Changes in the Scope of Consolidation

ProSiebenSat.1 Group regularly analyzes its portfolio and assesses possible growth and synergy potential. Strategic portfolio expansions and investments in promising growth areas are a significant part of this M&A strategy. Against this backdrop, the Company particularly strengthened the Entertainment and Commerce segments in the reporting period:

ProSiebenSat.1 Group founded the joint venture 7TV Joint Venture GmbH, Munich (“7TV”) together with the media company Discovery Communications Inc. in third quarter 2017 and expanded it in 2018. The aim is to establish a cross-provider streaming platform in Germany that offers a comprehensive entertainment package with live streaming, a media library and sports broadcasts. The streaming platform will make content available from the TV stations ProSieben, SAT.1, kabel eins, sixx, ProSieben MAXX, SAT.1 Gold, kabel eins Doku, DMAX, TLC, SPORT1, WELT, and N24 Doku, as well as selected content from Eurosport and the programming of ZDF, ZDF info and ZDF neo. In addition, the video-on-demand (VoD) portal maxdome and the Eurosport Player will be integrated in this service. Against this backdrop, the VoD portal maxdome was deconsolidated at the end of July 2018; ProSiebenSat.1 Group continues to include maxdome in its consolidated financial statements using the equity method for consolidation of 7TV.

ProSiebenSat.1 Group developed another future area in the Entertainment segment in 2018, namely the AdTech business. For example, the Group acquired Kairion GmbH, Frankfurt am Main (“Kairion”) (100%) in January 2018, a media marketing provider in the e-commerce sector. In April 2018, ProSiebenSat.1 Group acquired a 90.0% stake in esome advertising technologies GmbH, Hamburg (“esome”), the leading social advertising provider in the DACH region. AdTech serves as the foundation for the automated and customized buying, selling and selective configuration of advertising space in real time. The aim is to develop an ecosystem of leading technology providers and platforms in order to offer advertisers, agencies, and publishers an independent alternative to global players and thereby generate additional revenues.

Back in 2017, ProSiebenSat.1 Group restructured the commerce portfolio under the umbrella of NuCom Group, in order to establish a leading European omnichannel network for consumer services and lifestyle brands. One important step in this is the partnership with General Atlantic that ProSiebenSat.1 Group agreed for NuCom Group in February 2018 and implemented in April. General Atlantic is one of the world’s leading growth capital investors and holds a 25.1% stake in the portfolio of NuCom Group. The transaction was based on an enterprise value of EUR 1.8 billion. In NuCom Group, ProSiebenSat.1 Group bundles strategic investments in largely digital commerce platforms, including Verivox, Parship, Elite Partner, Jochen Schweizer, mydays and Flaconi.

In a first joint acquisition, NuCom Group acquired additional shares in PARSHIP ELITE Group, Hamburg (“Parship Elite Group”) and Verivox Holding GmbH, Unterföhring (“Verivox Holding”) in the second quarter of 2018, which increased its shareholding to 94.2% and 100% respectively. NuCom Group also acquired the online cancellation service Aboalarm GmbH, Munich (“Aboalarm”), which offers cancellation services for consumer contracts in the areas of Internet, mobile communications, insurance, dating and fitness, in the first quarter of 2018, and the remaining minority shares in SilverTours GmbH, Freiburg im Breisgau (“SilverTours”) in the second quarter of 2018. In another joint transaction with General Atlantic, NuCom Group acquired 100% of eHarmony, Inc., Los Angeles, USA (“eHarmony Group”) one of the leading online dating services in the US, in October 2018. The merger creates one of the world’s leading online dating services, which gives the companies attractive potential for growth and synergy. For example, eHarmony Group will adopt Parship Elite Group’s technical platform, which already provided the basis of the successful integration of ElitePartner. This will allow eHarmony Group to offer its customers a significantly more attractive service on its online platforms in future.

ProSiebenSat.1 Group practices active portfolio management in order to leverage the biggest possible synergies by connecting TV and digital offerings. Company disposals are also part of this portfolio strategy. Against this backdrop, the Group concluded the strategic review of the travel segment in the third quarter of 2018 and sold all shares in the tour operator Tropo GmbH, Hamburg (“Tropo”) to dnata (Dubai National Air Transport Association), Dubai, an Emirates Group company. It was deconsolidated at the end of September 2018. ProSiebenSat.1 Group held a majority stake in Tropo since 2012. In these six years, the tour operator significantly increased the awareness of its brand by using TV advertising. The company managed to defend its position even in the difficult market environment of the past several years. However, further synergy potential for the Group was limited.

In addition, ProSiebenSat.1 Group sold 7NXT GmbH, Berlin (“7NXT”) in financial year 2018; it was deconsolidated at the end of July. The provider of online sports programs operates both the fitness platform Gymondo GmbH, Berlin and 7NXT Health. ProSiebenSat.1 Group remains indirectly invested in 7NXT as a fund investor. The majority owner of the fund is Lexington Partners, a leading US private equity firm.