Digital Transforma/on Case Study Professor: J. Rubén G. Cárdenas Case Study Digital Transforma/on Strategies Background ProSiebenSat.1 Media SE (referred to as “P7S1”), a large TV broadcaster with a turnover of €2.6 billion ($2.95 billion)10 and more than 3,500 employees. It is one of the leading TV enterprises in Europe. Munich-based P7S1 operates in 12 countries and owns 15 TV sta/ons, which reach more than 42 million households. P7S1 was founded in 2000 and originated from the former Kirch Group, which established itself as one of two large TV companies in Germany aZer regulators opened up the market to private TV sta/ons. Business Drivers for Digital Transforma6on P7S1’s roots lie in the TV business. When the company’s managers first considered the opportuni/es and threats arising from new digital technologies, the core business was thriving and highly profitable. Thus, the need for immediate ac/on was not as strong as in other branches of the media industry. Nevertheless, managers recognized the poten/al of digital technologies—both for P7S1’s current ac/vi/es and for new business opportuni/es. This led to the decision to pursue a two-pronged approach to exploring and exploi/ng new technologies. One was to digitally enrich the company’s TV pordolio. The other was to ac/vely seek out new digitally enabled business models to diversify its business. Digital Transforma6on Outcome: Developing New Business Areas Ten years ago, digital technologies primarily had a suppor/ng func/on at P7S1 and were mainly used to op/mize business processes and provide an efficient infrastructure. Now, however, P7S1 perceives digital technologies as enablers of innova/ve products and services. To foster the transforma/on of ideas into new products and services, a dedicated innova/on lab was established in 2012. Thus far, though, P7S1 has not sought to be a technology leader but has focused its digital ac/vi/es on branding and customer interac/on via established technologies. DIGITAL TRANSFORMATION. EBS BARCELONA 1 The impact of digital technologies has been mainly on P7S1’s products and services, especially its TV business where digital transforma/on has led to, for example, video-on- demand or gaming content related to TV content. Produc/on processes have also become increasingly digital. In 2013, P7S1 earned €484 million from digital products and services, approximately 19% of its total turnover. In addi/on to digitally enhanced broadcast offerings, P7S1 is also ac/vely deploying digital technologies in business segments not directly related to content, such as e-commerce or mergers & acquisi/ons. These ac/vi/es include websites that supplement linear TV programing (from online text to mobile offerings), content pladorms (“video on demand”) such as maxdome and MyVideo, and online games p ...

1. Digital Transforma/on Case Study
Professor: J. Rubén G. Cárdenas
Case Study
Digital Transforma/on Strategies
Background
ProSiebenSat.1 Media SE (referred to as “P7S1”), a
large TV broadcaster with a
turnover of €2.6 billion ($2.95 billion)10 and more
than 3,500 employees. It is one of the
leading TV enterprises in Europe. Munich-based
P7S1 operates in 12 countries and owns 15
TV sta/ons, which reach more than 42 million
households. P7S1 was founded in 2000 and
originated from the former Kirch Group, which
established itself as one of two large
TV
companies in Germany aZer regulators opened up
the market to private TV sta/ons.
Business Drivers for Digital Transforma6on
P7S1’s roots lie in the TV business. When the
company’s managers first considered the

2. opportuni/es and threats arising from new digital
technologies, the core business was
thriving and highly profitable. Thus, the need
for immediate ac/on was not as strong as
in
other branches of the media industry. Nevertheless,
managers recognized the poten/al of
digital technologies—both for P7S1’s current ac/vi/es
and for new business opportuni/es.
This led to the decision to pursue a two-pronged
approach to exploring and exploi/ng new
technologies. One was to digitally enrich the
company’s TV pordolio. The other was to
ac/vely seek out new digitally enabled business models
to diversify its business.
Digital Transforma6on Outcome: Developing New
Business Areas
Ten years ago, digital technologies primarily had a
suppor/ng func/on at P7S1 and
were mainly used to op/mize business processes
and provide an efficient infrastructure.
Now, however, P7S1 perceives digital technologies as
enablers of innova/ve products and
services. To foster the transforma/on of ideasinto
new products and services, a dedicated

3. innova/on lab was established in 2012. Thus
far, though, P7S1 has not sought to be a
technology leader but has focused its digital
ac/vi/es on branding and customer interac/on
via established technologies.
DIGITAL TRANSFORMATION. EBS BARCELONA 1
The impact of digital technologies has been mainly
on P7S1’s products and services,
especially its TV business where digital
transforma/on has led to, for example, video-on-
demand or gaming content related to TV
content. Produc/on processes have also become
increasingly digital. In 2013, P7S1 earned €484
million from digital products and services,
approximately 19% of its total turnover. In addi/on to
digitally enhanced broadcast offerings,
P7S1 is also ac/vely deploying digital technologies in
business segments not directly related
to content, such as e-commerce or mergers &
acquisi/ons. These ac/vi/es include websites
that supplement linear TV programing (from
online text to mobile offerings), content

4. pladorms (“video on demand”) such as maxdome and
MyVideo, and online games portals
such as SevenGames.de. Another area of digital
investments is in online travel services. In
this area, P7S1 generates earnings through revenue sharing
and adver/sing.
P7S1 generates revenues from its digital products
and services both indirectly via
adver/sing and directly via paid content, the sales of
virtual goods within online games, or
through “freemium” models (providing a free
version with a basicfunc/onal scope and a
paid version that creates addi/onal value; an
example is the music streaming pladorm
AMPYA). Synergies between digital and tradi/onal
offerings are ac/vely fostered. For
instance, content from tradi/onal TV channels is
recycled in digital offerings, users are
referred from tradi/onal to digital products
and vice versa, and cross-media adver/sing
campaigns are conducted. The laoer, for
example, has been used for the cas/ng format of

5. “Germany’s Next Top Model,” a reality TV
show, which is complemented by content
pladorms, web services and corresponding events.
P7S1’s main focus, however, remains on content
crea/on, aggrega/on and distribu/on
(via its TV business). Addi/onally, though, it
strives to expand its revenues from the
management of content pladorms and e-commerce.
Digital ac/vi/es are expected to
become the second pillar of P7S1 in addi/on to
its tradi/onal TV business.
P7S1’s pure digital business unit is led by a
board member and is supported strongly by
the CEO. Most of P7S1’s digital ac/vi/es are
organized within a separate business unit called
“Digital & Adjacent.” P7S1 establishes a new
business internally (if necessary, in the form of
a joint venture) or takes over startups at an
early stage. For the laoer, the company has
launched a dedicated incubator (“ProSiebenSat.1
Accelerator”), which offers incen/ves to
startups, oZen in the form of free adver/sing /me on
P7S1’s TV channels in exchange for

6. equity par/cipa/on (“media-for-equity-program”).
DIGITAL TRANSFORMATION. EBS BARCELONA 2
Because P7S1 sees its digital ac/vi/es becoming a
second pillar complemen/ng its TV
business, a large share of corporate investments
is made within the digital area. These
investments are financed internally. The primary
focus of the investments has been and
remains the takeover and development of digital
businesses that complement P7S1’s
tradi/onal TV business.
DIGITAL TRANSFORMATION. EBS BARCELONA 3