Surprisingly, ProSiebenSat.1 almost completely canceled its dividend. This triggers a sharp drop in prices on the stock exchange. What’s going on at the media group?
It’s a pitch-black day for ProSiebenSat.1 shareholders: the media group’s papers collapsed in early trading by up to 18.9 percent to EUR 7.92. The stock wipes out its entire annual profit in one fell swoop. A company report from the previous evening caught investors completely wrong-footed.
dividend yield close to zero
ProSiebenSat.1 announced yesterday after the stock market closed that there should only be a five-cent dividend for 2022. For comparison: For 2021, the company had paid out 80 cents per share. Analysts had expected 66 cents for 2022. The dividend yield thus falls from 6.8 percent to almost zero.
But the loss of confidence is more serious than the severe dividend cut. The media group’s reputation as a dividend payer has been destroyed for now; it may take years to rebuild investor confidence.
Possibly “significant” financial burdens
The ProSiebenSat.1 board should also be aware of this. So why is he taking this bold step? The company itself refers to a changed dividend policy, which now also “takes into account an appropriate level of debt with a special focus”.
In fact, it is probably primarily legal problems with his daughter Jochen Schweizer mydays that are forcing the company to pay less money to the shareholders and to put more on the high edge. “The possible financial burdens for the group in connection with the official investigations cannot yet be estimated, but could be significant,” said ProSiebenSat.1.
Regulatory issues at Jochen Schweizer mydays
The background to this are numerous regulatory issues that recently arose about Jochen Schweizer mydays’ business. That’s why ProSiebenSat.1 even had to postpone its balance sheet submission and was almost temporarily dropped from the MDAX, because Deutsche Börse doesn’t like to see something like that in its selection indices. The question arose to what extent parts of the business activities of Jochen Schweizer and mydays fall under the so-called Payment Services Supervision Act (ZAG).
Yesterday evening, the group said that the product range had been adjusted in March and could continue to be operated without permission from the Federal Financial Supervisory Authority (BaFin). Both companies are currently coordinating details with BaFin in order to process the voucher products that were issued before the offer was adjusted and that required BaFin approval under the ZAG.
ProSiebenSat.1 under observation of prosecutor
“In addition, the Munich I public prosecutor’s office has initiated an observation process,” said the Bavarian media group. ProSiebenSat.1 and the affected subsidiaries cooperated extensively with the responsible authorities. Against the background of this news, the business figures for 2022, which ProSiebenSat.1 also presented in the evening, fade a little.
After that, revenues fell by 7.4 percent to 4.16 billion euros due to weak advertising markets, the operating result (adjusted EBITDA) collapsed by almost 20 percent to 678 million euros. For this year, the group is expecting stagnating sales of 4.1 billion euros, which could vary by 150 million euros up or down. The operating result is likely to drop to around 600 million (plus/minus 50 million) euros.
Berlusconi company from dividend cut particularly affected
Incidentally, the dividend cut hits the family of former Italian Prime Minister Silvio Berlusconi particularly hard. Their company Media For Europe (MFE) is the largest single shareholder of ProSiebenSat.1. MFE claims to hold 25.01 percent of the shares and has an option for up to 29.9 percent through financial instruments. In February, the Czech conglomerate PPF Group also got involved, which according to its own statements now holds 10.1 percent.