group is listed and employs more than 3,000 staff in 12 countries. Organization and legal Group structure There was no legal or structural change to the organizational set-up of the ProSiebenSat.1 Group in 2012; the company is managed centrally by the holding company ProSiebenSat.1 Media AG. However, there have been changes in the scope of consolidation. In December 2012, the Group sold its Northern European TV and radio activities and will now focus on the strategic expansion of its high-growth “Digital & Adjacent” business. The company acquired additional investments in the USA and Great Britain for its program production area. In addition, the Executive Board was extended by the “Human Resources” division. Management and control ProSiebenSat.1 Media AG is listed in Germany and headquartered in Unterföhring near Munich. A stock corporation under German law has three principal governing bodies: the Executive Board, the Supervisory Board and the Annual General Meeting. The governing bodies’ decision-making powers are strictly demarcated from each other. The Executive Board is responsible for the ProSiebenSat.1 Group’s overall performance, and has both professional and disciplinary authority over the managers of the various business segments and holding company units. The Supervisory Board monitors and advises the Executive Board in its conduct of business, and is thus directly involved in all corporate decisions of major importance. The basic rules for this dual management system are defined in ProSiebenSat.1 Media AG’s articles of 5 incorporation and in the rules of procedure for the Executive Board and Supervisory Board. The articles of incorporation also define the scope of business activity. According to Section 179 of the German Stock Corporation Act (AktG), they may only be amended by a majority resolution of the Annual General Meeting. The shareholders of ProSiebenSat.1 Media AG exercise their rights of joint administration and oversight at the Annual General Meeting. Each share of common stock confers one vote. Preference shares carry no voting rights, except where prescribed by law. Business areas and investments In its function as the Group holding company, ProSiebenSat.1 Media AG has no operational role. Its tasks include central financing, Group risk management and the ongoing development of the corporate strategy. The economic development of the ProSiebenSat.1 Group is determined primarily by the subsidiaries held both directly and indirectly. One of the most important direct subsidiaries of ProSiebenSat.1 Media AG is ProSiebenSat.1 TV Deutschland GmbH. Under this umbrella all German TV stations work together in a cross-function matrix organization. In terms of structure, ProSiebenSat.1 Media AG differs considerably from other German TV companies. Not only does the company own all shares in the TV stations SAT.1, ProSieben, kabel eins and sixx and SAT.1 Gold (since January 2013), it also indirectly holds a 100% stake in the sales companies. This results in advantages with regard to the station programming and the sale of advertising time. The companies in the online, games and pay TV areas are also affiliated with ProSiebenSat.1 Media AG via subsidiaries consolidated under ProSiebenSat.1 Digital GmbH, SevenSenses GmbH as well as SevenVentures GmbH. Segment structure and competitive situation In view of the activities disposed of in Northern and held for sale in Eastern Europe, the ProSieben- Sat.1 Group’s operating business activities are divided into three reporting segments that are strategically, economically and technically interrelated and managed by ProSiebenSat.1 Media AG: 6 • Broadcasting German-speaking segment: The TV activities in Germany, Austria and Switzerland are allocated to the Broadcasting German-speaking segment. With a population of over 80 million, Germany is Europe’s largest TV market. ProSiebenSat.1 is No. 1 in the advertising market here with its sales subsidiaries SevenOne Media and SevenOne AdFactory. Alongside innovative and customized sales concepts, the high reach of the ProSiebenSat.1 stations is key to the success of the Group in Germany, its most important revenues market. Due to their complementary programming, the advertising-funded TV stations SAT.1, ProSieben, kabel eins, sixx and SAT.1 Gold cover a broad audience group. While SAT.1 offers programming for the whole family, ProSieben is the market leader among young viewers. With Hollywood blockbusters, US series such as “The Simpsons” and TV event shows like “Schlag den Raab”, ProSieben mainly appeals to male viewers aged between 14 and 29. kabel eins focuses on viewers aged between 25 and 45. sixx, the women’s channel, was added to the German TV family in May 2010 and targets primarily female viewers aged between 20 and 39. In 2012, the ProSiebenSat.1 Group designed a further TV channel – SAT.1 Gold. Here the core target group is women aged between 49 and 64. At the beginning of 2013, the channel successfully went on air. With this portfolio, the ProSiebenSat.1 Group in Germany covers all commercially relevant audience segments, offering both advertising customers and views a wide range of stations. Additionally, in the Broadcasting German-speaking segment refinancing via distribution revenues is becoming increasingly important. The Group participates in the technical fees which IPTV, cable network and satellite operators charge for making the channels available in HD quality. • Digital & Adjacent segment: The Digital & Adjacent segment is the strongest growth driver of the ProSiebenSat.1 Group. It bundles the business units Online Video, Online Games, Ventures & Commerce and Music. The Group leverages the reach and advertising power of its television stations to develop products from the digital sphere and adjacent business areas as successful and strong brands. In this way, the Group taps into new revenue sources 7 and strengthens its independence from TV advertising markets which are sensitive to the development of the general economy. maxdome, Germany’s largest video-on-demand platform is part of the ProSiebenSat.1 Group. maxdome offers subscribers more than 50,000 series, movies, comedy programs, documentaries and other genres.