Co. expects year-to-year decrease in 2001 earnings to exceed 10%-15%
LONDON — A major writedown pertaining to its acquisition of Pearson TV and a depressed ad market were blamed for a first-half loss of 2.3 billion euros ($2.13 billion) at European broadcasting heavyweight RTL Group.
With little hope of a recovery in the ad market this year, RTL said it expects its year-to-year decrease in earnings for 2001 to be more than the 10%-15% slide it predicted in July.
“I don’t see a rebound for the ad market,” RTL Group CEO Didier Bellens said Wednesday, adding he expects last week’s terrorist attacks in New York to exacerbate the situation. “People are uncomfortable when you talk about war. Our clients are more conservative now.”
RTL’s writedown relates to a readjustment in the value of Pearson TV, restructuring in the U.S. as well as the fall in the companies’ share prices. The stock market has significantly weakened since Pearson TV merged with CLT/Ufa to form the RTL Group last year.
“This adjustment has no effect on the cash flow,” a rep said. “It is a noncash adjustment of the book value.”
Despite the sharp downturn in advertising, RTL said overall group revenues rose 3% to $1.86 billion, while television-related revenues, which account for 73% of total sales, rose 3% to $1.35 billion.
U.K. and Dutch troubles
RTL’s core French and German markets did not fare badly, but a slump in its U.K. and Dutch advertising revenues and higher program spending on its loss-making U.K. commercial TV station Channel 5 pushed figures lower.
Like many other broadcasters, RTL cut advertising during coverage of the terrorist attacks on the U.S., but Bellens said he expected that to have a limited effect on full-year results.
He said RTL, which owns 24 TV channels and 18 radio stations across Europe, was in a position to take advantage of the weakened market, with $1.86 billion to $2.3 billion available to the company for potential acquisitions. “The funny thing is that when the market is going down, the opportunities are increasing and the prices are going down,” he said.
RTL is waiting for the market to improve before realizing its long-term plan of a share issue, which would increase its free float of shares on the market from the current 10.3% to its proposed 15%.
(Reuters contributed to this report.)