ProSiebenSat.1 Media SE (OTCPK:PBSFF) Q2 2023 Earnings Conference Call August 3, 2023 4:00 AM ET
Company Participants
Dirk Voigtlander – Head-Investor Relations and Senior Vice President
Bert Habets – Group Chief Executive Officer
Martin Mildner – Group Chief Financial Officer
Conference Call Participants
Thomas Singlehurst – Citi
Conor O’Shea – Kepler
Annick Maas – Societe Generale
Julien Roch – Barclays
Matthew Walker – Credit Suisse
Dirk Voigtlander
Good morning, ladies and gentlemen, and thank you for joining ProSiebenSat. 1’s Q2 and H1 2023 Results Conference Call. I’m very happy to have with me Bert Habets, CEO of ProSiebenSat. 1; as well as Martin Mildner, our new CFO. Bert and Martin will first take you through the financial and operational performance for the reporting period. Bert will conclude the presentation with comments on the group-wide transformation and cost savings program as well as our outlook for the current financial year. As always, the presentation will be followed by a Q&A session.
With this, I now hand over to Bert.
Bert Habets
Good morning, everyone, also from my side, and thank you for joining our results call on the second quarter and the first half of the year. Before we go into details, let me give you a quick overview of the most important developments and results of the last months. As expected, in the German-speaking region, the still high inflation rates and weak economic development continued to impact our group with our most important financial KPIs being below the previous year’s level.
Especially, our TV core advertising revenues declined in the second quarter, although to a somewhat lower extent than in Q1. On a more positive note, we were able to compensate for the decline partially with the growth in advertising revenues from our digital businesses in the DACH region like [ph]Joyn or audio. In our Commerce & Ventures segment, the revenue growth of our digital platform and commerce business more than offset the decline of SevenVentures advertising revenues. This was especially thanks to Verivox.
The development of our rating and video segment was impacted by regulatory headwinds in Germany as well as the continued consumer constraint in the DACH region and lower usage of video services in the U.S. In this environment, we strongly focus on cost efficiency. As already indicated, we initiated a comprehensive cost optimization and efficiency program, which we expect to translate into annual growth savings of EUR 100 million in 2024.
Most importantly, in-line with the forecast of the economic research institutes, we expect the macroeconomic conditions to improve in the second half of the year compared to the previous years with the corresponding impact on the DACH advertising markets. Based on this assumption, we are confirming our financial targets for the full year. With this, I hand over to our CFO, Martin Mildner, who will guide you through our group financials for the second quarter and the first half of 2023.
Martin Mildner
Thank you, Bert, and good morning also from my side. Since this is my first analyst and investor call for ProSiebenSat. 1. I would like to briefly introduce myself. My name is Martin Mildner, and as CFO, I am responsible for the group’s finance, legal, compliance and Corporate Security departments for the holding as well as for the entire Commerce & Ventures segment.
I started as Group CFO on May 1. Some of you will know me from previous calls or meetings as Group CFO of United Internet, a German communications and Internet Group. In this role, I was also responsible for the IPO of the web hosting and cloud service provider IONOS, which took place at the beginning of the year.
I’m now very pleased to have joined ProSiebenSat. 1, a company that, on the one hand, has certainly challenges to overcome, but on the other hand, has great potential to successfully transform its business and grow in the long term. I’m very much looking forward to making this transformation a reality, together with my colleagues on the Executive Board and the experienced team at ProSiebenSat. 1.
Having said this, I would now like to give you an update on the financial performance of the company in the second quarter and first half of 2023.As already mentioned by Bert at the beginning of this presentation, the second quarter continued to be characterized by macroeconomic challenges in the German-speaking markets. As expected, this led to a group revenue decline of 10% in Q2 and up 9% in H1 of this year on a portfolio and currency adjusted basis.
On a reported basis, this means including the effects mainly resulting from the disposal of the U.S. production business of Red Arrow, Group revenues declined to EUR 868 million in the second quarter of 2023 and EUR 1.683 billion in the first six months. This represents a decline by 17% in the second quarter and by 15% in the first half of 2023, respectively.
The decline in revenues reflects the continued uncertainty in the economic environment and the resulting reluctance of consumers to spend with knock-on effect on the advertising market. The lower investment affects not only our advertising business in the Entertainment segment, but also the business of SevenVentures in the Commerce & Ventures segment. Adjusted EBITDA of EUR 79 million in Q2 was notably below last year’s level.
However, it was fully in line with the indications which we provided last quarter in the range of a mid to high double-digit euro million amount. The decline by about 50% in both Q2 and H1 2023, was mainly driven by declining revenues, mainly in our high-margin advertising business in the German-speaking region. Adjusted net income amounted to EUR 4 million in Q2 and minus EUR 11 million in H1 2023. This development primarily mirrors the development of the adjusted EBITDA, which was partially offset by an improvement in the financial result and income tax.
Finally, adjusted operating free cash flow was minus EUR 33 million in Q2 2023 and minus EUR 57 million for the first half year. These declines compared to the previous year, reflects the reduction of revenues and adjusted EBITDA. There are also seasonal factors at play, notably programming CapEx, which is to be offset in the second half of the year
Let us now take a closer look at our entertainment business, which you can see on Page seven of our presentation. Entertainment revenues declined by 21% in both the second quarter and the first half of the year; against the backdrop of a still demanding economic environment in the German-speaking markets, advertising revenues in DACH declined by 9% to EUR 421 million in the second quarter, a slight improvement compared to the first quarter of 2023 when we recorded a decline of 12%. In the first half of the year, advertising revenues in the DACH region declined by 10% to EUR 796 million.
The decline in TV core advertising revenues in the DACH region was partially offset by an increase in digital and smart advertising DACH revenues. Here, revenues grew by 5% in Q2 and where, in particular, driven by the streaming platform, Joyn, and the audio business. This shows that our digital entertainment strategy is paying off. Distribution revenues decreased by 4% in the second quarter. The minor decline resulted from the first-time consolidation of Joyn.
On an organic basis, though, distribution revenues remained stable. The significant decline in content revenues is due to the disposal and resulting consolidation effects of the U.S. production business of Red Arrow Studios. As you probably remember, this business was sold in July 2022, and had contributed EUR 75 million to revenues in the second quarter of last year.
In addition, the business still benefited from the production of the Series Anansi Boys, which had generated revenues in a low to mid double-digit million euros in the second quarter of last year. Other revenues benefited from the full consolidation of Joyn, and its SVoD revenues which are reported in this category. Adjusted EBITDA decreased by 54% in the second quarter, and by 59% in the first half of the year. This was mainly driven by the decline in high-margin advertising revenues.
The group has responded with more efficient management of programming costs, which decreased slightly to EUR 242 million in the second quarter compared to EUR 250 million in the same period last year. In addition to declining revenues, consolidation effects also had a negative impact. The full consolidation of Joyn in October 2022, resulted in a negative effect of EUR 14 million in the second quarter of 2023.
Furthermore, the U.S. production business of great aero studios, still contributed EUR 3 million to adjusted EBITDA. Please turn to Page number 8 of our presentation. There you can see, the Commerce & Ventures segment reported a revenue growth of 3% in the second quarter on both on a reported and on an organic basis. In H1 of this year, the increase was even 9% on reported and 10% on organic basis.
Also, the advertising business was impacted by SevenVentures’ performance. The digital platform and commerce business was able to more than compensate for this decline. SevenVentures was mainly affected by the postponement of campaigns due to the general economic situation and the empty reduction of marketing budgets by B2C companies. Many SevenVenture clients were heavily hit by the adverse change of capital market sentiment, lacking access to VC funding and feeling pressure to show profitability, leading to reluctant advertising spending.
The main growth driver of the Commercial & Ventures segment was the online comparison water Verivox. Since the beginning of this year, Verivox has benefited significantly from the easing in the energy market and has since returned to very dynamic growth. In addition, the Beauty & Lifestyle business with Sarcone, recorded a significant increase in revenues despite the ongoing consumer restraint in the DACH region. The experienced business of Jochen Schweizer mydays, also contributed to segment revenue growth.
I would like to take the opportunity to point out once again, the recent change in accounting methods at Jochen Schweizer mydays, and how this affects the seasonality of revenues and earnings. Previously, all revenues, including expected nonredeemable were recognized at the time of router sale.
Now, revenues from redeemed vouchers are recognized upon redemption. Revenues from non-redeemed vouchers, known as no shows, are recognized at expiry of their statute of limitations. The change in accounting method, therefore, results in a later recognition of revenues. This will also affect the seasonality this year and lead to a high revenue contribution in the fourth quarter of 2023. The increase in experience revenues in Q2 2023, compared to the same quarter last year is mainly attributable to the increased use and redemption of Jochen Schweizer mydays vouchers in the reporting period.
Adjusted EBITDA of the Commerce & Ventures segment increased by 22% in the second quarter 2023 and by 61% in H1 of this year. This positive development reflects the segment’s revenue growth and is characterized by offsetting FX with growth in consumer advice, Beauty & Lifestyle and experiences on the one hand and a decline in SevenVentures on the other hand. There was also an improvement in the profitability of the digital platform and commerce business.
Let’s now have a look at the performance of dating and video on Slide nine of our presentation. Dating and video segment revenues decreased by 18% to EUR 107 million in Q2 2023 and by 14% to EUR 225 million in H1 2023. The decline in dating revenues reflect the influence of the German Fair Consumer Contracts Act on the subscription businesses of Parship and the leader partner.
Introduced in March 2022, — this legislation limits the length of automatic subscription renewals, allowing consumers to terminate their contract at any time with one months’ notice once the subscription period is over. As many Parship with the leader partners subscriptions run for 12 or 24 months initially, we expect this act to have an effect on our matchmaking business in Germany until the beginning of 2024.
Furthermore, ParshipMeet Group’s business in the German-speaking countries was certainty also affected by consumers continued reluctance to spend. However, these developments were partially offset by our U.S. matchmaking business, eHarmony, which continued its growth path in the first half of this year. The video business, which is focused on the U.S. market declined at a high level in a competitive environment, having benefited from increased usage in the U.S. stimulus program during the COVID-19 pandemic.
The adjusted EBITDA decline of 30% in the second quarter and of 18% in the first half of the year reflects the before mentioned decline in revenues. In addition, an impairment of contract assets in the amount of EUR 5 million had also an impact in the second quarter of this year. Adjusted for this onetime effect, the decrease would have been lower. So let me continue with some comments on our financial leverage and the net debt development, both you can see on Page 10 of our presentation.
As you can see on this slide, the group’s net financial debt decreased by close to EUR 100 million to EUR 1.782 billion compared to the end of the previous year’s second quarter. Compared to the end of financial year 2022, it increased by EUR 169 million, which in general, reflects the group’s cash flow development and the seasonality of programming CapEx in particular; as expected, the decline in adjusted EBITDA also led to an increase of the financial leverage to 3.3x.
Based on our targeted improvement in adjusted EBITDA in the second half of this year, we continue to expect to achieve a financial leverage in the range of 2.5x to 3x at year-end. ProSiebenSat.1 Group is currently financed via two term loans and the revolving credit facility, RCF, as a part of a syndicated facilities agreement provided by banks as well as various promissory loans.
In May 2023, ProSiebenSat.1 Group has extended its syndicated facilities agreement. A term loan of EUR 400 million is maturing in April 2026, plus an extension option for a further year, and another term loan of EUR 800 million in April 2027. The undrawn RCF as part of the syndicated facilities agreement of EUR 500 million is also maturing in April 2027. In addition, ProSiebenSat.1 has promissory loans totaling EUR 925 million, of which EUR 225 million from 2016 with a term of 10 years and EUR 700 million from 2021 with terms of four, six, eight and 10 years.
So with this, I would like to end my part of the presentation and like to hand back to Bert, who will provide you with an update on our operational business.
Bert Habets
Thank you, Martin. Despite the difficult market conditions, we were able to drive our strategy in the past quarter and make operational progress. Our streaming platform Joyn is in the center of our digital activities going forward, and we are working hard on its expansion. In Germany, video view time of ProSiebenSat.1 highlights formats like, The Voice Kids or Stealing the Show, doubled on Joyn in the second quarter compared to the previous year. We already established 70 on-demand channels on Joyn that hit 200 million viewing minutes in Q2. And we are right on track to reach our target picture until the end of the year with regards to Joyn’s integration. All this translates into growing numbers.
We have established clear KPIs to provide transparency on the performance of Joyn, which we will continue to report going forward. In the second quarter, we registered 3.9 million monthly video viewers. 6.5 billion viewing minutes, a few times as well as a 28% increase in advertising video-on-demand revenues on Joyn. This is a very good start and the direction we keep pursuing. Furthermore, we launched Joyn in Austria in the beginning of May and also saw a strong performance there ever since.
Important KPIs such as total video views, monthly active users and total view time saw double-digit growth rates compared to previous year’s numbers of Joyn’s predecessor platform, ZAPPN. Besides Joyn, we keep expanding our digital activities. We are already very successful with our audio and podcast business. We are the market leader in native podcast advertising and serve a wide variety of target groups. This is a growth market and a growth story. 61% of the 18- to 29-year-olds listen to podcasts. This holds a huge potential for our group as our priority is that people spend as much of their leisure time as possible with our offerings.
Among over 50 podcasts and in-house productions that we market exclusively, 12 of them make the top 30 list of the most popular podcasts in Germany. Downloads of this portfolio increased by 51% since the previous year’s period. With this, we created strong monetization options and nearly doubled our ad impressions in one year. As Martin just explained, the digital advertising revenues generated by our podcasting business grew accordingly in Q2, and will play their part in our goal to maximize our digital and smart advertising revenues in the long run. Here, you can see why this is so important.
Since 2019, our TV core advertising revenues have been decreasing slightly, but we are more and more able to compensate for this with growth in our digital and smart advertising revenues. These are, of course, still on a low level compared to TV advertising. But this is the way forward and where we are focusing our energy on in order to secure growth in the advertising business in the long run. We are, however, also working on keeping our linear TV offerings attractive for advertising clients. One important tool is our programmatic TV offering that we launched one year ago.
Programmatic TV combines digital booking and targeting with overall linear TV reach, thus ensuring maximum media quality and market presence for campaigns. Botteisming. Our clients can access the linear TV inventory in an easy way, thus reaching 42 million viewers on a net basis each month. Programmatic TV also opens up a new customer base, with a booking logic that is well known from the digital world. Programmatic TV is an attractive offering for advertisers that are only starting with TV. And it also addresses the digital budgets of established TV clients. With this, we already realized over 50 campaigns since the launch of programmatic TV in Q4 2022.
Furthermore, fixed CPMs, which means no variability in pricing, provide planning security and brand safe access to premium TV advertising space for advertisers and agencies. Another important place in the monetization of our offerings is held by the distribution of our content. That is why our extended distribution partnership with Vodafone is very good news. Vodafone is the #1 TV cable operator in Germany and the largest TV cable network by reaching around 13 million households. We can access Vodafone’s cable broadband as well as mobile subscribers with our free-to-air and pay-tv channels as well as our digital products. In doing so, we secure our distribution revenue growth.
All in all, this deal completely plays into our strategy to maximize the reach of our programs, drive our digital advanced TV products as well as streaming business through the full coverage of all major distribution platforms. With this, let’s turn to our Commerce & Ventures segment. First, I’d like to state that there is no update with regard to Jochen Schweizer mydays and the German Payment Service Act topic. This means that there are no news from the prosecutor’s office that is looking into this.
As you just heard, Commerce & Ventures continue to grow in the second quarter, especially driven by a strong performance of our comparison portal Verivox. As you may know, our business at Verivox was heavily influenced by the overall high energy prices and thus reduced incentive to switch contracts amongst customers. Since the first quarter of 2023, wholesale prices, however, decreased and stabilized, which results in a positive saving potential for a large majority of gas and electricity customers. This development alongside an improved product offering to suit customers’ needs allowed Verivox to significantly increase its number of brokered energy contracts by 374% in the second quarter in comparison to the previous year.
At the same time, also brokered contracts and Verivox’s other business fields of telco, insurance and banking all increased. As a result, Verivox continues to show a very good development overall with strong profitable growth of 85% in the second quarter of this year. As we have already communicated mid-July, we are in the midst of realigning our organization and especially in the entertainment business after the full consolidation of shoring. In addition, we have to operate in an extremely challenging economic environment for the fourth year in a row. With our company-wide transformation and cost-saving program, we aim to achieve a more efficient structure, a more competitive cost base and processes clearly geared to digital transformation.
It is also imperative that we significantly reduce our material and personnel costs. All this is our priority to continue investing consistently in the future of the group, especially in content and digital offerings as well as to lay the foundation to grow sustainably again. Let me give you more details across our 3 segments. In the Commerce & Ventures segment, we already initiated the first measures in Q4 2022. For example, we reduced personnel expenses in the Commerce & Ventures Holding and in our portfolio company.
As per our strategy, we continued to further streamline our portfolio and sold Regiondo, the all-in-one booking system provider that was part of the Jochen Schweizer mydays Group, and we reduced our capital expenses. With this, we expect gross savings of around EUR 15 million for 2024 with regards to an addressable cost base of around EUR 200 million. With regard to dating and video, we started to implement a simplified organizational setup with a new leadership structure and lesser redundancies throughout the ParshipMeet Group in Q1 2023. We, therefore, had to reduce the workforce by around 10%, mainly in the U.S. video segment. And this has helped to secure ParshipMeet’s profitability in the first half this year.
Following an integrated approach, we are now working on the apps and services to complement each other even better with regard to product, target audiences, user intentions and territories. For this, we initiated a technical platform consolidation of our social dating apps in the second quarter. Our expectation is that these measures will enable us to save also EUR 15 million for 2024 on a gross basis compared to an addressable cost of around EUR 125 million. As you know, we are currently transforming our entertainment segment as well, but also the holding. We intend to complete this process by November.
Also, in these areas, a reduction in the number of jobs has unfortunately become necessary. This will affect around 400 full-time positions. We will, of course, realize these cuts in a sociable responsible manner through voluntary program in order to avoid compulsory redundancies as far as possible. With this step, we aim to create a leaner and more agile organization where processes are more and more automated and simplified where possible. With this setup, we want to enable our teams to work platform independently with our digital businesses, especially Joyn as a top priority. In doing all that, we expect here gross savings of around EUR 70 million for 2024 compared with addressable costs of around EUR 600 million.
With all these measures combined, we expect to reach gross cost savings for the entire group of around EUR 100 million in 2024. Please, be aware that these are all gross savings. Total savings at net level and thus, the net effect that will be reflected in next year adjusted EBITDA will be materially lower as contravening effects such as underlying wage and cost inflation are running against it. I also want to highlight that there are one-off costs associated with the organizational realignment, which will have a corresponding impact on our cash flow. These amounted to EUR 69 million in the first half of the year and have already been recognized either in Q1 2023, or as a provision in our books as of June 30, 2023.
Please also note that we will likely have an additional smaller amount of realization expenses in the second half of this year. Before we come to the outlook, let’s have a look on how we expect the advertising market to develop in the second half of the year as this is the decisive factor for ProSiebenSat. 1’s performance. with falling energy prices and easing inflationary pressure, consumer confidence has been improving steadily compared to the second half of the previous year.
We, therefore, assume our customers’ advertising spendings to normalize again in the second half of the year, especially in the fourth quarter. For your comparison, we have lost around EUR 135 million of entertainment advertising revenues in the DACH region in the second half of last year and have thus a very low comparable base. At the midpoint of our full year 2023 DACH advertising forecast, we expect a recovery of around EUR 50 million in the second half of this year.
Furthermore, we currently expect an about stable group adjusted EBITDA in the third quarter compared to the previous book year. We are thus confirming our full year 2023 targets based on the assumption that the economy in the DACH region will recover in the second half of 2023, in-line with the current expectation of the economic research institutes and that we thus will see an improved macroeconomic development compared to the previous year in the second half of the year.
As an early cycle company, we are likely to benefit from the expected improvements as our high-margin advertising revenues correlate closely with macroeconomic developments. In this context, the last four months of the year are particularly crucial as these are the strongest period for ProSiebenSat. 1’s advertising business in terms of earnings and revenues. This means that we continue to aim for group revenues of around EUR 4.1 billion with a variance of plus/minus EUR 150 million as well as for an adjusted EBITDA of around EUR 600 million with a variance of plus/minus EUR 50 million for the full year 2023.
First, positive effects from the cost reduction program we just — we just talked about are already reflected in this outlook. Having said all this, I need to underline in all transparency that the current macroeconomic forecasts are subject to a high degree of uncertainty. But we are cautiously optimistic that we will be able to improve compared to a particular weak second half of 2022.
Feedback from our key customers also suggest that they are more positive compared to last year. But given the nature of our business, it is also true that we will only have more visibility on how the last four months of the year will develop later in the year. Ladies and gentlemen, you can see that managing our cost base and improving our cash flow are top priorities as well as aligning our organizational structure closely with our strategy in order to make us more empowered and faster in realizing our goals, and our goal is clear. We want to be the #1 entertainment player in the German-speaking region. To do so, we need to meaningfully scale Joyn while remaining best-in-class in TV. This is precisely what will lead us to a successful future.
And with this, I’m looking forward to any questions you may have.
Question-and-Answer Session
Operator
Thank you. [Operator instructions]. Our first question today comes from Thomas Singlehurst of City. Please go ahead.
Thomas Singlehurst
Yeah, good morning. It’s Tom here from Citi. It’s Tom here from Citi. Thank you for taking the questions, and thank you for the presentation. A couple of questions. I suppose the first one, just on the advertising side, can you talk a little bit more explicitly about trends by months across the second quarter and the outlook into the third quarter? I’m conscious that likelihood September is not visible and September is probably equal to July and August put together. But can you give us some sense of whether that inflection that you’re expecting is already coming through? That’s the first question.
And then the second question, I know you’re moving as fast as you can on savings and the market environment isn’t necessarily super conducive to high valuation for sort of growth assets. But can you just talk about the scope for sort of portfolio change, in particular, sort of disposals for individual assets within dating and video and Commerce & Ventures, and explicitly whether any processes are underway? Thank you.
Bert Habets
Thank you for your questions, Thomas. Let me pick on the first two questions. With regard to ad market trends, we’ve shared the trends of the first six months of the year. What I can share with regard to July and initial insights for August trends are that we are still facing single-digit declines, high single-digit declines in these months based on the current forecasts. So we do not see any recovery yet versus last year. With regard to September, we do not have any insights yet.
Clearly, September is a more meaningful month than July and August as you know, that our summer period normally are the basis of low revenue recognition in general. And September, we will only be able to get in the second half of August, which for now is still too early stage. With regard to any progress made on disposal of assets, it’s fair to say that we are — what we have indicated with regard to the Commerce & Ventures part is that besides continuing on lowering the cost and improving the operational performance.
As a first goal for this year, we will be cautiously monitoring any exit opportunities going forward. We do see that the divestment climate opportunities are limited right now, but we would be open-minded to any inbound interest or expound interest from potential buyers, but no concrete feasibility on any exits there on assets for the short term. And the same would basically hold for the ParshipMeet Group, where we have also indicated in previous calls that the primary goal really is to focus on streamlining the organizational design, taking on costs and trying to improve the results, and trying to get back on a growth trajectory as a group in general. And in doing so, we would definitely be looking forward in crystallizing value of the ParshipMeet Group. But realistically, that will still be in a midterm perspective in terms — instead of a short-term perspective.
Thomas Singlehurst
Very clear. And one follow-up maybe on the advertising side. Given July and August are still fairly under pressure. Can you just sort of talk about the comp profile, whether there’s any sort of major difference in the comp profile between July, August and September or whether that’s a bit of a red herring, we’re just going to have to be patient and hope those last four months get better?
Bert Habets
Well, I think maybe elaborating a little bit more on the ad market trends for July and August, we also see a continued growth of our digital advertising business in the same trend as we have seen in the first six months of the year. With regard to the expected recovery, as always, and also historically, our year-end results are very much influenced by the ad market development in the last four months of the year.
So the rebound that we are forecasting there is still indeed out there because right now, in July and August, as stipulated, we do still have single-digit declines. As I laid out in the call, we lost last year, a level of EUR 135 million of advertising revenues in the DACH region in the second half of 2022. And in our midpoint forecast, we expect a recovery of that loss, of that EUR 135 million loss of EUR 50 million.
So effectively, if you calculate that, we effectively expect a recovery of 37% of the loss of last year, which obviously was a very steep decline in the challenging macroeconomic development then. And maybe as a last element in the dynamics, we had the World Cup in the last quarter of 2022, which obviously also had a negative impact to our developments in the ad market share and the ad market in general, while we were not broadcasting the World Cup on our channels, but it was with the public broadcasters. So that’s another one-off effect that may have influenced also the ad market on our side versus our outlook statement for this year.
Operator
We will now take a question from Conor O’Shea of Kepler. Please go ahead.
Conor O’Shea
Yes, good morning. Thank you for taking my questions. So, first question for Bert on — you mentioned in your remarks that a significant proportion of the EUR 100 million net savings would be reinvested or absorbed by cost inflation. Can you flesh that out a little bit more and give an estimate of how much will be retained in 2024? Second question, if you could give us just an outlook on the full year programming costs compared with the previous year, what you’re looking at the moment for 2023 full year? And then the third question, just on the dating business, if you can have a sense of sort of early trends in the third quarter, if there’s any change in any of those businesses compared with the second quarter.
Bert Habets
Yes. Thank you for your questions. With regard to the gross saving potential of the mentioned EUR 100 million, as I stipulated, we are still in the middle of preparing for our plans for the year 2024, which will also be influenced by quite high inflationary environment, both on wage and other cost elements in our P&L. So the net saving effect of this gross savings for next year is still something we are working on and investigating.
It’s definitely that we will continue to invest in our digital offerings and in our — in developing Joyn and our program grids. For this year, we continue to work on the basis of program costs of around about EUR 1 billion by also further building and accelerating our investments into Joyn within that building. So we’re optimizing our program cost spend within the existing base and reallocating program costs to Joyn. And maybe on the third question, we unfortunately do not see any major new trends in — with regard to the growth trajectory of ParshipMeet Group in the third quarter.
Conor O’Shea
I just — can I have a quick follow-up on the Joyn — the impact of Joyn programming cost. Can you give us a sense of how much the Joyn revenues were contributed to other revenues in entertainment in the second quarter?
Bert Habets
Yes. I think, in general, the digital and smart revenues that we shared in the DACH region increased by 16% in the second quarter to a level of EUR 68 million and to a level of EUR 129 million for the first six months of the year. And in that bucket, Joyn represents more or less, slightly less than 20% of the total revenue base.
Operator
We will now take a question from Annick Maas of Societe Generale. Please, go ahead.
Annick Maas
Good morning. So my first question is on the dating business. Is there any way you can dissociate how much of the dating weakness in Germany is due to this regulation change affecting subscription? And how much is due to the consumer pressure? My second one on the dating business, if — could you please elaborate on how much eHarmony was growing in the second quarter? And then just on the advertisers, is there any trends you see in terms of advertising category that one category is actually much, much weaker than it used to be, and it’s now slightly coming back in July, where another one is not. So if you could just give us more detail on that, that would be great. Thank you.
Bert Habets
Yes, thank you for your questions. I would refer for the eharmony growth to my colleagues, please to look up the precise number there. With regard to the dating business in Germany, it’s very difficult to detail and split the macroeconomic pressure versus the new legislation that has been put in place. But be remind that a lot of the existing dating subscriptions that we currently have are based on a 12 or 24-month period. And in further prolonging that, the business has a substantial impact, negative impact of the obliged new legislation, which allows customers to cancel with a one notice period after the first subscription period, where previously these contracts were kind of automated and automated in its renewal phase.
So I think this will be the majority of the negative decline of the German dating business that we currently see, but it’s very difficult to be very precise on giving a number here. With regard to the ad market category recovery, we did see a strong recovery of the travel market in the first half of the year. And otherwise, than that, I wouldn’t be able to give any big pluses or minuses across the most important categories that we see. And maybe with regard to our eHarmony growth trajectory, I can look at the colleagues of Martin or Dirk to elaborate on that.
Martin Mildner
Yes. Maybe I can take this question. eHarmony was the growth rate for the entire first half year was plus 8% in the second quarter, it was plus 2%.
Operator
Thank you very much. Our next question today comes from Julien Roch of Barclays. Please, go ahead.
Julien Roch
Yes, good morning. Just a quick one follow-up on advertising. When you said high single-digit decline, is that linear only? Or is it total including digital? First question. Second question is on video view time, EUR 6.5 billion. It seems like it’s a new KPI. So could we get the exact definition because you put it on the Joyn page. So is it Joyn only? Or is it total viewing time across linear and on-demand in German speaking? And if it is total, can we get the split between linear and on-demand. And then the third question is on podcast, it’s the first time you highlight podcast in your presentation. So when did you start having podcast advertising? And broadly, what’s the contribution in other percentage or millions in Q2 and the first half. Thank you.
Bert Habets
Thank you for the questions. With regard to our trend — advertising trends for July and August, we are talking about high single-digit minuses for the TV only part that doesn’t include the positive trends that I’ve stipulated more in detail on the digital advertising revenues, which continue to grow. The viewing minutes be the EUR 6.5 billion is the Joyn platform only, and for the German market.
So we will add the Austrian figures as of the next quarter into the launch because we didn’t — we weren’t able to reconcile all of these numbers to the same currency again. And indeed, we have started podcast, I think, 2.5, 3 years ago, more or less, and we are very happy with the sound growth rates and profitability that we can demonstrate and realize in this segment.
Julien Roch
Okay. Then if I could have a follow-up question. Would it be possible for you to give us your total viewing for all your programs in German-speaking countries across all platforms, linear, on demand. Is it possible to have a total viewing number?
Bert Habets
You mean total viewing number in terms of hours on TV and digital combined?
Julien Roch
Yes. Hours or minutes. Basically, how many hours or minutes are you programs seen by German and Austrian consumer and German — yes, and German speaking…
Bert Habets
I understand your question. I understand your question. I will not be able to provide that right now, but I’m happy to revert on that question after the call and provide you with the numbers.
Operator
Thank you. [Operator instructions] We will now take a question from Matthew Walker of Credit Suisse. Thanks a lot and good morning.
Matthew Walker
So the first question is, it sounds like from what you said so far that you’ve given us for July and August, the high single-digit thing. It sounds like you’re talking about that TV core numbers. If that’s the case, could you give us the percentage change for July and August, including both TV core and digital and smart revenues? That’s the first question. The second question is, IT did give some indications around September. They didn’t say a number. So they had some visibility around September. So could you just say whether September is actually positive or negative on the signals that you’ve received so far? And then the third question is on market share. In the report, you highlighted you’ve lost a couple of points of market share on a gross basis. Can you say what the change in market share is on a net basis and call out any sort of one-offs that we should be aware of that might influence that market share development.
Bert Habets
Thank you for your questions. As I pointed out with regard to our TV ad market trends for July and August, it’s high single-digit down. As I mentioned before, this is excluding our digital and smart revenues that continue to grow, in these months in parallel and the same pattern as we have seen in the first six months of the year. I think for September, the — we don’t have any insights or bookings yet given the short cycle that we have in the German market for our bookings, which is different than the U.K. market and ITV does. And on your third question with regard our — with regard to our gross market share development, this is based on the public information that is available. We do not — we find it very difficult to estimate our net share developments and therefore, only report on the growth share development going forward.
Matthew Walker
Just one quick follow-up, which is, can you give us a feel for what you think your Verivox revenue growth will be for the full year?
Bert Habets
Yes. Thank you for your question on Verivox. It has experienced very strong growth, as I stipulated already in the first six months. We indicatively expect the business to increase its top line by approximately 70%, 75%.
Dirk Voigtlander
Okay. Ladies and gentlemen, this was the last question for today’s call. As always, my colleagues in the Investor Relations team and myself will be available for any follow-up questions shortly. Thank you, everyone, and goodbye.
