Media

Chris Hughes is a Bloomberg Gadfly columnist covering deals. He previously worked for Reuters Breakingviews, as well as the Financial Times and the Independent newspaper.

Europe's TV listings are about to look very different. Sky Plc looks set to disappear from the stock market through a takeover of some kind; ITV Plc is getting a new CEO; and now German broadcaster ProSiebenSat.1 Media SE is set to replace its boss, Thomas Ebeling. His successor is going to find it hard to start the job -- and finish it.

ProSiebenSat.1 says Ebeling had indicated he wanted to leave months ago. Given he's been in the job for almost a decade, it's clearly the right time for a change of leadership. The group has been struggling to sell its strategy to investors in recent months. The shares are down 31 percent since the company surprised shareholders last year by tapping them for 515 million euros ($607 million) to finance acquisitions that will further diversify the business away from old-fashioned broadcasting.

Just Wait for the Next Episode
ProSiebenSat's shares have suffered at almost every major company announcement
Source: Bloomberg

Ebeling took ProSiebenSat.1 from a near-penny stock to a member of the benchmark Dax index. But over the last year, one disappointment has followed another. This month, he made some extremely ill-judged references to viewers being poor and obese as he tried to get his point across on the quarterly results call. Small wonder UBS analysts apply a 10 percent management discount to their fundamental valuation of the stock.

A new boss with a different communication style might in itself help lift the valuation. The difficulty is what he or she could do differently. The board has signaled it doesn't want to change course; a planned strategy day for December risks undercutting the new CEO's ability to take a fresh look.

Ebeling's most recent big idea was to back digital ventures, taking equity or revenue shares in return for granting them advertising airtime. ProSiebenSat.1 needs to do more to crystallize the value of this portfolio. Plans to sell a stake in it to investors or through an IPO should help. ProSiebenSat.1 is also seeking partners to expand its program making business.

Middlebrow Entertainment
ProSiebenSat isn't an obvious bargain
Source: Bloomberg
Enterprise value to blended forward Ebitda ratio

If the new broom is going to find it hard starting the job, it's not clear they will be allowed to finish it on their own terms either.

As analysts at Liberum note, Comcast Corp. may be interested in buying ProSiebenSat.1 through its NBC Universal network. It's familiar with the German market and could mine cost savings in U.S. content. ProSiebenSat.1, by its own admission, needs strategic and financial partners, so why not a full takeover?

ProSiebenSat.1 isn't an obvious bargain, trading at an enterprise value of eight times Ebitda, in line with RTL Group SA and ITV. But media is a consolidating industry. Ebeling's successor will have a challenge matching his tenure.

This column does not necessarily reflect the opinion of Bloomberg LP and its owners.

To contact the author of this story:
Chris Hughes in London at chughes89@bloomberg.net

To contact the editor responsible for this story:
Edward Evans at eevans3@bloomberg.net