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TRANSCRIPT
Capital Markets Day –
Perspective on SevenVentures Unit
Hans Fink, October 5, 2011
2
Addresses market segments that cannot be fully
exploited by Classic Media Sales
Source: P7S1
Classic
Inventory
P7S1 TV Media Inventory
Unutilized Inventory
Unutilized Inventory
Classic Sales Models for
core Inventory
• Close cooperation with big
media agencies
• Commitment and volume
based pricing models
Innovative Sales &
Financing Model M4R/E for
• Fast growing, exit-driven
online companies with need
for variable fee structures
• Small companies with
attractive products in TV-
affine segments with cash
constraints/financing needs
(e.g. Seven-Entertainment
for music labels)
3
Objectives & Benefits of M4R/E
Source: P7S1
1
2
3
4
5
Builds new market segments (with working capital / cash
constraints, high commercial risk) for TV advertising
Stimulate existing market segments for TV advertising
(see Dating example)
Participate in long-term growth of new customers
Capitalize exit/upside of online companies
Anti-cyclical inventory utilization with more independence
from fluctuation in ad market
4
Multiple value drivers
Source: P7S1
ILLUSTRATIVE EXAMPLE
1
2
4
Acquire if attractive
business and has
strategic fit
Discontinuation if target
below expectations
Participate in exit
proceeds
3
Convert into loyal
paying classical
TV customer
Revenue building blocks Exit options
€
Minimum
guarantee-driven
income
M4R/E
Customer Revenue share
driven income
Equity-driven
income
5
Clear screening criteria to identify suitable targets
1. Referring to M4R/E deals
Source: P7S1
No relevant existing or likely TV / SOM spend TV-affine product category
Clear target group fit
Upside from stimulatory TV spend in category
No financial, operational, legal risks
2 - 3 year commitments (excl. extension) with early termination clauses for 7V
Overall yield comparable to SOM yield / volume clusters
For M4E: Long-term fit with P7S1 and solid cash flows or exit fantasy through equity / call options
6
M4R/E Portfolio Development – 3 Phases
2008 - 2009
• Music / Music deals
• Online Gaming deals
2010
• Optimized terms /
processes
• M4R/E Push
2011 - 2012
• Best practice processes,
governance, portfolio
management
• Industry sector initiatives
• Potential partnerships
with VCs
Focus on adjacent and attractive industries
Source: P7S1
Widen and test new
approaches
Roll-out and expand
First success
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Example Zalando: Europe's #1 online shoe retailer
based on brand building and sales push through TV
• Participating in two revenue streams:
- Minimum Guarantee
- Exit value
• Founded in Oct. 2008, first TV campaign in Q4 2009
• Germany's largest online shoe retailer (260 brands)
• Aggressive future growth being fueled by category- and
geographic expansion
• Zalando advertising stimulated TV investments of
various other eCommerce companies
Source: P7S1
Zalando – A Success Story
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Example Yokebe: becoming 2nd biggest player in
German diet drink segment within 1 year after launch
• Attacker of #1 player Almased in German diet
drink market
• Founded in early 2010, first TV campaign in Q3 2010
• Listed in >5,500 top pharmacies and successful
online distribution
• Core for further promising OTC products
(e.g. “Lact-o-Stop”)
Source: P7S1
Yokebe – Jump Start
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Leveraging unsold media inventory
to grow own assets
Aspiration
• Strategic investments
(25+% equity stake)
in promising business
models
• Scale-up of digital
ventures portfolio
• Buildup of strong
lifestyle brands to
create brand equity
and commerce /
licensing income
• Become relevant
revenue contributor to
Group P&L
Source: P7S1
Own assets / Digital Commerce + Physical
Health /Beauty
Travel /Leisure /
Lifestyle
Fashion / Design
Digital Services
& Consumer /
Social platforms
NewCo. Jewellry
2011
2012
Nov.
Nov./Dec.
Dec.
Feb.
Jan.
Jan.
Mar.
Jan.
Jan.
+ Growth
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Example MeetOne.com – Building innovative dating
platform with bigpoint founders
Source: P7S1
• Freemium social dating platform
with international footprint and
multiplatform-approach
• Management Team: Founders of
Bigpoint
• Revenue Model: Virtual item
selling and micro transactions
instead of monthly fixed fee
Description
• Minority equity stake
• Significant share on revenues
(attractive recurring yield on
media spend)
• Attractive mid term exit value
Terms
Expansion of our music business
Source: P7S1
Music Promotion Own Products/New Markets JVs and Management
• Promotion of external
events and musicals
• "Musik Tip" format for
promotion of external
artists, CDs, downloads
• JVs with major labels to
promote and monetize
"joint" artists
• Management of artists
(360° licenses)
• Exploitation of music
records master rights
• 2nd biggest independent
label in Germany
• Signing of own artists1
• Partner and create own
events
• Exploitation of licenses
from external products2
1. e.g. Udo Lindenberg, Lenny Kravitz, Lena 2. incl. games
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Capital Markets Day –
Perspective on SevenVentures Unit
Hans Fink, October 5, 2011