Good morning, and thank you for joining us. I wanted to start with a quick anecdote. The other day, I met one of our TV hosts, and one of our big stars on a Friday morning at the airport. We were grabbing a coffee, and as we were chatting, he told me that he and his son were just watching The Masked Singer, the evening before. And then because his son isn't very old, when it was time for him to go to bed, his son asked whether he couldn't finish watching The Masked Singer on Joyn.
And I really got a kick out of this for two reasons. One, I think it shows that entertainment is relevant across all audiences and that with Joyn, we're extending those audiences from TV to digital in a very meaningful way. And I'll talk about that more later. Now if you go to Slide five, I wanted to start off and remind you of the strategic priorities that we set out last fall and that we have been consistently focused on and executing. Number one, to build a future fit entertainment and commerce champion, importantly, return to and accelerate organic growth while investing for total shareholder return.
Two, focus on local content, make that content more live, more local, more relevant and win back bigger audiences. Three, reach large audiences across all channels by building out our digital footprint, both through own and third party platforms. Four, turn that reach into more money, particularly focused on creating more addressable inventory. Five, drive content production by expanding our synergistic local footprint and scale up Studio71, our digital outfit globally and six, on NuCom to build our synergistic commerce portfolio by serving large consumer needs with a focused portfolio and building market leaders across all four verticals. So how are we doing?
Well, we've been very focused on executing across all of those priorities, and I think we're seeing good progress across all of them, though, of course, it's a journey and we're working hard every single day. So let me cover the six points. On growth, we're seeing group revenue growth of 4%, both for the second quarter and for the first half. By the way, that compares to about an average of minus 4% for European peers. And while certainly we would want more in the future, we think that puts us well on track in delivering growth and acceleration.
Two, on local content, we are seeing the best TV audience shares in June in Q2 in the first half. And importantly, total video view time was up for the first time in the second quarter. Now total video view time measures all minutes of all content we put out on all channels, whether they be TV and digital. And that's a really, really important metric because what it really means is that we are beginning to compensate and overcompensate with digital viewing the declines in linear viewing. And by the way, that is before we have launched Joyn.
Three, we've had, I think, quite a successful launch with Joyn, 3,800,000 monthly active users within the first month, which, by the way, is 4x what 7TV, the predecessor of Joyn, had the months before. Four, smart and digital advertising growing plus 26%, and we're making good progress in coming after addressable reach with the joint venture called dForce with RTL and the full commercial launch of addressable TV spot. Five, Red Arrow Studios had another super quarter with plus 28% revenues and Studio71 also delivering double digit revenue growth. And last but not least, on NuCom, we're well on track with 18% revenue growth to become a EUR 1,000,000,000 leading European digital platform and commerce champion. On Slide seven, I just wanted to remind all of us on the breadth of our business because at times, I feel that the narrative is getting a little bit too narrow that we are a TV advertising business.
And while by all means, TV is still a very important core and I think can be a healthy core in the future, we derive 50% of our total revenues from non TV advertising. And in fact, that part of the business, if you count all the parts together, is growing at about plus 12%. And so if you look at the parts underneath, you can see on Red Arrow Studios, plus 20%, plus 41%. You can see on Entertainment, the TV core advertising, which continues to be challenged, I'll talk about more on that later. But you also see the growth in digital and smart and distribution.
And by the way, the negative number on other non advertising is entirely maxed on deconsolidation effects. So if you look at that number organically, it would also be growing. And then you see very good and healthy growth across the four verticals at NuCom. So if then we go to Slide eight, what are the numbers for Q2 and for the first half? As I said earlier, group revenues are up 4% organic and reported.
Entertainment revenues are minus 1% organic, and that is a mix of a 3% decline in TV core advertising, offset two thirds by 26% growth in digital and smart advertising. Red Arrow Studios are growing 2128% organic and reported and commerce, Newcom Group a plus 7% and plus 18% reported. The plus 7% are marginally weaker than we would like because there's some weakness in the energy market, which is affecting VeriWORKS. But all in, we're pleased with that performance. And I think you can see that we are doing what we told you in our strategy, returning to revenue growth, accelerating digital and diversification, and all of that is coming through in our numbers.
We've also just seen and closed July. Now July is a small month, pretty easy comparator, so I don't want to put too much into this. But nevertheless, entertainment and advertising revenues grew 8%, TV advertising grew 4%, and digital grew 68%, which I think is beginning to show the impact of Joyn as this was the first month where we launched. And by the way, if you look at year to date, that takes a minus 3% in advertising to about a minus 1.6%. Our forward outlook, I think, in advertising markets continues to be uncertain, but nevertheless, I think this is encouraging that our strategy and execution is taking hold.
Now onto local content. I gave you an anecdote on Masked Singer at the beginning, but I just wanted to talk a little about this. So Masked Singer is a Korean format that then was a smash hit on Fox in The U. S. And we brought to Germany.
And it's really been a summer fairy tale for us. Masked Singer is basically celebrities competing and singing in outrageous costumes, the angel, the astronaut, the cuckado, the monster, and all of Germany feverishly guessing who is behind those masks. We've had 7,200,000 viewers on average per episode, 38.1% market share for the finale. And by the way, at that very magical moment when the astronaut was revealed, we had over 50% market share and 28.2 average per episode, 26,600,000 digital views. These are numbers we certainly have not seen in this decade and numbers that usually are reserved to world championships in football.
And I think it's a wonderful reminder that entertainment has unrivaled magic and power, that investing in content and playing that content across all channels is the right and winning strategy. Now on to Slide 10, we're not just entertainment. And so to contrast, I thought I'll give you a view on what we do on magazines or infotainment. We have leading brands in Germany such as Scalileo, Frustrekstauf Wannzen, which is our good morning Germany, Red and Tough and Late Night. All of them increased market shares, and we reach one in four fourteen to twenty nine year olds.
So if you look at the numbers on the right, those are fourteen to twenty nine year old audience shares. Digital view time across all of them is up 15%, and for example, on Late Night Berlin, 40% of all viewing is already digital. So all of them, I think, are great examples of excellent brand franchises that are meaningful and relevant in TV, but they are meaningful and relevant digitally. They capture broad and importantly, young audiences. And maybe also this is a good reminder of the unparalleled reach all of our programs have across all channels because we reach about 65,000,000 Germans every single week across all TV and all digital channels.
Now on to Slide 11. While I talked about viewer ratings earlier and having had the best June and first half since 2015, I think we're just getting started. I'm really excited about the Grade four lineup. We have 14 new factual and magazines, eight new movies, including the thriller, The Abandoned Village, produced by award winning Wiedemann and Burke team, 14 new reality formats and 24 new shows. And I think Queen of Drags with Heidi Klum and produced by our very own Red Seven will be a very exciting highlight of that fall.
By the way, if you look at ProSieben as a channel, we've increased own productions in prime time by 33% this year. On to Slide 12. So on the June 18, we launched Joyn, by the way, in just under one year from scratch with completely new and world class tech. We're six weeks in. It's early, but we're very happy with the early momentum that we're getting.
Now I wanted to remind you of the proposition. This is the one place where with no barriers, you can access the most TV and viewing digitally. 55 live channels, including the public broadcasters, RD and ZTF. We launched with five originals, 40 formats have seven days previewing. We have about 20,000 episodes in the library, and we're offering thirty day catch up.
All of this for free and frictionless. And you know, when I meet people over dinner or breakfast, the magical moment I find is you download the app, which takes about five seconds, then you open the app and with two finger movements, you click on live TV, you click on a channel, and suddenly, you have TV right there where you want it. And I think that is making entertainment and TV a mobile and broad viewing experience. And while it sounds simple, it's quite magical. You can't get this anywhere else.
And certainly, everyone I meet, whether it be friends or family, are hooked. Now how are the early numbers looking? Well, we've had 3,800,000 monthly active users in the first month. That's 4x what 7TV had. Our stated target is to get to 10,000,000 within two years, and hopefully much faster than that.
We've had 1,500,000 uniques, almost 2,500,000 app downloads. I think quite excitingly, this is a mobile first experience and viewing is about half live and half library. What's next? We're very focused on continuing to improve the free experience by making access to join ubiquitous across all platforms. We're going to load up Chromecast and remaining smart TVs through fall.
We're bringing more content, more search functionality, more curation. And then we are hard at work for a winter premium subscription tier launch. It's too early to give you all the details on this, but I've just had a review on this last week, and I think we'll be very strong. We'll have 10 plus originals when we launch, a vast library, and amongst other things, will be the home of Olympics in 2020. Discovery as a partner is fully committed, and we will begin to look at expansion beyond Germany, in 2020.
Now going to Slide 14, so how does all of this turn into money? Well, there's a lot of things we're working on from better client facing organization to creating total reach metrics. But the one that I really wanted to focus on and I think is most important is to build ability for us to hunt more euros of what in totality is a very big, vast and healthy advertising market. If you want, get out of the TV advertising corner. And the secret to do that is to create large addressable or targetable inventories.
And we're making good progress on this. Number one, we have launched an addressable TV spot. In Q2, we ran 19 geo targeted campaigns in the better version. We have about 60 client requests for the second half. Two, we're working on mixing that addressable TV inventory with addressable digital inventory so that we can reach large enough audiences and clearly Joyn plays an oversized role in this.
And then three, we've just set up the joint venture D Force with RTL that makes all addressable inventory across there and our infrastructure available in one place. And this, I think, makes the job for advertisers and agencies much, much easier and should really support scaling this business that we think will be a multibillion market in the future. Now on to Slide 15 and Red Arrow Studio, where we've had a very strong second quarter and first half. On the production side, we saw successful international production such as Jailbirds or Vienna Blood. Jailbirds is, by the way, if I may say so, the non scripted version of Orange is the New Black and is also running on Netflix.
So if you haven't seen it, by all means, check-in. In The UK, this format was Netflix number one reality show and number five of all shows very shortly after its premiere. Also Studio71, our global digital player posted double digit growth in revenues across all key markets, and we're seeing important initiative in the production and podcast market with productions for Facebook Watch in The U. S. And a rising podcast business where we have now done over 40 podcast live in The U.
S. The best one, I think, is called Something Scary. It has 4,500,000 monthly listeners. And again, if you're other than numbers trying to pick up some entertainment out of this call, this is very worthwhile to check-in. And if you look at our total social distribution, plus 27% growth on YouTube, plus 1,700,000,000 snaps and lots of very good work across Facebook and other digital infrastructures.
On to NuCom, Slide 16. I think we're well on track to create a €1,000,000,000 commerce champion with NuCom. We're very focused on the four big consumer needs and corresponding verticals. I just wanted to give you two examples. So on eHarmony, we're making good progress in integrating that into the partial group.
Registrations are now growing by 13%. After a long period of decline, we will switch eHarmony to our tech platforms and fall and have quite a confident outlook on the business. The other example I want to give you is Jochen Schweizer, MyDays. We launched a Jochen Schweizer TV show called The Dream Job, where Jochen himself was looking for a new Managing Director for his company and all had to go through crazy challenges around the world and it being Jochen jump out of planes and all those kind of things. And while, by the way, that TV show did good but wasn't a great success, nevertheless, it lifted the growth rate on Jochen Streitze 2x just because there was more exposure.
And I think that's another nice reminder that entertainment and commerce are very, very synergistic. And Bill Ford, GA's CEO, and I talk a lot, and we're both very pleased but also excited about what we may do in the future with this business. And that's also on Slide 17, I just wanted you've seen this before, I just wanted to remind us that I think there's a very key synergy case for NuCom Group and Entertainment. I've been, amongst many other things, a marketer for twenty five plus years. And having at one's fingertips the awesome entertainment, reach, convening and star power, to fuel commerce assets is I think the dream of every marketer and is something that we can do unique while our much more tech data driven commerce businesses are helping us, on the journey in entertainment, which is becoming a more consumer facing and more tech driven business witness join.
So then on to Slide 18, I thought I'll close by just giving you an update on how we're doing across our transformational agenda. We have now completed our leadership team with Rainer joining as CFO and Nick joining as CTO. And I think we really have built a top team that has a great balance of industry experience, ProSieben know how, but also brings fresh thinking to the opportunities and challenges ahead of us. I'm really pleased that Rainer is now on board. It's only been a few weeks, but it feels like we've worked together for years, and he is bringing discipline, urgency and fresh thinking to our business, P and L and bottom line.
On critical capabilities, as I think you saw earlier, we're really focused in building out important consumer facing technology and addressable advertising technology, building better sales client structures and working across a broad range of important partnerships. Partnerships are key to winning. We've been the original instigator of the European Media Alliance. We have Teva and Mediaset as shareholders in Studio71. We have just set up the joint venture with Airtel, which I really believe is an industry first.
We are the first strategic partner for Facebook Watch in Europe. We're doing JOIN together with Discovery. And indeed, we have a few other ideas and cooperations in the pipeline. Now third, I just wanted to talk about one entertainment company and Structure. I think we have a unique opportunity to take the three pillars of our business and really make them operationally very sharp and focused.
We have done that successfully with NuCom, which is operating as an end to end clearly structured company. And we're now doing the same with entertainment so that we can have an end to end company. We have defined the key leaders. We've defined the operating model, and we will implement this in fall. As we do that, I think it also gives us an opportunity to have a leaner holding structure.
And importantly, that setup will offer optionality as we look at the future of the group. But within all of that, the key is that we stay relentlessly focused on executing our organic growth agenda. And with that, I pass over to Rainer.
Thanks, Max. Good morning to all of you. Before we delve into Q2 first six months financials, let me start with some personal remarks. As some of you know, I have had some touch points with the broader media industry in the earlier part of my career. So when I got in touch with Max for the first time, I was curious to how I can help drive the change with Max and the team at set out to deliver.
The more we got into detail, the more excited I got about the opportunities, good positioning, top programs, leading viewer shares, strong brands and synergistic newcom play for ProSiebenSat. One MediaSE Group. But there's also need for transformation. This needs investments to lay foundations for the future growth. It is early days, but I expect that my focus as CFO will be on three key areas in the coming weeks and months.
First, increasing the focus on monetization, reviewing closely and driving return on investments. Second, exploring more ways of driving down costs and increasing efficiencies and third, increasing transparency to give you the tools to track the progress we make. As Max said, this is a journey, so bear with us whilst we are implementing the changes that are needed. Now to the results for the second quarter and the first six months twenty nineteen. Slide 20 shows that we achieved group revenue growth of 4% both in Q2 and the first half twenty nineteen.
On an organic, as defined as portfolio and currency adjusted basis, group revenues also grew 4% in Q2, which also is the best organic performance in the group could achieve in the past three quarters. As you can see on this chart, we also added more details about the organic revenue performance, which should also underpin that I will attach even greater importance to this KPI going forward. Whilst revenues increased in Q2, the development of earnings was marked by the planned and already indicated investments recorded as expenses, in particular in the Entertainment segment. About two thirds of the adjusted EBITDA decline can be attributed to incremental P and L investments in content, digital reach and monetization. Another third primarily stems from the decline of high margin advertising revenues.
As you know, we are undergoing a big investment program in our core business. This affects this year's earning development, but it is necessary actions. And as Max already outlined before, we see encouraging signs that these investments are paying off. Let me now continue with more color about the revenues and earnings performance of the Entertainment segment on Page 21. Entertainment segment Q2 revenues declined by 4% or EUR 27,000,000, which was affected by net deconsolidation effects of Maxdome, 7Next and consolidation of ESOM in the amount of EUR 23,000,000.
Having said this, organic revenues only slightly declined by 0.8, which we view as a decent performance given a still demanding TV advertising environment. After minus 6% in Q4 twenty eighteen and minus 4% in Q1 twenty nineteen, Q2 shows an encouraging stabilization of the segment's underlying revenue performance. While TV core advertising revenues declined 3% in quarter two, all other entertainment revenues combined grew 11% organically with strong contributions of the digital and smart advertising and the distribution business. Q2 adjusted EBITDA, as expected, declined to €186,000,000 which primarily reflects a high amount of already indicated P and L investments in program, digital platforms and monetization initiatives such as advertising technology. As Max already pointed out, these investments have started to be a fruit with a strong audience share performance in the TV business, a growing reach and usage of our digital products as an advanced and future ready advertising technology, which will put us in the position to roll out increasingly automated and targeted advertising solutions on a broader scale.
The progress also becomes visible in terms of selected operational KPIs, which you can see on Page 22. As Slide 22 shows, we achieved an overall positive performance in terms of key entertainment data points. Total video view time, which is a good indicator of the usage of our content across all platforms in the German speaking markets, increased by 0.3% to two fifty seven billion minutes or four point three billion hours. Audience share in the target group 14 to 49 increased by 1.2 percentage points to 28.4%, and the gross advertising share was also marginally up in Q2. The share of digital and smart advertising revenues, which marks the progress we are making in terms of the transformation of our advertising business, increased by two percentage points to 8%.
The number of HD subscribers further increased by 7% to 9,800,000. And last but not least, the share of Red Arrow's contribution to the local commissioned content on our TV channel portfolio has strongly increased by five percentage points to 24%. This development illustrates the result of our strategy to increasingly produce key local formats in house. Please turn to Page number 23. In the Content Production and Global Sales segment, we saw a dynamic revenue performance of both Red Arrow's TV content production business as well as the Digital Studio seventy one.
Q2 external segment revenues increased by 28% and hence has led to a continuing positive performance after an already strong first quarter. In terms of Red Arrow, the positive development was primarily driven by the production companies Ender, LeftRight, as well as our German content production hub, RedSeven. Also not shown on the slide, internal revenues generated with our German speaking TV operations notably increased by 67% from EUR 14,000,000 to EUR 23,000,000. Again, this development shows the increasing importance of Red Arrow for our local content initiative and gives us much better control over our most successful programs. Studio71 also continued to grow strongly with an increase in revenues of 41% or EUR 17,000,000.
The company benefited from strong growth in its key markets, Germany and The United States. Segment adjusted EBITDA amounted to EUR 9,000,000 and reflects a less favorable revenue mix as well as cost seasonality in Q2. In the first half, however, adjusted EBITDA improved 28%, which mirrors the revenue increase and shows a stable margin development too. Please turn with me to page number 24. The positive financial performance also becomes visible in terms of the segment's KPIs.
Almost all indicators show a positive development with a dynamic increase in terms of hours being produced by Red Arrow, as well as monthly minutes watched at Studio seventy one. The latter was largely driven by a significant increase in the number of YouTube channel subscribers, which grew from 1,100,000,000 to 1,400,000,000 people globally. From my point of view, it is worth highlighting that Studio71's monthly usage worldwide has already reached almost 55% of ProSiebenSat. One's TV channel usage in the German market. Although Studio71's monetization potential still is below the level of our TV business, I'm convinced that the company will become an increasingly important contributor for the group in the future.
Let me continue with the review of the financial performance of the NuCom Group on Page number 25. Our Commerce segment, also known as the NuCom Group, achieved revenue growth of 18% to EUR 198,000,000 in Q2. The development was driven by double digit growth in all verticals and benefited from consolidation effects of Around Home and Consumer Advice and eHarmony in Matchmaking. Portfolio and currency adjusted revenue growth of 7%, which is mainly the result of a soft development in the consumer advice vertical. Here, we saw an organic revenue decline in the mid single digit euro million range, which is related to a volatile energy price comparison market.
Whilst Q1 benefited from the insolvency of an energy provider, which led to above average switching requests, tariff developments and limited bonus incentives currently do not foster consumer propensity to switch. All other portfolio companies combined have grown about 13% in revenues organically in Q2, which demonstrates the good progress we are seeing in the other verticals. Adjusted EBITDA on the segment increased by 8%, which is largely the result of the organic growth. The acquisitions of Around Home and eHarmony are great strategic fit to NuCom's portfolio. But as planned, it will take time until their revenue feed through to bottom line.
Please move with me to Page number 26. The operational KPIs on the commerce segment show a positive development in every category. While the number of transactions of consumer advice and the number of registrations in matchmaking have benefited from acquisitions, the strong growth of transaction in the beauty and lifestyle vertical of plus 35% illustrates the vibrant development we are seeing there. In order to further stimulate these already strong growth and to secure further market share gains in a rapidly expanding online beauty market, we will step up investments for Flaconi in the second half, particularly in terms of advertising as well as the expansion of the business in Poland. Let me now finish my part of the presentation with a confirmation of our full year financial targets on Page number 27.
We continue to target mid single digit percentage group revenue growth in full year 2019. This growth will be primarily driven by our non TV core advertising business, which has grown 12% in the first half. This being said, we are optimistic that our group revenue targets can be achieved even under consideration of a potential continued lackluster TV advertising performance. We also confirm our adjusted EBITDA margin target range of 22% to 25%. This range takes into account already announced incremental investments in the Entertainment segment of in total EUR 120,000,000, as well as additional investments in our online beauty destination Flaconi to capture a bigger part of a dynamically growing market.
Please note that the level of investments in entertainment in Q3 will be similar to Q2 with a counterbalancing cost development in Q4. While we continue to work on cost efficiency improvements across the group, the ultimate outcome in terms of adjusted EBITDA and adjusted net income in full year 2019 will, as highlighted before, significantly depend on the TV advertising market development. Last but not least, I would like to confirm a financial leverage at the upper end of the target range by year end twenty nineteen, which will be supported by a free cash flow driven net debt reduction. With this, I hand back to Max for closing remarks.
Thank you, Rainer. Before we go to questions, I just thought I'll give you, if nothing else, the three things I want you to take away. Number one, our transformation is on track. It's works in progress, but with group revenue growth of plus 4%, local content paying off, digital growing 20% plus and continued productive and synergistic diversification with NuCom and Red Arrow Studios, we are on track. Two, we are confident about half year 02/2019.
We have a strong local content lineup, promising productions, Joyn coming of its own, the launch of addressable TV spots and further initiatives. Three, remember, it's a transformation journey. We are choosing to invest in our business to build for future growth, both top and bottom line and total shareholder return. Thank you.
We will now take our first question from Lisa Yang from Goldman Sachs. Please go ahead. Your line is open.
Good morning. I have a couple of questions, please. Firstly, I noticed you're slightly more conservative now on or cautious on the TV advertising outlook and expect a decline in TV advertising for the year versus flat to slightly down before. Just wondering if you could maybe quantify the level of decline that you expect and maybe what sort of assumptions you're making on the level of add on bookings in Q4? The second question is related to that as well.
I mean, previously you said we should expect the EBITDA decline in Entertainment of CHF70 million, but that was obviously based on a slightly better TV advertising environment. So just wondering if you can give us an update on the EBITDA decline that you expect this year in Entertainment. And thirdly, on NuCom, to get to your target of €1,000,000,000 of revenue for this year, I mean, there's any big M and A coming in, in H2, I mean, does imply a big acceleration in second half to double digit organic growth. And so given the slowdown in Q2, I'm just wondering what gives you the confidence and what are the various drivers of that improvement in the second half? Thanks.
Good morning, Lisa. I'll take your first question. So look, I think on TV ads, if you look at the first half, we've seen TV ads to be there, they're about 3.5%. In our planning, we're making conservative assumptions. And so we're making negative growth assumptions on TV ads in the second half, even though the comparators are easier.
And as I have said in the past, the market doesn't have a lot of forward visibility. We could end up doing better. We could end up doing a little bit worse, but I'm comfortable with our range of forecasting. And importantly, in our Q4 swing, it isn't built on an unreasonable TV advertising growth assumption. So fundamentally, we think TV advertising will continue to be weak.
But as I think you've already seen in Q2 and maybe even more pronounced in July, the acceleration of digital and smart advertising is really beginning to counterweight that in a very, very meaningful way. And we have all the confidence to continue seeing this going forward. I'll answer question three, and then I'll pass over to Ryan on EBITDA. So on NuCom, look, all in, we feel very good about the NuCom portfolio. Yes, Q2, there's a specific weakness on VariVox because the energy markets are a bit compressed.
Energy markets have been bumpy in the past. I mean, it's fundamentally a question of how much price competition is in that market. We have a very active program that looks at VariVox for the balance of the year, both on energy, but also in accelerating telco and financial verticals. And we are doing incredibly well on Flaconi, have a very strong program running into the balance of the year, and the same is true across the portfolio. So I think all in, our outlook is positive organically.
And with that, I'll pass to Rainer on EBITDA.
Thanks, Max. Thanks, Lisa, for your question. There is no update on our EBITDA guidance up to the year end. We see exactly what we have said before. It all depends overall on the advertising market, as Max already answered the question, when you look on the when you asked the question for the TV outlook and the advertising market for the full year.
Okay. Thank you.
Thank you. Our next question comes from Anik Maas from Exane BNP Paribas. Please go ahead. Your line is open.
Good morning. My first question is, you've announced last year the share buyback, which was never completed. Now given the share price is quite weak actually these days, I was wondering if that could potentially be an opportunity for you to relaunch that share buyback. My second question is on Mediaset, if you just could get a view on how you plan to cooperate with Mediaset? And then finally, can you repeat the July numbers you gave on the call?
And also maybe give us an indication on the August TV address trends given you don't have the World Cup comps at that stage? Yes.
Let me answer on the share buyback. First of all, we are not happy with the share price development overall, obviously not. But on the other side, we also have to see what kind of opportunities we will have in the future. And the share buyback is always it's a good signal for investors, for sure, that we believe in our share, but also can send other signals that you believe that there is potential in the company. And for instance, I already can announce because I will do it tomorrow that I will buy some shares, too.
And that's the reason why we are not planning currently to look on the share buyback program.
To your second question, Anik, on Mediaset. Well, look, we have a long standing and good relationship with Mediaset as we do across the European Media Alliance, which we set up many years ago. In fact, both Mediaset and TFR are shareholders in Studio71, our global digital video player. And we have constant conversations where there may be growth in synergy opportunities. And I think I've mentioned this in the past, namely in the areas of streaming technology, advertising technology, and opportunities to expand European growth across some of our NuCom assets.
And let's see what the future brings. On March ad trends, that's the crystal ball question because then the next question becomes what is September and what is Q4. It's all very hard to tell. But we are comfortable, I think, with the way we're forecasting the business, and we're comfortable with the guidance that we're providing for the year. And I think would not want to comment further than that.
Thank you very much.
Can you just repeat the numbers of July that you've given during the call? They were quite quick, so
Yes, I'm happy to do that. So July is plus 8% entertainment and total advertising growth with plus 4% underlying TV advertising growth and plus 68% digital and smart advertising growth. I will say that July is both a small month, and I think you made the point, Anik, the comparators are a bit easier. So I think it's encouraging, but I wouldn't be cautious and I wouldn't run away with those numbers either.
Thank you.
Thank you. Our next question comes from Chris Yonen from HSBC. Please go ahead. Your line is open.
Yes, thanks for taking my questions. I would like to take them one by one. First, Einar, maybe some additional comments on your first five weeks. How do you view, if you can say something, the group's leverage targets, the dividend policy, the current group structure, maybe some additional comments would be appreciated.
Thanks for your question, and you're totally right. These are my first five weeks. And for sure, you look on everything. Leverage targets, I already outlined that in my outlook. We believe that we will be at the year end to the higher end approximately at 2.5x net debt to EBITDA.
Dividend policy is in place, and that's what we have to accept, and it's fine. And the group structure, Max already outlined several times that we are working on getting it overall more in the segment areas, and that we will separate entertainment to make it more efficient. And that's clearly something where I believe this is the right way. And all the things which I found here are well thought. And I'm very optimistic that it will help us to drive the company to a better future if we go this path consequently, and that's exactly what we're doing here.
If I may follow-up on that. I mean, I understand the comment on leverage for 2019. But would you say it is too early for you to comment on whether you think the leverage target is actually sensible or whether it could be a potential change in view? I mean, same about the dividend points. You say it's in place, then we have to accept it, and it's fine, but that doesn't necessarily sound as if you are behind it, to be honest.
I am behind it. And the targets are existing, and that's the reason why I would like to mention it. Because at the end of the day, if you want to change it, then you change it. But this is not our target. So dividend policy is intact.
That has been changed. It's fine. And the leverage target is also something where you always which we also feel where we feel comfortable with. And again, that's also something when you work further down. And for sure, our target is to reduce the leverage target from the 2.5x further down.
But you always have to look, and that's what we also do. We look on opportunities. And if there are opportunities, then you have to discuss it at that time when it's happening.
Okay. That's clear. Second question on Joyn. How should we think about the ad load comparable specifically to seven TV? I mean, is it fair to say that, let's say, with three times the amount of traffic, we are basically looking at three times the amount of volume?
And then related to that on your smart advertising on smart TVs, I noticed that on Samsung, there is still to date no advertising shown on Joyn. Obviously, I think that's a temporary thing. Do we have any sort of idea on when Samsung will greenlight the pre rolls? And what sort of impact would you expect that to have given that, I mean, plus 68%? I would assume John plays a major role in that, if you could comment on that.
Yes. So I think all in, it's still early days on JOIN, but I think we're pleased with the launch. Your comment on Samsung is right. We are, because it's complex, working through every technical access infrastructure so that we can have ubiquity in people's ability to access joints. So we've just uploaded Apple TV, for example.
And there are some technical issues with Samsung that are temporary, and I would expect we'll solve as we flow through the quarter. I think in advertising loads, we're shall I say smarter and more educated than we were on seven TV before. We also have much better technologies on seven TV, I think, was very annoying at times because you got the same ads and so forth. So we're balancing monetizing well. And I think you can see this in the July numbers, but also let me be very clear that for the moment, we're really focused on building up our user base.
And so it's not quite three times, but not terribly far off. And that was it on Joyn or the Dimensity piece.
Yes. Maybe an add on on the I mean, the Eurosport player and Discovery basically giving the rights away to the zone. I mean, does
that Yes. Look, that was a deliberate joint decision discussed amongst us, and it was a very simple choice that we felt just having Bundesliga Friday games isn't fundamentally big enough to make a massive difference. And so our joint choice was that selling that off and then using that money to double down on originals and content is a better strategy. We are looking at our sports strategy going forward. And as I think I commented earlier, 2020 is the year of the Olympics via discovery.
We have all the Olympics rights and maybe that will be a good kick off in harbinger of more things to come.
Very clear. Thanks guys.
Thank you. Our next question comes from Omar Sheikh from Morgan Stanley. Please go ahead. Your line is open.
Good morning, everyone. I've got three questions if I could. So Max, maybe in this of not only focusing on the TV business, I'm going to start off with question on NuCom. Obviously, you've given a little bit of color on the top line for this year. I wonder if you could just clarify the investment that you flagged in Flaconi and whether that would be incremental or self funded?
So maybe just a bit of profit guidance on NuCom, that would be helpful. That's the first question. And secondly, I want to just talk about Joyn. You previously indicated an investment or net investment of €50,000,000 for 2019. In the context of the initial traction you've got, how should we think about the investment next year?
Do you think that will be similar level, the same or any higher?
That's the
second question. And then finally, I want to just check that I understand the guidance for the full year. You said previously, you said that the it's based on advertising stable to slightly declining, and you've obviously clarified that a little bit in your comments so far. But are you sort of implicitly saying that the non TV advertising parts of your business are growing a little bit faster than you previously expected, and therefore, you've reiterated the guidance? Or is there some other interpretation?
Thank you very much.
Hi, Omar. So on NuCom, look, we're making on top investments in Flaconi, I think, the tune of €10,000,000 somewhere thereabouts. And that's really because we think we have fantastic growth case. We're growing 40%. We're, by the way, now expanding in Poland.
Beauty e commerce is still massively underdeveloped. We have more opportunities to link an asset like Flaconi into the access that we have to influence communities. We're looking at creating broader private label offerings and so forth. So we're just really working this all out. And I think it's a good example of the kind of growth energy and excitement we can get out of NuCom.
On Joyn, we would and I think that's what we've guided before they or they about see similar investment levels in 2020. On 2019 guidance, the guidance I think is what it is and it's the range that we have provided. There are many moving pieces. And I think we have as best as we know, I think, a reasonably conservative view on TV advertising, and we are doing well in accelerating our digital footprint. And then if I may, Omar, given you are the most prominent sector bear, which by the way, I think is entirely legitimate.
I always look at it and I think, look, there is for us to win in entertainment, we have to fundamentally reverse out or prove two points. Number one, we need to prove that we can capture more viewers in the future. And while that's a work in progress, I think we're beginning to do that if you look at our total viewer shares and if you look at the total amount of minutes that are being consumed. And number two, we have to prove out that we can overcompensate what may very well be a structural decline in TV advertising with more digital advertising stage one. And again, we're beginning to do that not completely, but I think you can see the trends.
And then stage two with smarter advertising products that access more of the market and by the way monetize better for us. And again, you can see that we're beginning to do that, which is also why you see Ryan and me continuing to put our personal money in this business because we believe in it. Thank you.
Okay. That's, understand that Max. Just maybe I could follow-up then on, in that context on Joyn. I mean, if you're trying to grow sort of offline viewers or viewers outside of traditional linear television, do you think the 50,000,000 investment, per annum in in that platform is enough? If you are looking to build a platform of scale, do you think there's scope, for you to invest more?
Well, it's the €50,000,000 are the net loss. And by the way, there's two partners. So that's two times €50,000,000 net loss. If you look at the absolute investments flowing in, they are significantly above that. I'd actually have to look up the number.
But Ralf, maybe if you look at the total investments, they surely are 2x to 3x that, no?
Omar, Ralf speaking. Obviously, as you can assume, Joyn is a business with revenues in excess of $100,000,000 already. And when you then compare this to net loss, which in total is roundabout 100,000,000 you can see that we have a substantial investment jointly with Discovery into the venture. And we believe, according to what we plan, that this will surface.
Actually, me because it's a really fair question, though. It's are you putting enough firepower into the site? I think the other thing that we're doing is we are uniquely using the broader entertainment infrastructure that we have to feed and drive drawing, whether that is trailers that are saying after you've watched an episode on Monday evening, if you want to see the next episode, you can see it live on Joyn right now instead of waiting until next week, whether that is cross wiring fan communities or whether it is making our staff available. So there's both, if you want monetary tangible money, but there's a lot that we are feeding in that doesn't show up in the P and L. But at the end of the day, else did it would cost tens and tens of millions.
Got it. Thank you very much.
Thank you. Our next question comes from Adrien de Saint Hilaire from Bank of America. Please go ahead. Your line is open.
Yes. Good morning, everyone, and thanks for taking the question. So I've got a few of them, please. So Max, you mentioned the fact that your first half was the best since 2015 in terms of market share. Just wondering if you could make this analysis looking at the absolute viewing time.
I mean, how does H1 twenty nineteen compare to previous years? Secondly, you mentioned 68% growth in digital and smart advertising in July. Is it fair to assume that now that the D force joint venture has been approved, growth would accelerate from that level? And then thirdly, maybe a question for Rainer as well. You did the deal with General Atlantic a couple of years ago, valuing commerce at 1,800,000,000.0 Obviously, that doesn't seem to be the number which the market retains right now.
So would you consider other, let's say, value crystallization opportunities around commerce or around other assets? Thank you.
Yes. Thank you very much, Adrian. So on your first question, I think on absolute viewing time, given linear viewing is declining, if you were to compare the numbers in absolute viewing, it'd probably be five to 10% below. The bit that I think is really interesting to me is, you know, as we started to measure total video view time And by the way, we're working hard on measuring net reach across all channels and platforms, but it's actually quite difficult. So we just don't have those numbers yet.
But for me, that's a really important metric, because fundamentally my view is in entertainment, we are in the business of producing great content that people want to see. And the first measure of successes are more people seeing it. And I'm very agnostic on whether they're seeing it in the linear viewing experience on joint digitally or whatever. And I think that's quite a meaningful and important proof point. On your second question on digital and smart ad growth.
So yes, we've you caught the wire. I was going to make a comment on this. So the cartel authorities have approved the RTL d force joint venture with us, which I think is a really good and encouraging sign because it creates a really important infrastructure point in the market where advertisers and agencies can now access the totality of addressable and smart inventory across TV and across digital and across the RTL universe and the POSIMIR alliance universe in one place. And I think in scaling that, that will be very meaningful. And yes, I think underpins a continued positive outlook on digital and smart advertising growth.
68% is a big number. I think if you look at the first half at 26%, would we expect that 26% to accelerate in the second half? The answer is yes to but I don't want to quantify that number. On NuCom valuation, look, we are just as on entertainment. I think we're very focused in operationalizing NuCom.
We've done a lot of work there. I think we have put very good teams in place. We have a very clear strategy around four big consumer needs and verticals. We have absorbed and bolted on a number of businesses, and we're beginning to turn yield and growth on those. And so I think all of that is progressing very well.
As I have said in the past, at the right moment in the future, we will look at value crystallization opportunities and the most obvious being at some point in time to IPO NuCom and or IPO asset clusters within those. But for the moment, we're in executing and operating mode. Thank you.
That's all very clear. Many thanks, Max.
Thank you. Our next question comes from Laurie Davison from Deutsche Bank. Please go ahead. Your line is open.
Hi. It's three questions from me, please. First, just a question on the on advertising. Dentsu have just missed numbers and cut guidance today, specifically on multinationals advertising into Asia. I'm just wondering whether you've seen any deterioration within the mix of the advertising you've reported from multinationals starting to cut back in July and August?
Second question, for Rainer. M and A is back up again. You've spent £101,000,000 in the first half. Previous CFOs have talked about ongoing M and A of around £200,000,000 but you were quite significantly below that last year. So are you going should we be thinking that M and A spend on a recurring basis is going back up to the kind of €200,000,000 level on a full year basis?
And lastly, another question for Rainer. If advertising were to significantly deteriorate in the second half, what would be sacrificed? The dividends, the joint investment, programming spend or M and A? Thanks.
Laurie, I will take the first one. I used to spend a lot of time in Asia, but where multinationals are going in Asia, think, has little impact on what is happening here. Look, as I said before, the advertising market has little visibility. There are some sectors that are strong and weak, but we're we don't see any accelerating signals. I'll give you an example.
I mean, automotive has been a weaker part of that market, certainly last year and this year. But there's actually some momentum coming in because both VW and BMW are launching big e mobility campaigns and we're participating in those. So it's just the point I'm trying to make is it's incredibly difficult to manage our forecast market because at the end of the day, it's an aggregation of individual players and industry. And as I said before, we are comfortable, I think, with the guidance range and forecasting that we have put in for the year.
So let me answer the second question, M and A. Honestly, I don't want to put out a number in the market because it's opportunity driven. When we have something which is attractive, then we will look into it. And then we decide based on numbers, very disciplined, if we can do it, if we want to do it and if it creates value for the company overall. And that's the only thing I would like to say to that.
And just by the way, on the €100,000,000 to make a comment because I think they're a good €100,000,000 We've used them to take over minority shareholders that we had in Studio seventy one. And we have a strong belief set on Studio seventy one. And we're one of the top three global digital video players. I just had a long meeting with the global YouTube and Google executives on what we might do more. And so I think that's money very well spent.
We have taken out minority shareholders on virtual minds. And let me remind you that ActiveAgent is the technology engine that is driving our RTL joint venture. And so again, that to me feels like very value accretive money being spent. And then the third is we bought Regiondo, which is an important component of taking our experience business to the next level because experiences are one of the fastest growing and most highly valued sectors globally. And we have a pole position, and we want to be the ones that enable people in Germany, app based, to book any experience they want anywhere and at any point in time.
And Regiondo is adding very important capabilities for us to do so.
And the last question is a difficult one because at the end of the day, our belief is that we reach our numbers at the year end. That's the reason why we reiterated our guidance from a margin point of view for the EBITDA margin between 2225%. And I feel comfortable, and that's for sure what you do when you come new onboard. You look on the current analyst forecast, and I've seen that the most of the analysts have an EBITDA margin between 2223%. And here, overall, I feel comfortable.
So whatever happens, we and Max already said that in his speech. We reiterated that in our outlook statement also for the top line. With the mid single digit growth number, we feel also comfortable. So therefore, for me, it's more or less that we have to deliver on what we promised. And that's exactly how I would like to play it.
And if there is something new to tell, then we will discuss it.
Okay. But just in terms of priorities here, what comes first out of those four?
Overall, as I said, you know, there is always a mixture between things. And then we have to see what is necessary, what is not necessary. Again, we feel comfortable with our guidance for the year end.
Thank you. Our next question comes from Patrick Schmidt from Warburg Research. Please go ahead. Your line is open.
Yes. Thank you for taking my question. And maybe a quick follow-up on your M and A strategy. I mean, what is your leftover firepower for H2? I mean, you said it's opportunity driven, but do you actually have any opportunities in H2 looking at your leverage ratio and targets for the full year?
That would be the first question. And then secondly, where do you see your long or, let's say, midterm profitability in your Entertainment segment? I mean, we're obviously all aware that you, at the moment, are investing heavily into advertising technology and content, etcetera. But do you see, for example, let's say, overall higher production costs, especially when you compare yourself, let's say, years ago when you mainly broadcasted U. S.
Content? And lastly, it's just a quick follow-up on regarding Joyn and the discovery bid that they sold the Bundesliga rights. Were you aware of that when you got into that cooperation? Because I think it's one of the most attractive assets yet for a potential premium or potential, let's say, paying customers for your plants in winter.
So for the M and A strategy and firepower, for sure, it all depends on the EBITDA, which you're buying because it's a calculation game. On the other side, our guidance, at the upper end of the 2.5x, is based on low M and A further on. So we have to see what is happening. And then it's opportunity driven. And if you find something which is attractive, then we have to discuss it.
But currently, I would say we feel comfortable with our guidance. And on top of that, what I said at the beginning, it's opportunity driven. Second question, long and midterm profitability in Entertainment. First of all, we focus on the year end numbers. As we all know, that's difficult enough.
What we have discussed already, in that case, that we have fundamentally to prove that we get up in Q4 our numbers, and that's based on the advertising market. We have mentioned that several times during this call. Again, we feel comfortable, and we take it from there in March then.
The just to add one point on entertainment. So yes, there are elements where we are adding cost because we're creating more locally meaningful programs and there's some degree of programization, I guess, going forward. But at the same point in time, as our reach becomes targetable, that reach is a lot more valuable. So I'm a very big believer also that in the long term, mid to long term profitability in entertainment can and will be very attractive. On Joyn, yes, that was a complete joined up discussion with Discovery and we decided that together, not because Bundesliga is not attractive, it's terribly attractive, but it's only the Friday games.
And so it's a too thin slice, we felt relative to the cost to make a big difference. And so we jointly decided to use that money and double down on original content creation and then work on a sports strategy, I think, really kicking in gear with the Olympics next year.
All right. Maybe just a quick follow-up on Entertainment again. So you feel comfortable that you can reach, let's say, historical margins within that segment in the mid to long term?
Overall, we are not margin driven in that case. We are more the absolute number, which is relevant for us at the year end.
Okay. I understand the point of the year end, but I'm talking about the midterm. So let's say, next three to five years?
It is too early to forecast that right now. Let's finish the year, and then we will discuss it again. But again, we are more looking on the absolute number like I also did it in the past because that's relevant, because that's generating cash flow, and that's generating profitability and opportunities also for the future. All right. Thank you very much.
Thank you. Our next question comes from Sarah Simon from Berenberg. Please go ahead. Your line is open.
Yes. Hi. I've got just three quick ones. Firstly, just on Joyn, Max, I think you said but can you just confirm that the 68% growth in July is not really coming from Joyn because you haven't started to push the monetization. So it's more about kind of core online as opposed to Joyn.
Second one was just on d force. Can you give us a quick rundown of what that actually means in terms of the commercial offer? And then the third one was just on Studio seventy one. How much of the revenues of Studio seventy one are coming from Germany? Thanks.
So on Joyn, no. The 68% in July are meaningfully impacted by the launch of Joyn. And so I think it's actually a positive sign that Joyn is beginning to impact the expansion of our digital growth strategy. On Studio71, Germany is there or thereabouts 25% of the global footprint, no? Mid double digit million.
Thank you. And on d force, well, look, what it means in terms of commercial offer is that and we're in the midst of working kind of bringing this alive technically, but it fundamentally means that we're able to make addressable TV, addressabletargetable digital inventory available across the infrastructure that at Hairless and our infrastructure, put that together and offer that to clients. And we have about, I think, 60 clients or so that have initial interest. Then as these things go, first, we needed to set it up, which we've done. We needed approval, which we've done.
Now we need to start going live. And I think as we go live and we get into Q3 and into the future, we will begin giving you more detail and more numbers on how that is going.
But so presumably, you've got two separate sales forces, but sharing of the infrastructure. Is that the way we should think about it so that there's one interface for the buyer?
No. It's programmatic platform, so the inventory is already ingested. Of course, the pricing is set completely independent by both companies. Right. But I can I have one programmatic base where I can access all the inventory, and that makes it much, much easier, much faster, and less complicated for clients and agencies to access, addressable and smart inventories?
Perfect. Thanks.
Thank you. Our last question comes from Richard Arie from UBS. Please go ahead, Your line is open.
Thanks. Just four actually quick questions. First one, Max, just in terms of you've mentioned total view time a number of times in the presentation, and it was sort of encouraging to see the fact that, that actually had stabilized. Can you actually give us a sort of breakdown in terms of that total view time between linear and nonlinear so we can actually track that performance so we can understand how that relates to the advertising share that you've given on that slide as well? That's the first question.
The second question, you talked about, obviously, some initial programmatic sales, which I think you said you'd already done 18 sales, but obviously potential to do 60 in the second half. Can you talk about the pricing of that in terms of those twenty nineteen geo campaigns and what the pricing differentials were so we can understand that? The third question is on Joyn. I think I heard correctly that you talked about the potentially to grow that geographically. I don't know whether you can expand on that or whether it's too soon to do so.
And then just Rainer, just on the last question just on guidance. I know this has probably been asked in several different ways. But just to be clear, the historical guidance was talked about as a €50,000,000 EBITDA impact this year on the consolidated numbers. But with the Falcone investments of €10,000,000 that was mentioned on the call, should we now think that widens from 50,000,000 to 60,000,000 Or is there something that I've missed? So, they're the four questions.
Thanks.
So, let me take your first three. On total view time, so if you take on total view time, if you want the amount of linear decline, and then you look at how we are filling up relative to that linear decline, then two thirds of that is the growth in market audience shares, and about one third is the growth in digital. And by the way, if you recall one of the KPI pages, if you look at our total footprint, about 8%, I think, is now digital. And on the one hand, one could say, well, that's really small. Shouldn't it be bigger?
And the answer is yes. But I think it's a fantastic opportunity because it also shows how much scalability we still have going forward. On programmatic sales, pricing of campaigns, don't want to comment on specifically. Yes, all in, we think as campaigns become addressable, there is pricing opportunity to the tune of 50% to 100%. But for the moment, we're really just focused on scaling that business.
And it's a very new thing in Germany, helping our client partners and our agency partners understand what it is we have to offer and scale up. And on Joyn, potential growth geographically, the answer is yes. We have two big European media players that have expressed strong interest to think about and look with us whether this could travel beyond. I think the answer here is one of timing and sequencing. We're very, very focused in completing the build out of our AVOD and free offering.
We're very focused in putting the premium layer together for launch in winter and that is absorbing 100% of the energy and team that we have available. As and when that is done, we will begin taking a look at when, how and with what kind of structure we might look at opportunities beyond our core markets.
Max, can I just ask a quick follow-up? Just go back to that slide, which is 22 in the deck with total view time, two fifty seven billion minutes of that. What is the actual breakdown of that in terms of digital versus linear to compare with the 928% basically for core advertisers and digital smart?
Richard, it's Dirk speaking. Just a quick comment. Yes, you see on the same slide also the daily linear TV consumption, which was down 2%. Yes. And this obviously has affected the whole market.
And in the total market, we have gained audience share, which is, let's say, two around about twothree of linear TV viewing gains we have achieved by audience share gains. The rest, basically, why we are up in total, is derived from our digital assets as well as Studio71 in Germany, but it's not including Studio71's global business.
Okay, fine.
And by the way, digital yes, go ahead, Max.
No, I was just going to make a comment because all of you look at linear viewing numbers, which continue to show a decline. And one would think sometimes that the client has accelerated. You have got to be a bit careful with those numbers because, for example, they don't measure at all today what viewing is caught on streaming platforms and so forth. So that's why we're now looking increasingly at total video view time. So the total amount of what's being consumed and then the measure that we're working hard on is to be able to look at total reach and then be able to duplicate that reach across everything because I think that's the truest view of how many people are watching our stuff and whether they're doing that in a linear or digital experience, I'm completely agnostic too.
So, let me answer your last question. Please take into account that everything which we have already announced, especially the incremental investments in our Entertainment segment of the approximately EUR 120,000,000 as well as the additional investments in our Online Beauty destination, Flaconi, are part of our guidance range, which we have given out. And also have in mind, again, that the level of investments in entertainment in Q3 will be approximately similar to our Q2 investments. And then we have to counterbalance these investments with cost development in Q4. And that's also one of the things we are working on, is cost efficiency improvements across the group.
And for sure, the ultimate outcome in terms of adjusted EBITDA and adjusted net income in the full year 2019 will depend significantly on the TV advertising market development for the year end. So therefore, yes, the extra investment of whatever the number will be, 10,000,000, 20,000,000 for Flaconi, will impact the year, but it's all included in our guidance. And again, I feel comfortable with the numbers, which we have seen margin wise between 2223% from the analysts, which we can see currently.
Okay. Thank you.
Okay, ladies and gentlemen. This was the last question for the call. We thank you for your participation. And, if you have any follow ups, please do not hesitate to get in touch with Dirk and team. And with this, we wish you a very good day.
Thank you.