With its double-digit TV NAR growth in Germany, ProSiebenSat.1 beat analyst expectations, including Screen Digest's. The 14.8 per cent rise in TV NAR is even higher than in Q1 and Q2 2010, which were up 7.1 per cent and 8.3 per cent. This is despite tougher comparisons in Q3 2009 (-2.4 per cent), compared with Q1 2009 (-7.0 per cent ) and Q2 2009 (-7.9 per cent), suggesting an organic recovery of TV advertising and not just a mechanic rebound. A key factor for this recovery lies in advertisers taking advantage of low TV advertising prices. During the advertising crisis in 2009, broadcasters had drastically lowered prices. For 2010, they have not at all or only very modestly increased prices. Prices were established at the end of 2009 and in the beginning of 2010, when visibility was still extremely low and a soft market was assumed. Low prices have also attracted the retail industry, a group of advertisers which has so far been largely absent from TV in Germany. Increasingly, retailers are seeing the benefits of brand-building in TV and low prices provide a good opportunity for entering the market.

Following the strong Q3 performance and positive feedback on October advertising, Screen Digest has updated Q4 2010 forecasts for ProSiebenSat.1's German TV NAR from 2.5 per cent to 6 per cent. Screen Digest has, however, not upgraded 2011 forecasts. We remain convinced that German broadcasters will make good for the missed priced increases in 2011 in a bid to secure the long-term sustainability of the TV advertising model. This will result in fewer bookings of airtime inventory. Paired with tough comparatives of a strong 2010, we still expect ProSiebenSat.1's TV NAR to be up 3.5. per cent in 2011.

However, the international free-TV segment should see stronger growth in 2011. Despite good performances in the Netherlands and Scandinavia, Central and Eastern European (CEE) TV advertising markets will remain depressed in 2010. The situation is still dire in Bulgaria and Romania. We forecast both TV advertising markets to be down approximately 10 per cent in 2010.With a return to normal trading conditions in 2011, CEE markets should rebound double-digit. This will positively impact on the performance of ProSiebenSat.1's international free TV segment as well.