Revenues at RTL Group for 2018 rose by 2.1 percent to reach €6.5 billion, bolstered by its digital business, Fremantle and RTL Nederland.
Net profit fell by almost 10 percent to €668 million, mainly due to a goodwill impairment against StyleHaul. While reported EBITDA was down 5.7 percent, adjusting for the one-off effect from the sale of its buildings in Paris last year, operational EBITDA was stable, rising by 0.7 percent.
The company touted its diversified revenue base, with 45.8 percent from television advertising, 20 percent from content, 15.1 percent from digital, 5.3 percent from platforms and 4.1 percent from radio.
In Q4, digital and Fremantle were again key drivers, with total group revenues up to €2 billion. Net profit in the quarter fell to €244 million. Mediengruppe RTL Deutschland’s EBITDA was €728 million, the second highest full-year operating profit of the unit. The slight decrease from 2017 was mainly due to lower TV advertising revenues in a year in which major sporting events, including the World Cup and the Winter Olympics, were broadcast on public broadcasters. M6 Group’s EBITDA rose by 2.8 percent to €400 million. Fremantle’s EBITDA rose by 5 percent to €147 million, reflecting higher profit contributions from the businesses in North America and Germany and the video game company Ludia. RTL Nederland’s EBITDA was up slightly to €89 million.
Commenting on the results, CEO Bert Habets noted, “With rapidly changing consumer behavior and the rise of global tech giants and streaming platforms, we’ve moved from a local to a global competitive landscape. At the same time, international media markets are experiencing unprecedented change and consolidation. This is why 2018 saw the start of our transformation journey to foster organic growth within our portfolio, through our Total Video 2.0 strategy. With this strategy we will focus on two clear priorities: building local streaming champions and strengthening our content creation. Accordingly, RTL Group will invest at least an additional €350 million to boost the expansion of our streaming services over the next three years—€300 million of which will be dedicated to content investments across all genres. As our streaming services are deeply integrated in our families of TV channels, these investments will generate sizeable additional revenue and will thus have limited impact on our operating profit. Every investment in local, exclusive content is an investment for the long run, strengthening both our linear TV channels and streaming services. In other words: we will continue to generate very healthy profit margins.
“At the end of 2018, RTL Group passed the first million mark of paying subscribers, combining the subscriber bases of TV Now Premium in Germany and Videoland in the Netherlands. We plan to start similar services in other countries. Over the next three years, we aim to grow our total number of paying subscribers to at least 3 million. Our streaming services already show very promising growth rates in a highly dynamic market—thus we will always have the flexibility to further increase our ambitions in this space. This growth will help to further diversify RTL Group’s revenue streams.
With Fremantle we continue our push into drama production. As drama series are also key for the expansion of our streaming services, we have developed an ambitious growth plan for scripted series. Based on this growth plan, international drama productions are forecast to generate more than €500 million in revenue in 2021.”
For 2019, RTL Group is forecasting that revenues will rise between 2.5 percent and 5 percent, led by digital and Fremantle. EBITA is expected to fall moderately.