Prosieben Sat 1 Media

Good morning, ladies and gentlemen. Welcome to the Q2 2020 H1 results call of ProSieben Sat1 Media SE. This conference is being recorded. Today's call is hosted by Mr. Dirk Boikentlender. Please go ahead, sir.

Good morning, ladies and gentlemen, and welcome also from my side to our Q2 2020 results conference call. Today's call is hosted by Rainer Bougeon, Chairman of the Executive Board and Group CFO, as well as Ralf Gehrig, our Deputy CFO of the Group. As always, Rainer and Ralf will first lead you through the presentation and provide an update on the operational development, as well as the Group's financial performance. The presentation will be followed by a Q&A session. Weblinks, dial-ins, and the presentation material were made available via email sent out this morning. With these opening remarks, I now hand over to Rainer.

Thank you, Dirk. Good morning also from my side, and thank you for joining today's Analyst and Investor Call. Today will be about, presumed at once, result in the second quarter and the first half of 2020. COVID-19 is still a quite predominant element of our lives, socially as well as economically. But the situation is clearly brightened compared to the last time we spoke. As discussed in our Q1 call, my executive board colleagues, Christine Scheffler, Wolfgang Link and I had implemented an immediate action plan early on to mitigate the COVID-19 impact on our company. We have thus provided for a stable liquidity and financing situation and first results of our cost management actions are already visible. And the good news is that after the easing of the lockdown measures in our core markets, Germany, Austria and Switzerland, signs of recovery are increasing in the economy. as well as in our advertising business. I will follow up on this with more details a little bit later. First, let's see what we have on our agenda for today. We will start with a quick overview of the status quo in Germany and the conditions under which we are currently operating our business. We then continue with our group financials regarding the first six months and the past quarter. All developments came in as expected, thus it will come as no surprise that the COVID-19 effects hit us in Quota 2. And we will finish this presentation with an operational update on some of our key projects, reflecting how we push our strategy forward. And of course, I will also comment on a first outlook regarding July and August. Our crystal ball for the months after is still unclear. Let's start on slide number three. How has the COVID-19 pandemic been developing in Germany? Daily new infections had its peak in March and April. Since then, the infection rate has been significantly slowing down. As already mentioned in our Q1 call, the German government is doing a great job in managing this crisis and keeping the situation under control. This is certainly due to the well-equipped health system also in international comparison, and due to the sound budgetary management of the past years. The government was thus able to quickly offer a far-reaching financial support package, including a VAT reduction until the end of the year. All this has been leading to a more optimistic economic picture today. After easing the lockdown measures in May, the mood amongst German consumers and executives has brightened. According to the IFO Institute, business expectations among German companies rose from its 69.5 points low in April to 97 points by the end of July. Consumer mood in Germany is also recovering thanks to the rapid reopening of the German economy and society. both economic and income expectations, as well as propensity to buy, are rising. As a result, GFK consumer climate index forecast a figure of minus 9.6 points for July. This is nine points higher than its level in June. In short, In our core markets of Germany, Austria and Switzerland, the crisis has been managed very well so far and economic indicators are beginning to brighten. This also supports the recovery of the advertising business. We are seeing the first positive trend in July and expect July advertising revenues to decline by slightly less than 20% compared to the previous year and that's a much smaller decline than in the past quarter. And there are also signs of a further improvement in August. We see currently an improvement to around minus 10% compared to last year. But please have in mind that July and August are very small months. Most relevant are the months from September to December. We are thus moving in the right direction. We do not depend on export business and are therefore less vulnerable to the continuing economic upheavals overseas. Nevertheless, it is clear that all forecasts have to be treated with caution as everything depends on the further development of the pandemic. But now let's dive deeper into our development in the second quarter and first half of 2020. On slide four, you can see that we have positive and negative developments across our segments in a COVID-19 influenced environment. On the one hand, we see positive impacts for some of our assets. The last few months have shown that television usage has increased strongly, both in our linear and nonlinear platforms. Because we offer exactly what viewers are looking for, regular, reliable infotainment and big entertainment, And this is reflected by an increased reach and viewing time in the last month. Total video view time, which means minutes that viewers consume our content on all our platforms, rose by a strong 7% in the second quarter. We see equal growth rates in terms of daily TV consumption and daily net viewers. Especially important, we increased our primetime market share in the first six months, for the fourth consecutive half year, and we all know that prime time is the most valuable TV time slot for advertisers. This clearly shows that our focus on local and live, especially at prime time, pays off. Also, our digital offerings are gaining viewers, which is underlined by 4% more unique users for our channel website. And our Digital Studio 71 records excellent figures with its influencers and web content. We see a plus of 22% in video views in the second quarter compared to the previous year. Overall, we are reaching a total of 11.8 billion video views. But like all other media companies, we are in a paradoxical situation. While our content offerings were extremely successful these past months, advertisers had postponed their campaigns or reduced their spending due to the COVID-19 impact on their own business. You can see on the slide that in the second quarter, TV was facing advertising reductions of up to 80% depending on the respective industries with the tourism sector unsurprisingly showing the sharpest decline. And as you will see later on, In our financial, this trend, of course, also impacted our advertising revenues considerably. But our sales colleagues have been working tirelessly since the beginning of the crisis to stay close to the customers, to find individual solutions for them, and to put together appropriate advertising packages for their situation. After the VAT reduction, for example, they have targeted precisely those companies that want to pass on the tax reduction to their customers and communicate this via advertising. In general, we are also seeing that the strength and cooperation between our sales colleagues and the program teams under one roof within the 7.1 Entertainment Group is starting to pay off. Besides the advertising business, also our production segment suffered from the COVID-19 related lockdown measures. Postponements or cancellations of scheduled productions across the globe resulted in 28% fewer hours that the Red Arrow colleagues produced during the second quarter compared to the previous year. In this challenging environment, we clearly benefited from our diversified portfolio thanks to Newcomb Group. Some examples. The online beauty provider Flaconi increased its revenues in the second quarter by a very strong 68% year-on-year. In our matchmaking service, Parship Group proves especially resilient with the first-time customers' revenues growing by 46%. With these positive developments, we were able to compensate for the most difficult situation in Newcom Group companies, such as Silver Tours, Jochen Schweitzer My Days, and Around Home. These businesses were significantly affected due to lockdown effects on the traveling and experiences industry. With this, I hand over to my deputy, CFO Ralf Gierig, who will provide deeper insights into the financial implications of these developments and discuss our group financials with you.

Thank you, Rainer, and good morning also from my side. I would like now to continue with an update of our Q2 and H1 2020 financial performance, our balance sheet, as well as where we stand in terms of the targeted cost savings to cope with the COVID-19 crisis. Please turn to page 6 for an overview of our segment revenue performances. Thanks to a well-diversified portfolio of ProSiebenSat-1 and, in particular, the growth of Newcom Group, the impact of the COVID-19 crisis on the group's revenue performance was less pronounced in revenues than it would have been otherwise. This said, group revenues decreased by 25% to €709 million in Q2. While the 7-1 Entertainment Group and the quantum production business of Red Arrow Studios saw a revenue decline of 34% and 31% in Q2 respectively, The NUCOM group as a whole showed resilience in terms of its top-line development and posted a very satisfying plus 5% growth. As already indicated in the Q1 results conference call, we saw a very muted advertising environment in the second quarter as our advertising customers showed reluctance to spend as they experienced significant revenue and earnings shortfalls too. Despite lockdown measures having started to be eased during Q2 in Germany, the second quarter therefore still showed a decline in advertising revenues of 37% to 323 million euros. Given the better development in Q1, the decline of advertising revenues in the first half is limited to minus 21%. On the positive side, the largely subscription-based distribution business has continued to grow dynamically by 9% both in Q2 and H1 2020. Revenues in the 7-1 Entertainment Group reached €398 million in Q2 and €961 million in H1. At the same time, the production business, especially in the US and the UK, has been meaningfully affected by the lockdown and by the still difficult situation in these countries regarding COVID-19. As a result, Red Arrow Studios revenues dropped by 31% to 102 million euros in Q2, which can mainly be attributed to lower production revenues. On a first half year basis, segment revenues fell by 17% to 236 million euros. I would like to highlight the comparatively strong performance of Newcom Group, which illustrates the importance of diversification for our group. Newcom Group revenues grew 5% both on an organic and reported basis to €209 million in Q2 2020. Although the consumer-advised and experienced businesses declined notably due to the negative effects of COVID-19 on their businesses, The matchmaking and beauty and lifestyle business more than compensated this development. We are in particular very satisfied with the strong growth of the matchmaking business, as this not only demonstrated its resilience in the crisis, but also shows the successful turnaround of eHarmony in the U.S. In the beauty and lifestyle business, Flaconi stood out with exceptional revenue growth resulting from strong demand for online shopping of beauty, hygiene and cosmetic products. Let me now tell you how our operating profitability has developed. Please turn to page 7. As we indicated in our Q1 results conference call, the 7-1 entertainment group was expected to see the most pronounced decline in adjusted EBITDA across the group due to the significantly higher level of fixed cost in its business compared to the other two segments. Page 7 shows that adjusted EBITDA of the 700 Entertainment Group declined to 13 million euros in Q2 as well as 155 million euros in H1 respectively. Red Arrow Studios achieved an adjusted EBITDA contribution of 1 million euro in Q2. This also marks a pronounced decline compared to the prior year as the lockdown measures prevented us from producing as planned. Please bear in mind that we largely recognize revenues and thus resulting EBITDA contributions in accordance with IFRS based on the percentage of completion method. Although the Newcom group has achieved solid revenue growth, the adjusted EBITDA declined by around 4 million in Q2. This can be attributed to an earnings decrease of the high-margin car rental platform Billiger Mietwagen. The good news is that we have seen Billiger Mietwagen slowly coming back in July, as the easing of lockdown measures is having first positive effects. Lastly, the reconciliation result, which also includes the holding costs, reduced by 7 million euros to only minus 3 million euros in Q2 2020. Please now turn to page 8. Since the group adjusted EBITDA only shows 23 million euros in Q2 because of COVID-19, the EBIT reported net income and adjusted net income metrics reflect this development accordingly. Texas made the biggest difference in the development of the adjusted net income compared to adjusted EBITDA. Adjusted net income amounted to minus 52 million euros in Q2 and a still positive 7 million euros in H1 2020. The fact that our free cash flow before M&A declined notably less than the adjusted net income shows the impact of our cash management efforts. Let me now continue with additional comments regarding already achieved and still targeted cost savings in H2 2020 on the next slide. In the second quarter, the focus was on getting planned cost savings measures on track. For example, we introduced short-time work in the holding of group areas as well as in all segments where the business was negatively affected by the COVID-19 crisis. As the chart on page 9 shows, costs across the group reduced meaningfully with selling and administrative expenses combined down by almost 50 million euros in Q2 compared to Q1 2020. In comparison to the prior year, these costs were reduced by 26 million euros. Although cost of sales also declined meaningfully, This can largely be attributed to lower revenues. In terms of the already indicated reduction of programming costs, we expect the bulk of these savings to be realized in the second half of this year. Please be reminded that originally we had planned to increase programming expenses by 50 million euros in 2020. Along with the crisis, we have decided to lower program costs by 50 million euros, which represents a swing of 100 million euros compared to the initial plan. Let us now discuss the development of group net debt on page 10. The group's net debt at the end of the second quarter was 2.353 billion euros. This is a slight increase of 108 million euros compared to year in 2019. and a reduction of €161 million compared to the end of Q2 last year. This reduction can largely be attributed to the non-payment of dividends in June of this year. Please be reminded, dividend payment made in June of last year amounted to €269 million. As already mentioned in the Q1 2020 results conference call, We have drawn the available RCF in the amount of €350 million in early April to further strengthen our liquidity position and to ensure that we have access to our liquidity reserves. Under consideration of the already available cash position as well as the free cash flow development in Q2, we report a cash position of almost €1.2 billion as per the end of June. Versus end of Q1 and pro forma, the 350 million euro RCF drawdown, we only lost about 60 million euros of cash on balance sheet in the second quarter. In light of the COVID-19 crisis, this is a very good outcome underpinned by our cash management efforts. Due to the COVID-19 related decline in adjusted EBITDA and H1, the group financial leverage increased to 3.6 times. This being said, we remained fully committed to returning to our financial leverage target range of 1.5 to 2.5 times as soon as possible through a targeted earnings improvement, better operating cash flows, as well as potential proceeds from future asset disposals. With this, I hand to Rainer for the operational update.

Thank you, Ralf. As just shown, the influence of COVID-19 on our second quote results was significant. but overall as expected and a development that we have countered with a very disciplined cost and cash management. Last time we spoke, we also discussed our sharpened strategy. And I think during this COVID-19 pandemic, it already became clear that focusing on our core competence of entertainment and infotainment is the right thing to do. We are also fully concentrated on leveraging more and more synergies between our 7-1 entertainment group and the businesses of Red Arrow Studios, Studio 71, and Newcom Group. At the same time, results orientation continues to be our priority. Every employee is encouraged to make our company a little bit better every day, even if trying new things sometimes means making mistakes. Especially in a challenging market environment, we need to pay attention to promote entrepreneurial spirit and behavior even more strongly. And this means putting performance, drive for execution, and synergies first. We do not aim for revenue growth at any price, but we are focusing more than ever on profitability. With this in mind, let's move on to the next slide and a quick operational update. Slide 12 shows the development of our total video view time over the last two quarters. Let me remind you, The total video view time is a parameter that we introduced in 2019 to measure the entire viewing time on all our platforms, be it on our TV channels or digital platforms. Because simply looking at our linear development does not justice to the digital footprint of our company, especially with regard to the future. The second quarter figures reflect the viewer's current need for increased entertainment and information, with total video view time growing from 257 billion to 275 billion minutes. With linear viewing declining over the years, we are actively working to keep the overall viewing time stable or even grow it overall. How are we doing this? First, we shape our prime time slots, especially on the larger channels, with live and local format. Of course, we will continue to show attractive US content, but less than in the previous years. Big German entertainment and infotainment formats are still the key to attract a great number of viewers, and we are more and more including our own production unit for this. Our all-time hit, Germany's Next Top Model by Heidi Klum, produced by our German studio Red 7 Entertainment, is the best example of of how successful the strategy can be over the years. This year's season was the best in eight years in terms of market share and reached a total of 28 million viewers on our linear channels. Figures that prove that this is the right way to go forward. Look at autumn. We have major primetime formats in our program. The third season of the entertainment show Beat the Channel is starting in September. S of October. We are celebrating the 10th anniversary of the music contest The Voice of Germany. Also in autumn, our smash hit format The Masked Singer will come back with a third season. And there is more to come. S 2021. For that one, we secured the only live free TV package for our German soccer league Bundesliga. During the 90s, that one set standards with its sport program RAN. From 2021, we are back in the game for nine matches in each of the four subsequent seasons, strengthening sports as a pillar of our local content. Second, even though the viewing time share of our digital platforms does not yet reach the level of the linear ones, the digital extension of our TV content is of major importance with advertising video on demand being a megatrend. The just mentioned Bundesliga rights package, for example, allows us to make the matches also available on the websites of ZONE and RAN, their apps as well as on our streaming platform JOIN. And this not only delights me personally as a fan or as a supporter. In the media business, we all know new distribution channels mean new possibilities for monetization. Another important pillar of our digital footprint is of course Join. The streaming platform celebrated its first anniversary in June and one fact is particularly important for us. If you look at usage numbers, you clearly see that it is the platform's TV content that is driving the viewers' usage. With this strategy, we will further push our total video view time which is the basic precondition for successful monetization. And when you talk about better monetization in the future, you will always end up talking about data. With the era of third-party cookies coming step by step to an end, we took early action and revised our group-wide registration service, 7Path. 7Path is an important basis for our data strategy. Since April, Our content offerings on the TV and brand websites, apps, platforms such as Join, and our audio platform Fire are only accessible after a one-time registration. This is indeed leading to a short-term decline in usage, but in the long run, it will help us to turn data into earnings by making our advertising more targetable and thus attracting more advertising customers. Now let's turn to slide number 13. Please allow me to summarize. First, as expected, our second quarter results were strongly influenced by the impact of COVID-19, especially in our advertising business. Second, despite the challenging market conditions, we continue to have a comfortable liquidity situation driven by our consequent cash and cost management, which we will maintain focus on. Third, as discussed, economic indicators are brightening and first signs of an economic recovery are increasing. Our team is concentrating on profiting from this recovery in all our business sectors. As of July and August, we are already seeing first positive trends in the advertising market. And if this development is sustainable, we will see more positive effects on our group's advertising revenues in the second half of the year compared to the first half 2020. Of course, nevertheless, uncertainty over the further development of the pandemic continues to prevail and visibility remains low. It is therefore still not possible for us to provide a reliable outlook for the full year. But we will certainly be able to give more details in the next Q3 call and, of course, continue to be very disciplined about costs and cash management in order to preserve our stable financial basis. Fifth, what will be decisive for the group's business performance in the full year are the months September to December. For these crucial months, our crystal ball remains unclear. Please keep in mind that in a year with a normal revenue development, unaffected by influencers such as COVID-19, We generate about 50% of our fully adjusted EBITDA in these four months. Although we will not be able to make up for the declines resulting from COVID-19 by then, we are looking more optimistically into autumn. Sixth, at the same time, it is essential for us to further invest in our core strategic projects and in entertainment as the heart of our strategy. We do not save at the expense of our future. After all, our goal is to be the leading entertainment and infotainment player in Germany, Austria, and Switzerland. I hope we could show you today that the whole team is working very hard to get us closer to this goal and to master the current crisis. Seeing every day how motivated the team is to drive our business forward, to make ProSieben.one better bit by bit, by taking on personal responsibility makes me proud and look to the upcoming months with optimism. Thank you very much.

We are now ready for your questions.

Thank you very much, sir. Ladies and gentlemen, if you wish to ask a question over the phone today, please signal by pressing star 1 on your telephone keypad. If you are using a speakerphone, please make sure your mute function is turned off to allow your signal to reach our equipment. Once again, it is star 1 on your telephone keypad to ask a question. We'll pause for just a brief moment to allow everyone an opportunity to signal for questions. Our first question over the phone comes from Lisa Yang from Goldman Sachs. Please go ahead. Your line is open.

Good morning. Thanks for taking my questions. I have a few, please. Firstly, I'm just curious about your July and August outlook. I mean, it looks like the French and Spanish companies are talking about actually the Scottish trends. in both of those months. So I'm just surprised why Germany seems to be recovering at a slower pace. Is there anything like, you know, we should be thinking of, is TV losing share, is placebo losing share? Yeah, any explanation would be really helpful. The second question is on the drop-through. So in Q2, the entertainment revenue will be dropped as well, 90%, and the standard of cost savings will come through in the second half. So maybe you can help us understand, like, what sort of... you could achieve in the second half is 50% reasonable. It looks like, again, some of your peers managed to report a drop for about only 30-40%. Yeah, any indication would be helpful. And the third question is regarding, obviously, the state building by a number of parties, KK Army, they said, check me and invest. Just wondering if you can maybe give us an update in terms of any conversations you might have had with any of those third parties, you know, in recent weeks, in recent months. And I'm just curious what I'll be telling you that they are saying in person that the market is not a clean up thing. Thank you very much.

Thanks, Lisa, for your questions.

So let me start with the first one. Yeah, our July and August, I think it's pretty convincing because what you can see here is a clear improvement because we had in April, May and June minus 40% compared to last year. Honestly, it's difficult for me to talk about our colleagues in French, Spain and whoever. But if I remember correctly, their decline was much higher in these months than ours. So perhaps that's an explanation for it. But on the other side, when I talk about the minus 20 in July and the approximately minus 10 in August, it's more or less TV cash ads. And it's the first indicator. Again, these are very small months. And we really have to see what is the outlook for the rest of the year. especially for September. I can tell you out of the discussions which we had with a lot of our customers, and that's what we also said last time, there are not a lot of cancellations. So there is optimism that we will see a very strong last quarter, but we don't know currently, and that's the situation. So therefore... Perhaps as Germans, we are always a little bit more conservative than others. But, you know, in the current time, nobody knows where this pandemic goes. And, you know, I think it is important. But we are very happy to be in markets like Germany, Austria and Switzerland, mostly Germany, because what you could see in the past is that the German market is doing well. And if this stays the case, you know, I stay optimistic, you know, going on further. And what we do on the cost side, I also start the second question on that basis. You know, we are not doing that, what I read, you know, of some of our friends, you know, out of the southern markets, you know, southern markets, which then clearly reduced also their program. That's the reason why our total video view time went up, because our target is to make linear TV more attractive to our customers. And therefore, you know, we try to convince a lot of, especially young people, and that's working. So if you see on our cohorts, you would see that especially the young people start to love TV again, which is good for the advertising business going on further. That's good. And, you know, the saving, especially of the 50 million in program, you know, is for the majority in the second half of the year. But what you could see, and Ralf has presented it, in his slide and also in his presentation. We have done a lot to reduce the costs. And for me personally, we are a little bit in a wait and see position. We are not opening currently our spending. We stay on our cost and working capital breaks as long as we are not seeing a clear improvement. On the other side, we are investing. in areas where we know that we need them for the future, consequently and clear, because we believe that the strategy which we are running is necessary and very good, and the first signs are there. So, Ralf, you want to add on costs?

Yeah, Alisa, as Rainer already alluded to, we're very confident to deliver the 50 million cost savings in program cost. This will probably be the majority of this will be realized in Q4. We will also be addressing continuously obviously selling and administrative expenses. Hence we are managing the addressable cost and subject to let's say COVID-19 there should also be let's say impacts from revenue related costs. So we are We are addressing the cost base as we did in H1. We are plugging in the additional 50 on program cost expense. And as you know, this is for the entertainment P&L.

Let me answer your last question. No further discussions currently about strategy or whatever with media set and CMI. I only can repeat what we have said several times in the past. CMI, for sure, as well as KKR in the past was very supportive. because they totally understand that our cash flow focus, that our return on capital focus, which we have as a company, is good. And for sure, our synergistic approach is good, and everything which doesn't play into that is something which we look carefully in, if it will stay or will go away out of the group, and that's exactly what we do. And for sure, cash flow plays an important role. I've mentioned it before. We only lost $60 million... in cash, you know, from Q1 to Q2. And that proves a little bit what we are doing currently. So our focus is clearly on cash flow. Our focus is keeping the liquidity together. And, you know, that's clearly in the interest of everybody who comes out of a private equity or whatever approach.

Great. Thank you very much. Our next question will come from Annick Mass from Exane.

Please go ahead. Your line is open.

Good morning. My first question is you had a very strong programming schedule in Q2, and despite that, you lost some TV advertising shares. So with programming costs coming down in H2, what drives your confidence that you're well-positioned to capture any advertising spend coming in? My second question is, I understand you can't give any comments yet regarding September, but maybe you could comment on the tone of advertisers and how it has developed over the last three months, particularly as over the last weeks you have more and more restrictions and lockdowns being put in place also in Europe. And my third one is on Newcombe. Just with COVID going on and some of the assets actually having quite good trends within Newcombe, do you think there's maybe... some monetization possible earlier than expected for some of the assets. Thank you.

So let me start with the first one. Yes, we had a good program schedule for the second quarter. Please have in mind that especially the European Championship wasn't there. So therefore, everybody who didn't have the rights had to do something in the second quarter, especially if you want to present an attractive program. We did. But again, we stay and stick to the 50 million cost saving because we knew already that the European Championship wouldn't happen. So how we scheduled it for the rest of the year is exactly in line with that. So as I said, costs are very well under control. And I doubt that we lost market share in TV advertising because I believe the trend, which you could see in the second quarter, over the quarter of minus 40% for TV cash ads. That's what we are talking about. It's pretty similar to everybody in the industry. And again, Germany was doing here a lot better than several other countries. And that's also something which you should have in mind. So total advertisers, I can tell you, when you listen to us, when we forecast the minus 10%, For August, I clearly can tell you that a lot of advertisers are very interested in advertising, where is the place to be, where you have the highest customer base sitting in front of the devices, which is currently for sure in TV, because in all the other areas, there are no new programs and so on, so therefore we have good discussions. But up to this point, and you know our lead time is four to six weeks, So we will know better how September and all the other months will work when we are closer to the end of August because then we have a better feeling for it. But I'm not pessimistic. Hopefully that comes across, you know, that there is also a possibility that we can have a very strong last quarter because we don't have a lot of cancellations. So, you know, it's postponements and that's what we already said last quarter and this hasn't changed. So we are in good discussions all over. For sure, there are some people in that market, you know, and we also have shown that on this slide here. You know, some industry like tourism, you know, which will have problems further on, but others like gaming industry or whatever will come to the market. So therefore, you have a picture which has positives and negatives. Newcom, we have good trends. You're totally right. Our monetization strategy here is clear. In that moment, when we figure out that an asset in NuCom doesn't need us anymore because we are not the best owners anymore, then we are ready to monetize it. For sure, we are happy that companies like Flaconi, Winstar, Parship are performing very, very well in this time. But on the other side, we really have to see how the situation is. We have clear plans. and I've already said, you know, we are committed to reduce our leverage down to between one and a half and two and a half times. And also, you know, part of this leverage reduction somehow in the future will be some disposal. So nothing more to say currently, but, you know, we are pretty optimistic. That's the ones which we had in mind for monetization. One which we officially announced is Parship. in the combination of the meat group. But again, the meat group is not closed currently. It was an IPO in 2022. This is still possible. We don't see there a problem because the performance is great. So, yeah, we are optimistic.

Nothing has changed in our plans. Thank you.

Our next question over the phone will come from Richard Erie from UBS. Please go ahead. Your line is now open.

No, thank you very much. Just two quick questions and a bit of a follow-up. If we look through from April, May, June and into July and August, what sectors have actually driven the sort of improving trends in July and August? uh will be the first question so we can just get a reference to that from what we're seeing in other markets the second question just on the meet group can you you said obviously the transaction hasn't closed can you just give us an update in terms of when you expect approval in the us and whether there's any issues on that approval process yeah we are still second one is pretty easy to answer um you know we are

In the process, we are waiting for the last approval. It's very difficult to forecast official authorities to tell when they will approve. We don't see that there is an issue, but we can say currently. We hope it's happening, as we already said, in the second half of the year perhaps. It will happen in the third quarter, we will see. No update there. The sectors which are improving... you know, is a lot of sectors. You know, we have, for instance, you know, the services sector is up, you know, energy, finance, nutrition. On the other side, you know, you also have, as I said, you know, markets, you know, which are going down. Take the motor vehicle market, you know, which was down. But here I can tell you with all this, you know, e-cars coming to the market. There are a lot of campaigns coming in the second half of the year, especially during the Christmas season. There is a lot of stuff where we are very optimistic that it will come back. That is also for telecoms. They also have their Christmas campaigns going on further, which normally happens in the second half of the year, mostly in the last quarter. There are a lot of customers which whatever happens, you know, will come back to the market because they have to. And again, you know, it is very difficult for us to say, but we don't have cancellations currently. We had postponements. Everybody looks currently how the market is developing, how this pandemic goes on further. And that's a situation which we have to address. And you could see the first trends. Again, July and August, small country, small months. Not really a comparison. September up to December will decide over the year.

Thanks. Could I just ask a follow-up question just in terms of the profitability of Placoni?

Obviously, we've had a good first quarter and acceleration in the second quarter. And we obviously had some reinvestment in that business to grow geographically. Can you just give us a viewpoint in terms of where the profitability is for that business and how you see that going forward?

Currently, the profitability is not our main focus because we let this company grow because, as you can see, the competitive landscape in Germany is in some of the main competitors. I'm not mentioning their names. You will figure that out. It's struggling a little bit so far. It's a great momentum to take market share. That's what we want to do. The reason why NuCom wasn't performing so strong is more or less billiger Mietwagen, because here, with a high margin... You know, due to the tourism business and the reliancy on that, we do have that problem. As I've already mentioned before, we had minus 80% compared to last year. Okay, that's getting better to minus 50%, but it's still the major reason why our profitability in NuCom is not as strong as it could be when you have all the others in place. I'm not talking more about the profitability about Flaconi. You know, that's clearly not the reason for... the losses or the difficulties in our new calm performance.

Can I just follow up, obviously, that you said, obviously, village of memory was obviously down 80% in second quarter. It's quite a high profit number. What are the margins in that business so we can understand when that business has come back, what the impact will be on new calm profitability?

Richard, Billiger Mietwagen is a very, let's say, profitable business. You can assume, let's say, in normal environment, EBITDA margins to be 30%. And obviously, we have a high drop-through. If revenues disappear, you see it in the bottom line. However, also this company... undertaking its measures during the COVID-19 crisis, but the difference in EBITDA can largely be, as we said, attributed to billiger Mietslagen.

Okay. Thank you very much.

Our next question comes from Julian Rock from Barclays. Please go ahead. Your line is open.

Yes, good morning. My first question is, could we have the split of the four viewing minutes, numbers on page 12, between linear and non-linear? And if that's too long to give, maybe you can tell the wonderfully talented Doug Voigtlanger to give us the number. That's my first question. The second question is, can we have how much was smart advertising in million of euros out of the 323 in Q2? And my last question is, when we compare your advertising revenue in Germany to the one of RTL, you've been losing share for a couple of years and you've lost share in the first half again. Now, as you highlighted, your audience is actually improving. You said that your primetime audience was increasing. for, I think, the third or fourth year in the first half. And usually, that leads to share gains. So can you explain why you're losing share to RTL in Germany?

Thank you. Well, let me start with the second one.

I don't know where you come to this conclusion that we are losing market share against RTL, because we have to count it over the year. And over the year, normally, it stays stable. We have quotas. where it's better and where it's worse, but currently I would say we have a lost market share against RTL. I haven't seen their numbers. We will see them, but we know exactly from the advertisers, from the advertising industry, from the agencies where we are working with that this is pretty in line. Again, always have in mind when you look on the statistics that we are very transparent because we always talk about TV cash ads. outside you know the rest if you compare and put everything together you would figure out I would say we're not doing so bad currently so you split between TV viewing minutes linear and non-linear you know I don't have it in my mind it's less than 5% for digital that has to do with a massive linear TV which we have you know we have 60 million customers watching it so therefore it's less than 5% currently and You know, that hopefully helps you to get those numbers in the right way. And smart advertising, Ralf, if you want to answer it.

Julian, digital and smart advertising revenues were in Q2 also affected, obviously, by COVID-19, but still low single-digit positive. And in H1, yeah, you can safely assume that it was around about plus 15% or so, yeah. Okay.

Thank you.

Our next question comes from Connor O'Shea from Kepler. Please go ahead. Your line is open.

Yes, thank you. Good morning, everybody. Three questions for me. First question, just a follow-up, Rainer, on your comments on July and August when you said down less than 20%, down less than 10% for cash advertising. Just to be clear, is that total advertising, traditional TV plus smart digital, or only traditional? That's the first question. Second question, just in terms of the pickup in the advertising market, are you also seeing that for Studio 71 digital ad revenues in July and August? Has that returned to a flat or positive number? And then the third question, just on join, I think the numbers you gave in terms of unique users for Q2 were slightly below Q1, very slightly, I think 3.9 million versus 4 million. Does that mean momentum has slowed a bit or was there an unusual boost at the start of the lockdown and therefore in March, which distorted a little bit the Q1 number? Thank you.

The last one is pretty easy to answer. We had our peak in May with 3.9, and then it's a use and pattern, you know, that it's going down and up depending on how much new originals or whatever we have. And we didn't have a lot of new stuff also because we are heard enjoying, as everybody in the industry, by some productions. So therefore, you know, the use and pattern goes a little bit up and down, but overall we're pretty happy with the performance, as we already said. July, August. down total advertising, or if it's TV cash ads, it's TV cash ads. And, you know, perhaps, you know, we have a chance, you know, to be a little bit better with digital together. And we have given out this number for sure as total. TV advertising is, as I said, the first indication. And, you know, we will see how this development is. August is not over, as you know. So we see if there is room for improvement going on further. Again, July, August are small numbers. More relevant is September. Here we don't know. We have to see how this will develop. Again, you know, we are Germans. We are not so progressive than others because, you know, we don't want to be too negative going on further and then taking it back. So therefore, we are okay with those numbers. That's what we can see currently in our That's what we currently can see in our systems. So, Ralf, you want to answer to Studio 71?

On Studio 71, obviously the German business is also benefiting from improved advertising trends for the US, where we have the larger part of our business still remains to be seen. Obviously, the COVID-19 dynamics there are much different. So, We will have to see, but generally speaking, the German business is obviously experiencing the same improving trends as the other part of our Germany.

Okay, understood. Many thanks.

Our next question comes from Sarah Simon from Bernberg. Please go ahead. Your line is now open.

Yeah, I just had a couple of follow-ups. On the total video view time, or rather TV consumption, can you tell us what reach did? So it's obviously different from sort of average consumption per user. And sorry, I think I kind of missed the answer to the previous question. So the minus 20 and the minus 10 is TV, is that right?

Or is it total? Thanks.

Second question is total and TV cash ads.

Okay, so they're both recovering in line with each other.

Yeah, exactly. And the point here clearly is digital is always a chance, so we have to see how much that can improve, but it's more or less the forecast for the TV cash ads. But as I said before, we don't want to be too optimistic because there is our seven ventures business in China, There is some digital business, and we have to see how this will develop. But normally when we've seen the trend, there is a positive chance to go on further, but we will see. We don't want to give out aggressive numbers and then later on tell the people, okay, it's minus 12 or it's minus 22. So that's the motivation why we've said around 20, around 10, we have to see how this will develop.

Okay. And Sarah, also the reach metrics developed positively. I don't have the numbers in front of me right now. You can follow up. But it was the same trend.

Okay. Thanks.

Our final question now comes from Nisar from Deutsche Bank. Please go ahead. Your line is open.

Great. Thank you. Good morning, everyone. I just have a couple. Firstly, on the Newcom group, could you tell us how current trading is progressing on your e-commerce assets in particular? With Flaconi up 68% in Q2, has that sort of normalized in Q3, or are you still seeing strong demand? And the same for the matchmaking vertical as well. Have those trends sort of sustained over the period in Q3 that you're seeing? Some color there would be great. Secondly, just to understand, did Percivan benefit from any government assistance during the first half on the back of COVID-19? And would you sort of hope to get more government assistance in H2 as well? And lastly, on JOIN, you mentioned that it is progressing as you planned. Just wanted to understand, is there any intention to sort of accelerate investments into JOIN in the second half to promote it even further? some color on how you're thinking about the evolution of this business and its contribution to Proceben's own top line would be great. Thank you.

So JOIN, we are totally in line with the investments which we communicated last year, and we keep it running because JOIN is one of these strategic investments which we need also for our future, so therefore there is no cutback. So the numbers which we have provided you with in our forecast is still the case. So we are spending approximately 60 million from our side into it. And then you have Discovery spending a pretty similar number. For benefits of the government, no, we haven't taken benefits from the government besides short workage time, which we don't have to pay back because we don't need it. That's the reason why we have drawn the revolver. Also, as a security measure, because we are well-prepared, well-positioned, our performance is good. And we also, when we look forward to our repayment of the bond next year, we don't see that we are in trouble or in difficulties, because we are very well-positioned. And when we talk about NuCom, Flaconi, as well as Matchmaking, is doing also very well in Q3. So we totally can see that this trend, which we have seen in Q2, is also going on further. Ralf, you want to add something?

And bear in mind, we are not consolidating JOIN. It's a 50-50 JV. So the net contributions of JOIN show up in our equity results. Obviously, we do business there, but what Rainer mentioned, you will see in the equity results, in financial results.

Great, thank you.

Ladies and gentlemen, this was the last question for today's call. As always, my colleagues in the Investor Relations team and myself will be available for any follow-up questions. Thank you and goodbye.

Ladies and gentlemen, this does conclude today's call. Thank you for your participation. You may now disconnect.