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Didier Stoessel: Interview for Frankfurter Allgemeine Zeitung

PPF a.s.

24/8/2023 | 7 minutes to read

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Prague-based financial investor PPF is a major shareholder of Pro Sieben Sat.1. PPF Chief Investment Officer Didier Stoessel says how time-consuming is this investment in the leading European media company and television broadcaster, addressing the combined markets of 100 million viewers in Germany, Austria and Switzerland.

The interview was published in the Frankfurter Allgemeine Zeitung on Friday 25 August 2023. The original text in German can be found here.

You invested in Pro Sieben Sat.1 half a year ago. Since then, the company’s half-year losses have multiplied eightfold to 86 million euros and its share price has declined by nearly 20 percent. Is that still a good investment?We’re long-term investors. We started buying shares early. For us, today’s position is okay. This also applies to this investment.

How large is your share today?

We have disclosed that we have crossed the threshold of a 15 percent share in Pro Sieben Sat.1. We have not reported crossing a threshold of 20 percent. That means we own between 15 and 20 percent.

Are you currently purchasing more shares?

We have no further disclosure to make in this regard. We’re happy with where we are today.

Some investors associate investment in media with political intentions. Does PPF?

No. We’re crystal clear about that. Just look at our Central European Media Enterprises. CME operates television stations in five countries in East-Central and Southern Europe. We guarantee newsrooms their absolute independence. Independent journalism is a value in and of itself, one that we stand for.

You were not welcomed with open arms, not even by MFE – deceased former Italian prime minister Silvio Berlusconi’s Media For Europe – which with a 28-percent stake holds the largest share in Pro Sieben Sat.1.

It’s clear that people were initially surprised and wondered: Who is this? Then we explained our intentions. In all the countries in which we’re active, we always try to get along well with all stakeholders. Reputation is extremely important for us as a global investor. Let me put it this way: If you want to be a blue chip, you have to act like one. We’re not here to cause trouble, but to help.

And all is good now?

Our mutual interactions today are friendly and constructive. We have our representative on the supervisory board, which hopefully will be soon confirmed by the court. The choice was welcomed by all the others. MFE has two representatives on the supervisory board, we have one. End of story.

Will Berlusconi’s death change anything?

You’d have to ask MFE. We’re happy to be where we are today. We see ourselves in a good position.

PPF has invested its assets of 40 billion euros in many areas: financial services, telecommunications, e-commerce, real estate, construction of transport vehicles, and even yacht rentals. How do television stations fit into all this?

Firstly: We’re a family-run, globally active investment company with a conservative but clear investment philosophy. We’re most easily described as a patient long-term investor who likes to get involved in fragmented growth markets that offer opportunities through digitisation and that are sustainable and climate-friendly.

Which doesn’t necessarily lead to media.

We invest in media because we believe that we have a good understanding of the market. Secondly, video consumption is increasing worldwide. You can watch videos at any time of day or night on a wide range of devices. We have the content and the technological capabilities to deliver what consumers want, everywhere and at any time. All we have to do is monetise it. There are huge possibilities and great opportunities.

Are you not afraid of Amazon, Netflix, and the rest?

Those are fantastic competitors. But is Netflix going to decide tomorrow to make a supermodel series with Heidi Klum in Germany and Austria? Probably not.

You’re not afraid of their size?

Size means a lot in this business, but local content and live content are much more important. People want news and stories from their lives, from their region, in their language. I firmly believe in this. That’s why we have such faith in the media market. And we see many trends. Pro Sieben Sat.1 operates only in Germany, Austria, and Switzerland. But with our media, we’re active in many other regions and possess expertise in digitisation and telecommunications. For instance, we have just acquired a share in the fast-growing streaming platform Viaplay, Scandinavia’s largest.

Didier Stoessel, Chief Investment Officer, PPF, Prague - Photo: PPF

Even with the large streaming providers, not all that glitters is gold. When they run into trouble, what does that mean for the other providers?

Many of the large streaming services are currently losing hundreds of millions of dollars. People shouldn’t forget that they have to raise prices. The platforms will be asking between 20 and 25 euros a month. That is an opportunity for other providers. I’m convinced that traditional . . .

… free and advertising-funded …

…linear television possesses a great market potential for monetising content.

Right now, Pro Sieben Sat.1 is not achieving this sufficiently – as the business figures show. So: what should be done?

Naturally, we’re not thrilled. That is definitely not the case. We’re very pleased with what has been accomplished in the past six months. Right now, the good news is that all the shareholders have one goal: to make sure that Pro Sieben Sat.1 gets back on the winning track. On the other hand, it’s also true that the company and the entire industry are currently working in a very difficult environment.

Which means?

Everybody has to pull together and provide the board with as much support as possible, and as much help as is needed to make sure that the company stays on track.

Is that a call to arms or a description of the situation?

Everyone is on board. And the strategy presented by our CEO, Bert Habets, is clear.

Meaning the announcement that 400 jobs will be cut, and the promise to finally get the Joyn streaming platform up and running?

There’s a big difference, of course, between presenting a strategy and implementing it. Many individual steps are required. You have to build up teams again, television channels have to perform better. It’s clear that the monetisation of content has to become more attractive across all media. It’s equally clear that the entire digitisation process has not made much progress in the past five years. This has to be made up for at an extremely fast pace. That’s clear to everybody. Everybody knows what has to happen and that it really has to be done.

So there’s not much time to practice?

The next five or six months are important. Then we’ll see how the German advertising market is developing. Content has to be improved as well. Something like that won’t happen overnight. For that, you need the right people and a detailed action plan that management is hopefully capable of implementing. Let’s wait and see in another six months. Then we can talk about it again.

That’s not a long time.

Six months can be a long time and also a very short time. But it has to be enough for us to concentrate and focus our energy on reconfiguring the programme for 2024. You know, our content should make people happy, it should excite and move them.

CEO Habets has your full confidence?

He does, and 100 percent support. He did a convincing job as CEO of RTL Nederland. The digital transformation that he accomplished there was highly successful. Now, of course, it’s not 20 million but 80 million potential customers, which requires a quantum leap. In other words, everything depends on his ability to properly implement the concept. That will be decisive for Pro Sieben Sat.1.

There has been much turmoil at the company: delayed financial statements, losses, the departure of top managers, and layoffs. Did you expect such restructuring?

We took a close look at the company before purchasing the first share. We analysed all segments, compared advertising times, and so on. And we were not surprised. But the important thing now is to earn money with the content across all channels. This won’t happen by waiting and watching.

That requires investments, not owners who expect quick dividends.

Of course, the company needs more investments for this to happen. Some future profits will have to be reinvested. We’re talking about a long-term investment. But we see great potential, as long as the necessary restructuring gets underway. The success or failure of Pro Sieben Sat.1 and of every other media company in Europe will depend on how and whether they are capable of distributing and selling their content more broadly than today. Telecommunications providers will be decisive in this area. This, too, is a business we understand.

The interview was led by Andreas Mihm.

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