2023-03-28 14:24:05 ET
ProSiebenSat.1 Media SE (PBSFF)
Strategy Update Conference Call
March 28, 2023 3:00 AM ET
Company Participants
Dirk Voigtländer – Head-Investor Relations and Senior Vice President
Bert Habets – Group Chief Executive Officer
Ralf Gierig – Group Chief Financial Officer
Conference Call Participants
Annick Maas – Société Générale
Nizla Naizer – Deutsche Bank
Julien Roch – Barclays
Adrien de Saint Hilaire – Bank of America
Matthew Walker – Credit Suisse
Conor O'Shea – Kepler
Richard Eary – UBS
Presentation
Operator
Good day, ladies and gentlemen. Welcome to the Strategy Update of ProSiebenSat.1 Media SE. This conference is being recorded. Today's call is hosted by Mr. Dirk Voigtländer. Please go ahead, sir.
Dirk Voigtländer
Yes, thank you, operator, and good morning, ladies and gentlemen, and welcome to our conference call on the occasion of the presentation of ProSiebenSat.1 strategy update. Bert Habets, our Group CEO, will guide you through the presentation. The related press release as well as the presentation documents are available for download on our website. Following the presentation, Bert Habets, as well as our Group CFO, Ralf Gierig, will be available to answer your questions.
With this, I would now like to hand over to Bert.
Bert Habets
Thank you, Dirk, and good morning, everybody. Thank you for joining our analysts and our investors call on the strategy update today. I'm very happy to do my first presentation as Group CEO of ProSiebenSat.1 and share my observations from the past months as well as the strategic direction we are taking as a group. I'm well aware that you are all keen to know when we will publish our 2022 results, which we had to postpone by the end of February. As we have communicated, regulatory questions related to the business of Jochen Schweizer mydays occurred, which we have to resolve first before closing the books for 2022. More concretely, this means that we are examining possible regulatory requirements for Jochen Schweizer GmbH and mydays GmbH in connection with the Payment Services Supervision Act, the so-called ZAG. We need to clarify if and to what extent vouchers may also fall under this loan.
We are currently in close and constructive exchange with a supervisory authority, BaFin, to clarify whether and if so how we need to adapt. This process is ongoing, and we are currently – we currently expect it to take further between four to six weeks. And rest assured that our teams are working full speed on this to resolve this matter. As soon as we have certainty over the timeline, we will provide you with a new date for the publication for the details of our full year figures for 2022 and our outlook for 2023.
With this, let's get started. The Media and Entertainment business is close to my heart with 22 years of professional experience in this field. And ProSiebenSat.1 is a great company with many passionate employees that I have been excited to work with every day over the last five months. Our industry is in a constant flux of change, and we will further strengthen our leadership position in the German speaking entertainment market over the next years. Because I believe that the power of TV will enable us to become a powerful player in the streaming video market, but also into other businesses.
I have known ProSiebenSat.1 for a long time when I was working for RTL, and I always valued ProSiebenSat.1 as one of our major competitors with a strong entrepreneurial and innovative power. Since November, I've been able to look behind the curtains and gain deeper insights into the heart of the company where we produce not only great entertainment, but so much more. We have found a very solid business model with lots of strengths, and we have all it takes to reach millions of people every day. We operate 15 TV channels in Germany, Austria and Switzerland. And Germany alone, over 60 million people are watching our programs and 12 million monthly unique visitors are visiting our digital platforms. And digital is the right keyword. We have 13 successful digital entertainment destinations for our consumers with over 54 million video views every month.
Also, our Commerce & Ventures segment as well as Dating & Video have a strategic closeness to our Entertainment business. With our Commerce & Ventures business, we gather around 248 million visits on our commerce platforms. These strengths are all bundled in a great set of assets and capabilities that we can build upon to address the current challenges in our current – in the market and to turn this into future growth. We have a very strong and diversified Entertainment portfolio. By acquiring the full stake in Joyn at the end of this last year, we made an important step and taking this Entertainment power digital. The 100% stake finally makes us owner of our own destiny in the streaming domain.
We are the market leader in smart advertising products with our leading position in advertising technology. Our advanced TV offerings allow us also to tap into new advertising client tools. We continue with successfully develop local live and relevant entertainment with many well-known content creators from the German-speaking region. Together with them, we developed state-of-the-art content for a young target group that also appeals to our advertisers. A great example for tapping into growth markets is our audio business, podcasting. We have grown our advertising revenues in our podcasting business throughout the German-speaking region and are already ready to expand even more in this segment. This setup holds great growth potential, but it will need full focus in the upcoming years to lever our advantages.
In our Commerce & Ventures segment, we have a proven business model with media-for-equity and media-for-revenue participations. Here, we invest in young companies and offer them advertising space by using our idle inventory. In return, we receive either a revenue share or convert the value of our airtime into a shareholding in the company itself, a smart way to further monetize our reach while building strong consumer brands. And finally, we have high-quality dating brands in Europe and North America, as well as market-leading tech solutions for digital interactions.
Before we dive into the details, I would like to take a step back and look at the strategic direction we are laying out on. On what principles do we build our future success? First of all, we continue to increase our reach and impact in the German-speaking entertainment market by rigorously putting the consumer first in all we do. Secondly, we strengthen our leadership position in the German-speaking entertainment market and further optimize and experiment to diversify our monetization. We strive to maximize the time consumers spend across all our media offers and build more attractive digital services. At the end of the day, we are competing for leisure time of our consumers and thus want to outgrow our competitors. Number four, we continue to synergistically create new digital businesses with entrepreneurs in the German-speaking region, while crystallizing value for the group. At the same time, we will maintain strict financial disciplines while we save and prepare for future growth as part of our transformation journey. Therefore, we will focus on cost efficiency, profitability and free cash flow across our portfolio.
Based on our strength and this strategic direction, we have now defined our plan for ProSiebenSat.1 and what we want to tackle first this year. We are putting our entertainment back at the core of what we are doing with more focus on and expanding our digital business. By that, we want to strengthen our leadership position in the German-speaking entertainment market.
How do we get there? First, we establish Joyn as the central digital touchpoint for our users’ journey. This will lead to an increase of our overall reach. Secondly, we focus on local life, and life and relevant content as well as build out our portfolio of in-house produced formats. We therefore strengthen our content production house and intensify our content partnerships. Thirdly, we optimize and diversify our monetization with smart advertising products under the umbrella of our Advanced TV offering and we will experiment and build new monetization initiatives.
We are also becoming increasingly tech and data savvy. This secures and increases our monetization opportunities throughout the whole Group. We thus transform our core business with a focus on digital growth and without economic compression. We want to reach our viewers anytime, anywhere and we are adapting our organization to this objective following the acquisition of Joyn.
In the Commerce & Ventures segment, we focus on operational performance of our assets. We maximize media synergies and redefine our portfolio. This means we have a closer look at how we can further crystallize value in the midterm. We have already established a position in supporting young digital companies to build a strong brand and accelerate our growth by using our entertainment power and we will continue this path and be the enabler of young digital companies and support the next generation of entrepreneurs in the German-speaking countries.
For Dating & Video, operational performance improvement and user-based growth are the main objectives for this year. In the midterm, we aim to further penetrate ParshipMeet Group existing international markets and crystallize value for our stakeholders at an appropriate time.
Let me sum up what this means for our Group as a whole. In 2023, we will work intensively on our cost base, while adjusting our operational setup. Our clear goal is to build a highly profitable, local, all-in-one entertainment champions that builds on multiple forms of monetization and leverages as much as possible our position in the markets where we operate in.
Let's now deep dive into our plans for Entertainment. The first prerequisite for growth is to reach a large audience. That's why we aim to maximize our total viewing time across all platforms, adapting more than ever to changing media consumption and establish digital offerings with a high appeal. Let me give you some examples on how we are driving reach and usage. We are establishing Joyn as the central digital hub with all our platforms directly directing traffic towards Joyn. We aim to increase our local content and our own IP across all platforms. Our own production capabilities give us quick access to the right content and its development.
In addition, we maintain and develop lighthouse brands and family entertainment shows. Our linear TV channels have great reach, which we are also able to translate successfully into the digital world.
We want to conclude more and new content partnerships to boost our media libraries. Therefore, as the brand Joyn suggests, we will enhance Joyn’s aggregator's role again. we want the industry being other media companies, producers, publishers, advertisers, but also agencies, and creators and other talent to join us in developing the premium content offering of Joyn.
We used the strength of our news department that started on January 1. Its content contributes to our live formats as well as ours news snippets on Joyn. And of course, it underlines the public value of our offerings. We will further develop our windowing and multi-platform strategy and focus on creator-led premium content. We reinterpreted classic TV shows combining them with the greats of social media customers and exploit it digitally. We enrich the content experience and improve user engagement on our platform.
We already launched 16 special interest playlists for AVOD content on Joyn, the so-called FAST channels. They play curated advertising finance content back to back like a playlist of thematic content. This allows us to retain viewers on the platform and to increase their time spent with our content. Other interactive features as well as shopping will also lead to higher user engagement.
Let's now talk about Joyn as the cornerstone of our digital offerings. We aim to position our streaming platform as the number one freely accessible entertainment and lifestyle brands in Germany, Austria, and Switzerland for the entire family. Therefore, we focus on three types of content that reach different target groups.
First of all, kids and the younger generation are our target group for growth. We will just develop new flagships formats to bring them to our platform and strengthen their retention. Interactivity and creator-led content such as life events, with our well-known influencers play an essential role here. For our largest target group, adult consumers, we will enhance our TV experience as well as our libraries.
First, we expand our offering in Joyn original releases. Secondly, we offer them exclusive previews for the programs aired on our TV channels. Thirdly, we use selected U.S. premium content from our licensing deals. And fourth, we increasingly use special interest playlists from AVOD content with attractive topics to drive retention at Joyn.
And for the best agers, we will strengthen our live TV offering, especially with news and sports. Therefore, we will strengthen Joyn’s aggregator role and distribute our partners and live TV on our platform. If the platform doesn't make a difference and we can adapt to the viewing habits of our viewers, then content alone the sites on our success. This significantly improves our competitiveness compared to other streaming providers.
The underlying element of Joyn’s success will be our multifaceted content strategy as it allows us to maximize reach across our platforms. Next to our local and live strategy, multi-usage deals like our recent deal with NBCUniversal are key. They represent the future of rendering and give us the necessary flexibility to address viewers on all platforms at any time.
Let me give you some details on this deal. As this is an example on how we want to source content going forward. The NBC deal includes both linear, free and pay TV rights as well as extensive and long run digital on-demand rights both for AVOD and for SVOD. As you can see, our package includes feature films and series both first runs like Fast & Furious, but also extensive library content deals as well as factual and kids content. This perfectly fits our offering of Joyn.
In Germany, this is the very first deal that such a large scope of digital rights has been put on the market by a major Hollywood studio and it is the first time that when we can flexibly decide in which order and where we want to air. For us, this is a real game changer as we now can perfectly cater to our viewers' needs. When it comes to our digital offering, Joyn will be the central hub for our reach.
To further strengthen Joyn’s positioning in the market. We use all linear and digital channels such as our TV websites, but also our social media channels as traffic engines. Additionally, we aim to build relevant partnerships for future growth. This is a key element in our strategy. We also want to partner with young creators to leverage our access to the creator ecosystem with Studio71.
I'll give you an example, how we have already demonstrated that this strategy works. Our Austrian streaming platform Zappn shows how we can use the strength of our TV offerings to create a compelling overall family household offering. With our streaming platform Zappn, we focused on free growth levers, local, life and relevant content, a great user experience and an excellent windowing strategy between our digital and linear channels. This approach had a clear impact on the user base.
Unique monthly active users grew by 66% year-on-year in the fourth quarter of 2022 and the minutes user spent on the platform increased by 60% to an impressive two hours and two minutes per day in the past 12 months. Zappn is a proof point on how we are able to shift eyeballs from TV to our streaming platform with a great content offering.
Of course, Austria finds itself in a very different competitive landscape than Germany, but still the power of our channels can massively leverage our viewing habits in the streaming world. What does this mean for the development of revenues in our entertainment business? Digital platforms and addressable forms of advertising offer the potential to monetize our advertising inventory at significantly better conditions. And the data on this slide show that the expected increase in the usage of Joyn and the growing share of addressable TV advertising come along with higher TV prices. This notably improves the monetization potential with more users and reach on our digital platforms. Thus longer dwell times will fuel our future growth in the entertainment segment.
Focusing on digital also supports us in optimizing and diversifying our revenue streams, we follow an approach with three steps that we can build. We optimize classic TV advertising, monetizing our business with linear TV advertising, distribution and media for revenue and media for equity deals are a proven business model for us. And they continue to be strong revenue braces for our group. Therefore, we continue to leverage the high pricing power of TV mass reach.
Additionally, we have the monetization potential of our idle advertising inventory. Most importantly, we scale our Advanced TV advertising products such as addressable TV, programmatic TV, or advanced targeting, by digitizing our TV inventory and introducing new sales offerings. We achieve higher reach and higher CPM as explained, and thus a better monetization of our ad inventory where these products come into play.
And thirdly, on top, we want to build and expand on that new direct-to-consumer initiatives. Shoppable ads or live interaction can give us access to our customers and open up new direct-to-consumer revenue streams.
To sum this up, we will be able to monetize our growing digital reach via our smart Advanced TV advertising products and thus, increase the digital share of our advertising revenue significantly. This is important to remember. On the one hand side, we are facing structural challenges in the TV business.
On the other hand, the digitization of our core business is opening up new revenue streams that will allow us to grow in the entertainment business in the long run. In the last few minutes, I have outlined our different initiatives we are focusing on that will accelerate our digital expansion.
As you can see on this slide, we are thereby tapping into attractive focus markets. The prospects for the InStream video advertising market alongside the markets of podcast advertising and content production are very good. Also, we expect e-commerce to gain importance in the entertainment sphere [ph].
We are experimenting with social shopping and shoppable ads to further develop this new revenue stream. The growth potential of this market segment is likely to exceed that of the e-commerce market as a whole.
At the same time, we expect the combine classic and Advanced TV market to remain flattish. Transforming our entertainment business into an overall structural growing business means that our revenue split will continue to shift.
Classic TV advertising will remain an important contributor, but decline slightly over time, while our Advanced TV advertising products will grow faster and offset this increase. Furthermore, we will see growth potential in our distribution and content business. However, the highest growth lies in the development of Joyn. I’m convinced of this path that it will lead to company to mid-term organic growth in our core business.
Let’s now have a closer look at our Commerce & Ventures business. Our Commerce & Ventures business has a strategic and successful closeness to the core entertainment business. Since over 10 years, we have been using our idle inventory, advertising inventory to push the development and brand building of aspiring digital companies.
Since 2013, we have invested a total of €400 million in capital in companies and realized over €1 billion of proceeds from disposals. On top of that, our Commerce & Ventures assets have contributed for more than €600 million in cumulative net advertising synergies. On the minority side, we are monetizing our idle inventory through media for equity and media for revenue investments. This is a proven business model for us and a model that benefits our group.
Hence, we will continue to be the enabler of young digital companies and the next generation of entrepreneurs in the German speaking countries. Regarding our majorities, we will continue to improve our portfolio operationally. At the same time, we will also continue our best owner strategy and verify how we can crystallize value for our group.
This means that we exit our investments whenever we can drive growth predominantly, we cannot drive our growth predominantly through our reach in our core markets anymore. In the future, following our investment criteria, we will only make majority investments in case it fits perfectly to our entertainment core business.
We have also introduced stricter cash allocation discipline for our Commerce & Ventures activity. We’ll only apply moderate amounts of investments and thus only add cash to the airtime used in very selective cases. By doing this, we will push for a more synergistic approach for Commerce & Ventures for the future, while preserving our cash for developing the Entertainment segment.
Our Dating & Video segment is a great proof on how we build market leaders through media. Back in 2012, we had a minority investment in Parship, thus in a pure dating brand based in Hamburg. By adding our brand power, our operational knowledge, as well as our financial firepower, we built one of the top three leading on-time online dating players in only 10 years time.
Today, we are majority owner of ParshipMeet Group, a dating and video group with eight brands operating in three continents. As such an international company, ParshipMeet Group now generates around two-thirds of its revenue outside of the dark region, which means that media synergies with our core business are becoming of less importance over time. Overall, this is a journey that we all can be very proud of. After this buildup, we are now focusing on operational performance of our Dating & Video business.
This includes a much more integrated approach of the business, which allow the ParshipMeet Group brands to complement each other even better with regard to product, target audiences, user intentions and territories. This reorganization is reflected in a new leadership structure.
Our previous Co-CEO, Marc Schachtel has been appointed as Group CEO of the ParshipMeet Group and CFO, Henning Rönneberg also takes over the role of COO. Both of them are with the company since the early days. Former Co-CEO and Co-Founder of The Meet Group, Geoff Cook leaves the company on the best of mutual terms possible to pursue new entrepreneurial endeavors outside of the group.
In alignment with a new leadership structure, ParshipMeet Group will also streamline its organizational setup and implement efficiencies, including personnel costs. These adjustments will mostly affect the U.S. operations, especially in the Video segments. I’m confident that the company will tackle the growing online dating market with even more vigor and cohesion in the future. Our primary objective continues to be value creation for all of our ParshipMeet Group stakeholders. And for this, we continue to assess all options for value crystallization in the midterm.
Although, we have not yet published our financial results for the previous year and our financial targets for the current financial year 2023, we have some clear financial goals when we implement our strategy. We are expecting growth in the Entertainment business and see growth potential in businesses outside the core business. This makes us optimistic that we will be able to achieve average organic growth in the medium term in the already communicated range of 4% to 5%.
The main growth drivers will be the digital initiatives in the Entertainment business, especially Joyn, as well as the commerce and dating portfolio. We will continue to achieve this growth with sustained high capital efficiency. Thus, we will continue to target our ProSiebenSat.1’s return on capital employed to be above 15% in the medium term.
This shows that we are always making planned investment against the backdrop of achievable value contribution. We will specifically support those businesses that promise high and earning potential with modest capital requirements. Finally, we’ll continue to aim for a financial leverage ratio in the range of 1.5 to 2.5 times adjusted EBITDA to net financial dept at a respective year end. This policy has been in place for several years. This range enables us to maintain a balanced relationship between attractive return on equity and the balance sheet strength.
Before finishing this presentation, I want to make it very clear. What I present to today is not a revolution. It is an evolution, an impactful evolution with focus on speed and consistency in our day-to-day operations. Now, it is all about how we execute. We need to be quick, we need to be agile, and we need to foster a culture of innovation and entrepreneurship.
With this, let me sum up today’s four most important takeaways. We strengthen ProSiebenSat.1’s leadership position in the German speaking entertainment markets. Secondly, we expand our reach with a focus on digital and continue to diversify our monetization. Thirdly, we invest in brands, in assets and talents that make a difference to our audience and to society. And finally, we safe and prepare for growth. I’m really convinced that we have all the takes and we’re just getting started.
Thank you so much for your attention and I’m looking forward to your questions.
Question-and-Answer Session
Operator
Thank you. [Operator Instructions] Our first question today comes from Annick Maas of Société Générale. Please go ahead.
Annick Maas
Good morning. My first question is, so you speak a lot about how you want to be focusing on profitable growth and so on, but you don’t really give a target on what the EBITDA margin is going to be in the future. So maybe you could highlight or give us a bit more details about this going forward. The second one is, so you mentioned you want to have – do moderate investments in Commerce & Ventures. Can you maybe give us an envelope of the size of investments you want to do? And then the third one, you mentioned that in Parship, the cost cutting is coming through the Video segment. Now, if I recall, while the Video segment was – the segment that was going to actually fuel the growth in Parship. And so does that mean this video opportunity within Parship is not as significant as you may have thought so before? Thank you.
Bert Habets
Thank you for your questions. Let me take them and tackle them one by one. Our focus on profitability, I think for today, as we are less focusing on the results presentation of 2022, which is spending as I gave and highlighted in my introduction, we will have to postpone all target settings for the 2022 results, but also for 2023 outlook and trend years. So, we will revert on that in a later stage on this specific part.
With regard to our investments in Commerce & Ventures, we will – we have introduced the concept of investing less cash and more synergistic, so more idle inventory as the basis for our minority investments going forward. We are setting boundaries at the level of around €50 million to €75 million, cash, maximum, on an annual basis across all the value buckets that we are looking into. That is, I think, the guidance we can give on your second question.
And with regard to ParshipMeet Group, indeed, the Video business has seen a less favorable development in the last quarter of 2022. And also this is a continued trends that we see at the beginning of this year. And this together with the new leadership team, has led us to look into streamlining the organization, which was a topic that we had discussed for a longer period of time and to really prepare the platform for future growth by aligning and bringing the European and the U.S. organization much closer together.
Annick Maas
Thank you very much.
Operator
We will now take our next question from Nizla Naizer of Deutsche Bank. Please go ahead.
Nizla Naizer
Great. Thank you. I hope you can hear me. I have two from my end as well. Firstly, just on the Jochen Schweizer review. Could you give us some color as to the timing? Why now? And it seems like you just away from reporting and this new set to come out. So some color there would be great.
Secondly, on the addressable TV and targeted advertising. Could you remind us just how ready is the underlying sort of German market for such technology? And do people have smart TVs on mass in their homes? Or could that penetration improve? Some color on maybe the underlying market and your ability to reach consumers in Germany would be great.
And maybe one final question related to Joyn. What are the factors that convinced you to maybe pursue an AVOD strategy with the streaming business, which is the impression I’m getting versus more of an SVOD strategy? And would you still want to drive the subscription part of Joyn as well going forward? Some color there would be great. Thank you.
Bert Habets
Yes, thank you. Thank you for these questions. With regard to Jochen Schweizer and the regular issues that we are tackling there, we guided that we would probably need to four weeks to six weeks in order to come back to you and indicate a new timing frame of our annual results release as we are in constructive dialogue with BaFin. This process takes time, and this is our estimate based on today’s insights.
I think with regard to addressable TV and targeted ads, this is an ongoing development in the German landscape. We’re trying to improve our base for a rollout of these products by, on the one hand side, making our inventory increasingly available for these products after the test phase that we have gone through. So at the same time, we see a very positive adoption from the advertisers and the agencies towards these products. So this is a very positive sign that there’s increasing interest from the market in adopting to these new services.
We’re also preparing for offering these offers – these product offers at scale going forward, which is ongoing tech development road map that we are developing and which we are prioritizing in the company. And then maybe lastly, through the new distribution deals that we have in the marketplace and increasing tech and data capabilities that we are implementing, I think we become increasingly savvy in generating and rolling out these business models at scale. So, I think we are making good progress in developing this new market and new revenue line in the coming years.
And on your third question, Joyn as an AVOD strategy. Indeed, our primary goal is to grow the reach offering of Joyn through our own content offering and make it into a broad entertainment and lifestyle brands for the whole family, as I try to explain. As we are late to the game in the streaming video space, I think the first priority on our side is now to build a meaningful streaming video platform with critical mass that is the priority. And from there, we can still develop other revenue lines like subscription, which we currently also are building. But I think, first, in the upcoming period, we will focus on the AVOD part and attracting as many as viewers to the platform and enjoy the offer that we have there.
Nizla Naizer
Thank you. Very helpful.
Operator
Our next question today comes from Julien Roch of Barclays. Please go ahead.
Julien Roch
Yes, good morning. Three questions, please. The first one is what you said today in terms of strategy makes perfect sense. But I struggle to see the significant difference between the new and the old strategy. You said it yourself, evolution, not revolution. So could tell us what is the main difference between the old and the new strategy? Second question is you gave us a couple of targets. You said that we’ll have to wait for margin target. But will there be any extra investment? Is the new strategy implemented with no extra investment like TF1 or will you have significant investment like ATV?
And the last question is what KPIs will you give us, because you talk about increasing the digital share of advertising revenue, but you weren’t disclosing that. You talked about concentrating on maximizing viewing time across old platform, but you stopped giving us total viewing since 2020. So what KPI will we have to track your progress? Thank you.
Bert Habets
Thank you. Thank you for your questions. I think the main differences between the old and new strategy come to putting our entertainment business back at the center of the core of our group again, and within the entertainment to put Joyn at the very center on where we want to grow and where we want to build a meaningful digital presence. Now that we own the platform 100%. I think, we finally are capable of developing this streaming video platform going forward. And there we will continue to build also our further present in the entertainment market with other digital assets which could be a combination of organic growth and small M&A transactions.
I think if we look at Commerce & Ventures, we will be much more disciplined in our cash allocation and primarily focus on minority investments going forward and crystallize value of the existing portfolio when deemed appropriate. And on ParshipMeet Group, we basically have been very clear that we want to crystallize value of this investment over time. And in the meanwhile, we streamline and optimize the business by bringing the U.S. and European organization much closer together.
Second question and third question are actually all going into direction of KPI sets, which are something that we will come back on in a later stage once we share the financial results.
Ralf Gierig
Yes, Julien. Ralf speaking. In terms of let’s say content investment, I think it’s important to note that not much will change our 1 billion number from the past. And this will also be the benchmark for the future periods. And it will be much about windowing. Yes, it will be much about exploiting digital rights which so far we couldn’t use on our streaming platform. But in this sense, yes, we will stick to our investment policy as we did in the past.
Julien Roch
Thank you very much.
Operator
Our next question today comes from Adrien de Saint Hilaire of Bank of America.
Adrien de Saint Hilaire
Yes. Good morning. Thanks for taking the question. First of all, do you mind giving us some operating and financial KPIs around where Joyn is today? Secondly, there is – on Slide Number 13, you showed a different buckets of statements. Just wondering what is the underlying profitability of each bucket and how you see it going forward? And then thirdly, maybe I’ve missed it, but I don’t think there is any mention of like, what sort of didn’t be out you would like to have under that new strategic direction?
Ralf Gierig
Adrien, I can start with your first question maybe. And so we will put out a full set of obviously operational and financial KPIs for Joyn when we release our full year financials and talk about the 2023 outlook. But just one figure, December 2022 we had more than 4 million monthly video users, which is a number you probably know. And obviously, we want to develop it from there. Yes. And also with respect to your second question, yes, all the underlying KPIs, profitability buckets, et cetera, we will elaborate on when we have our full year results released and obviously the outlook for 2023. Yes. And I think the third question is going into the same direction. Yes. Obviously, we will talk about dividend when we have our full year results release and talk about the outlook.
Adrien de Saint Hilaire
Yes, that’s great, Ralf. Thank you. And maybe if I can squeeze in one more. I think we heard from RTL in Germany that they have Q1 or they see the Q1 German you had [ph] market down 15%, 20%. Is that also what you’re foreseeing at the moment?
Ralf Gierig
Yes, I mean, as you know, I mean, we look at the comps. Obviously, Q1 is providing the toughest comp as you might recall. Q1 last year was up 9%, 10%. Yes. And so, and also given the macro environment, I think it’s a tough start with the year. But we expect the gradual improvement more to come when we talk about 2023. And I don’t want to put out a precise percentage number right now. Yes. But obviously, we have seen figures from ITV, we have heard RTL. I think the trends in the big markets are similar, I would say for the start of the year.
Adrien de Saint Hilaire
Very clear. Thank you.
Operator
Our next question today comes from Matthew Walker of Credit Suisse.
Matthew Walker
Thanks, and good morning. I just wanted to get bit of clarity on the current trends in the dating. On the revenue side, if you could say a little bit more, you obviously, I think you said it was a little bit weak in video. Could you give us a bit of a feel for how dating revenue is trending?
And then obviously how deep is the cost cutting on dating? Like, what, I know you don't want to say because you haven't put out your 2022 results, but if you could give us a feel for how much either in absolute euros or margin uplift, we should be assuming in dating because it feels like quite a significant change in policy on dating?
And then also could you just comment on – you mentioned on just recently on the advertising front, but given that the [indiscernible] has been improving and energy costs are coming down, wouldn't you expect that to show up in the appetizing market? And when do you think that might happen?
Ralf Gierig
Hi, Matt, Ralf Gierig speaking. As we said at the beginning of our presentation, we will elaborate on 2023 trends in detail when we put out our full year financial and talk about, let's say the outlook. So apologies that I don't want to go into detail for dating at this point in time, yes. And, but you will get all relevant KPIs and our views on how we see the business when we talk about our full year financials, and maybe but one comment on ad trends here, when we look at the macro picture in our core market, Germany, the biggest market in which we operate we see a distinction between first half year and second half year with – for GDP forecasts and also consumption patterns. And clearly we would also expect and hope that the trends in particular in the second half here will improve. This is as much as we can say at this point. And apologies, but we will talk in more detail when we have our full year results.
Matthew Walker
Okay. Thanks a lot.
Operator
[Operator Instructions] We will now take a question from Conor O'Shea of Kepler. Please go ahead.
Conor O'Shea
Yes. Good morning. Thanks. Thanks for taking my questions. Just a couple of questions from my side. Just, the first question on the Jochen Schweizer mydays situation. Just to give us a little bit more background about this book just wondering about the timing of this issue. You've owned these businesses for some time now. Why now is this suddenly an accounting problem? And if it is found that the activity is covered by the Payment Services Supervision Act, can you give us a sense of what the practical implications of that would be? And also is this something to do with the repay ability of vouchers as a result of the pandemic? Is this why it's an issue now?
And the second question, just in terms of, I know you said about the advertising outlook that you don't want to comment back 2023, but just in general, you – I think, have a higher exposure to say digital native advertisers. And you mentioned that that this was compatible with your strategic vision. Obviously a lot of those digital native companies, e-commerce companies are going through a much more difficult time now with the model, with the reset interest rates. And so wonder are you still confident that that is going to be a source of growth in the medium term as strong as it has been in the last decade?
Bert Habets
Yes. Thank you for your question. I think on Jochen Schweizer mydays, it's important to understand that we are dealing with a possible regulatory issue here and not an accounting issue. So the discussion here is whether parts of our business are subject to the, what we call Payment Services Supervision Act set again in Germany it's called, and we are currently investigating to what extent this might possibly be the case. And we, as I indicated, we are in constructive dialogue with BaFin on this matter, which takes time to resolve. We indicated we would need four to six weeks of that, and it's important to understand that it's very difficult to control the timing aspects of this matter.
And secondly, I think if I understood the question correctly, we are very much committed and convinced to continue investing in the commerce and venture space as we build a very strong position in this community of enabling young digital companies to grow quickly by providing them with our power of airtime, which we will continue to do. I think there is a large portfolio of companies that is still looking for cash and the power of our airtime to further build a company. And I think even in this difficult macroeconomic environment there where finding new rounds of financing become increasingly difficult, there is an additional opportunity for commerce and ventures to build new relationships and build new partnerships in the commerce and venture space. So I would be – I'm quite positive on the future development and opportunities we will see there.
Conor O'Shea
Okay. Fair enough. Thank you.
Operator
Our next question comes from Richard Eary of UBS. Please go ahead.
Richard Eary
Apologies upfront, but I’m traveling and I’ve had sort of bad signal. So if you’ve answered the SE questions before, I apologize, is just to go back to obviously, a couple of comments in the statement earlier about reinvesting or investing originals and talking about cost out. I appreciate you don’t really want to talk about 2022 and 2023 numbers, is this part of a multiyear reinvestment curve where ultimately you think you’ll come out stronger, but there might be some reinvestment in the business over a period of years at the outset. That’s the first question.
The second question is you put up a slide talking about CPM increases 1.3 times, 1.4 times linear. I’m just trying to get an understanding of that, is that seems quite low from what we’re hearing from other broadcasters across Europe. And so is that an issue around ad load? Or is that an actual CPM number and whether you can talk to that number?
And then just lastly, in the slide on revenues, you talked about the in-streaming revenue opportunity. Can you – and that’s where the growth was coming from to drive the Entertainment business. Can you just expand on that, and talk about how big that opportunity is, and exactly how that advertising model will work, and how that is going to be different from your essentially current advanced advertising or addressing even platform within the existing Entertainment business? Many thanks.
Ralf Gierig
So Richard, let me start with your first question. Obviously, we are looking year-by-year. We are looking into our investment needs. And I already briefly touched upon what we see as a relevant number for content which, in our view, does not necessarily need to change and is around €1 billion. And this is our annual investment cycle, i.e., we invest regularly every year into content. And as, with a focus on local life where we have decent successes.
And the combination of our linear channel network with our streaming platform, Joyn, now offers the opportunity to apply a kind of multi-usage of content. And the deal we struck with NBC Universal also enables this for, let’s say, license content, much better than in the past where our digital rights were really limited.
Maybe on the CPM topic. We will develop, obviously, the CPM views. I need to compare what other broadcasters do. But the German ad market is attractive, and we will be working on improving obviously all relevant KPIs.
And on the streaming opportunity, I mean, this is something we would like to elaborate on when we have our full year financials and the 2023 outlook and please bear with us. But this we will touch on when we sit down next time.
Richard Eary
Thanks. But can I just ask a follow-up? Just with regard to content. So what you’re suggesting is that we’re not going to see a significant step change in content investments over the next couple of years to change – to drive the strategy change. It’s going to be done with the existing envelope? And that envelope includes buying additional rights to digital beyond what it is on linear such as the NBC deal?
Bert Habets
Yes. Let me shortly comment on that because I think it’s definitely part of our strategy to optimize within the existing content budget of the mentioned €1 billion by Ralf to optimize as money as digital rights in the strategy going forward, which is a process we have already started in 2022, and we’ll continue to optimize in 2023. And also with all the new deals that we will source going forward, we will selectively invest into original content but coming from the content budget that we have shared with you today.
So it will be a continuous optimization within the existing content budgets to learn also from the performance this will bring to the platform. And from these insights, we will decide on any additional subsequent investments in the coming years.
And also bear in mind that we, in building Joyn, we want to actively also aggregate and partner with other players in the ecosystem, which means that we do not have additional content investments from these partnerships, but we will also be able to be open for revenue shares or different monetization models between partners in order to build a platform going forward.
Richard Eary
Thanks, Bert. And just maybe can I follow up with regards to Warner deal. Obviously, the Warner deal is now expired, is that correct? And that was obviously our largest output deal. Does that provide more flexibility? Or is that flexibility being taken up with an expanded NBC deal?
Bert Habets
The deal we highlighted is the NBC Universal deal. And I think there, we versus our previous long-term partner. Warner Bros., we had a significant improvement of terms and rights in the new deal that we concluded.
Richard Eary
Thank you. That’s helpful.
Operator
This concludes today’s question-and-answer session. I would now like to turn the call back to your host for any additional or concluding remarks.
Dirk Voigtländer
Yes. Thank you. Ladies and gentlemen, this was the last question for today’s call. Thank you again for joining us today, and we hope you found the conference call informative. As always, my colleagues in the Investor Relations team and myself will be available for any follow-up questions shortly. Thanks, everyone, and goodbye.
Operator
This concludes today’s call. Thank you for your participation. You may now disconnect.
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ProSiebenSat.1 Media SE (PBSFF) Strategy Update Conference Call Transcript