RTL Group Revenue Impacted by French Economy, FremantleMedia Performance

November 13, 2014 World Screen Top Stories

LUXEMBOURG: RTL Group saw its net profit for the first nine months of the year fall by 42.8 percent to 306 million euros ($380.6 million), impacted by a new advertising tax in Hungary, the difficult economic situation in France and challenges at its FremantleMedia production arm.

Revenue was down 1.6 percent to 3.95 billion euros ($4.91 billion). EBITA was down nearly 5 percent to 679 million euros ($845 million).

TV ad markets across Europe showed signs of improvement for the first nine months of the year, the exceptions being France (relatively flat) and Belgium (down 0.7 percent).

FremantleMedia's EBITA was down from 77 million euros ($96 million) to 54 million euros ($67 million). This was due to unfavorable exchange rates, lower revenue from American Idol and increased investments in digital business and the content pipeline.

During the first nine months, EBITA of Mediengruppe RTL Deutschland increased by 5 percent, thanks to higher TV ad revenue in Q3 and a growing digital distribution business. RTL Nederland's EBITA gained 6.9 percent, thanks to higher digital distribution revenue and diversification activities. RTL Group recorded a goodwill impairment on RTL Hungary of 77 million euros ($96 million).

In the way of digital, the division reported growth of 16 percent to 180 million euros ($224 million), thanks in part to some new acquisitions. RTL purchased a 65 percent stake in SpotXchange. It also took a controlling stake in the YouTube MCN StyleHaul, with plans to invest $20 million to help bolster the company's expansion.

Anke Schäferkordt and Guillaume de Posch, co-CEOs of RTL Group, said: “After nine months, we see a similar picture as at our half-year results in August. While Mediengruppe RTL Deutschland and RTL Nederland report significant profit growth, the economic situation in France and for FremantleMedia remain challenging. In the third quarter, significant revenue and EBITA growth in Germany led to stable Group results, and we had a good start into the important fourth quarter.

“Given our high cash flows and strong financial position, we won’t wait for the economic condition to improve, but invest today in new growth drivers for RTL Group. This year, we will invest more than 240 million euros in rapidly growing digital businesses—while also launching new channels and further diversifying our content production arm. This is the highest investment level for acquisitions since 2005. With the recent acquisitions of SpotXchange and StyleHaul, we have made strategically important progress to make RTL Group a global force in online video and online video advertising.”