RTL Group H1 Profit Takes a Hit

LUXEMBOURG: RTL Group reported a sharp decline in first-half profit, impacted by an impairment of 88 million euros ($116.8 million) as a consequence of the new advertising taxes implemented in Hungary.

Anke Schäferkordt and Guillaume de Posch, co-CEOs of RTL Group, said: "Today’s impairment charge demonstrates the significant damage caused by the new advertising tax in Hungary. As we already said in July: the precipitous introduction of the confiscatory advertising tax is an alarming signal for all international investors in Hungary. Our audience and financial success has always included two key elements: a local, decentralized management structure and being politically independent. RTL is and will remain deeply rooted in Hungary."

For the first half of 2014, profit attributable to shareholders fell 51.7 percent to 202 million euros ($268 million). Revenue for the half year slipped 2.5 percent to 2.69 billion euros ($3.6 billion). This was mainly due to negative exchange rates, lower ad sales in France and lower revenue from FremantleMedia and UFA Sports. EBITA was down 6 percent to 519 million euros ($688 million).

FremantleMedia posted lower EBITA of 29 million euros ($38.5 million), down from the 47 million euros ($62 million) in the year-ago period. This was largely due to lower production and distribution volume, one-off costs at the company's headquarters and weak foreign exchange rates.

The group's digital revenues, however, saw growth, up 10 percent to 113 million euros ($150 million), thanks to organic growth and new acquisitions.

RTL said it now expects 2014 group revenues to decline slightly this year, with a more significant decrease in EBITA.

Schäferkordt and de Posch added: "As a business, we remain focused on three strategic goals. First and foremost, we will continue producing, acquiring and airing the best TV content. Finding the new hits—big and small—is a joint priority for both our broadcasters and for FremantleMedia. More than ever, our TV channels have stepped up their own development initiatives in their local markets. Strengthening the creative pipeline—and ultimately improving the profit margin—of FremantleMedia requires targeted investments in new talent, genres and geographical areas, as recently demonstrated with the acquisition of U.S.-based 495 Productions. This will take some time, but we are clearly committed to further scale up our global content arm.

"Second: online video is at the heart of our digital strategy, as it will be a key driver of future growth. For the full year 2014, we expect to more than double our online video views to around 40 billion.