A Succession-style boardroom battle is playing out in Europe.
Germany’s ProSiebenSat.1 Media has rejected a set of proposals from lead shareholder MediaForEurope (MFE) to restructure the European media giant.
The Berlusconi-family controlled MFE (formerly Mediaset) submitted a series of motions ahead of ProSieben’s annual general meeting on April 30, which included splitting up the business and changing its capital structure.
ProSieben released a statement today rejecting the proposals, saying they are “not in the best interests of all shareholders.”
MFE is already ProSieben’s largest shareholder, owning just less than the 30% that would trigger an automatic takeover offer under German business law.
Rumors have been swirling that the Italian company is seeking to quietly take control of the ProSieben board and de facto ownership of the business at a lower cost. MFE hadn’t responded to a request for comment by press time.
During a bruising 2023 that saw revenues collapse and profits fall at European networks and media companies, ProSieben changed strategy and placed entertainment at the center of the operation.
MFE earlier this month said it supported that strategy, but wanted to see new board members of its choice added, along with a spin-off of the Dating & Video and Commerce & Ventures operations. MFE had claimed there was “no material progress” made on the restructure.
However, ProSieben today countered, saying a split up was in the “unique interests of MFE,” but “not in the best interests of all shareholders.” Should spin-offs occur, the ProSieben exec and supervisory boards predicted other units such as SevenVentures would also have to be separated “resulting in a direct destruction of value.” They claimed net debt would remain the same, but with a lower market cap that would drive down the share price.
Instead, the ProSieben boards once again proposed selling parts of the business to raise cash.
They also claimed MFE’s request to replace supervisory board member Rolf Nonnenmacher – who is also chairman of the audit committee – with former EY auditor Simone Scettri, harbored “the obvious risk of a conflict of interest.”
This related to EY’s performance auditing its operations in recent years. According to ProSieben, EY “did not raise any objections to the violations” of German business law at ProSieben’s experiences business Jochen Schweizer mydays, which had run into regulatory trouble in 2022 and caused a delay in its 2023 results. ProSieben will “examine whether to file a claim against EY” over the issue.
ProSieben also took issue with the proposal to add former Italian Citibank investment banker Leopoldo Attolico and Christoph Mainusch, a former RTL and CME boss, to its supervisory board.
Existing supervisory board members Katharina Behrends and Klára Brachtlová already had “direct and close ties” with MFE and second largest shareholder PPF, respectively, and the new additions would see a “majority” having close ties with the two companies despite them not owning a controlling share in the business, ProSieben argued.
Behrends is the DACH region boss for MFE, while Brachtlová is a senior exec at broadcaster Central European Media Enterprises (CME), which is owned by investment group PPF.
MFE also called for a new capital structure, which ProSieben has rejected, claiming this would “serve MFE’s exclusive interest to prevent a percentage dilution of MFE’s shareholding in the company through measures that make sense for the company and all of its shareholders.”
For its part, MFE has claimed its motion was designed to “offer the executive board a solution to decisively execute its strategy and unlock the full value of the businesses for all shareholders.”
MFE sees several of ProSieben’s units as “very different and non-synergetic business activities” that will lower the value of the business, and says its proposals would equip the broadcaster with the “new impulse” to focus its entertainment strategy around streamer Joyn.
The Italian company itself is facing a new future following the death of its founder, Silvio Berlusconi, last year. In his will, he left control of the company to children Pier Silvio Berlusconi and Marina Berlusconi.
Earlier this month, ProSieben posted full-year 2023 results that saw profits fall €100M ($108M) to €578M while revenues dropped 7.5%. But it claimed there were clear signs of recovery both internally and in the European TV advertising market. Gains were made in the fourth quarter, though there is still some way to go before it reaches previous levels.
A resolution to its management structure would go some way to achieving that.
