AMSTERDAM — Endemol Entertainment and German market leader RTL Television have reached a new three-year volume agreement, calming investor worries that Endemol’s business in Germany might be in trouble.
The new deal will go into effect Jan. 1, 1998, and calls for RTL to buy an undisclosed guaranteed yearly volume of Endemol product fixed at a percentage of the station’s annual turnover.
The minimum guarantee will be increased yearly for the duration of the contract, according to the deal. Endemol’s previous contract with RTL, which is up at the end of this year, was for $172 million in annual output.
RTL is by far Endemol’s biggest customer in Germany, a territory that accounts for more than a quarter of the Dutch-based indie’s revenue. In April, reports in the Dutch press that RTL wanted to cut back its business by 50% with Endemol sent stocks diving to 49.90 guilders ($23.64), the company’s lowest share price since it launched on the Amsterdam stock exchange in November.
Since then, price per share has remained relatively flat, but announcement of the deal with RTL sent it up by more than a guilder, closing at $25.07 on Monday, up from $24.54 at the close of business Friday.
While both companies remained mum on details of the pact, an Endemol spokesman told Daily Variety the agreement “in no way represented a cut in Endemol’s business with RTL,” but rather a breakthrough in that it increased cooperation between the two companies. Part of the deal, the spokesman added, calls for Endemol and RTL to work together for the first time to mutually develop program formats and pilot episodes of new programs for the German television market.