Advertising revenue continues to sink
BERLIN — The financial crisis continues to take its toll on Europe’s two big TV groups, which have been hit hard by sinking ad revenue and devaluation of once pricey assets.Pan-European broadcasting companies RTL Group, based in Luxembourg, and ProSiebenSat.1, based in Germany, are bracing for the worst as ad coin continues to dry up. But it’s not all bad news. RTL on Thursday posted a 1.2% increase in annual revenue for 2008 to nearly E5.8 billion ($7.4 billion). Its German division, comprised of five channels including leading channel RTL, and its U.K.-based entertainment group FremantleMedia achieved record earnings, with RTL Germany up more than 25% to $540 million and Fremantle up more than 18% to $198 million. Yet the global meltdown continues to devalue assets, a factor that slashed profits at RTL and rival ProSiebenSat.1. RTL’s net profit plummeted more than 65% to $248.5 million, mainly due to a goodwill impairment of its U.K. TV activities amounting to $432 million. RTL operates Blighty’s struggling terrestrial web Five. Munich-based ProSiebenSat.1, meanwhile, suffered a $162 million net loss last year due to a $230 million goodwill writedown on its pan-European SBS broadcasting unit as well as a 5.7% drop in annual revenue to $3.8 billion. Despite increasingly difficult ad markets in Europe, RTL chief exec Gerhard Zeiler pointed out that the group had increased its revenue and operating result for the seventh year running. RTL last year stepped up its online activities with acquisitions and investments and acquired a new channel after taking over Greek broadcasting group Alpha Media. The conglom now operates 45 TV channels in 11 countries. “Operating in a very challenging time, we are experiencing a substantial slowdown in advertising bookings,” Zeiler said, adding that it was impossible to provide a reliable full-year forecast given the current state of the advertising markets and the short-term bookings cycle. He stressed, however, that RTL’s profits would probably be down this year compared with 2008. ProSiebenSat.1, which released its 2008 results March 4, declined to offer any predictions for the current year “since economic conditions are so difficult to assess at the moment.” Andreas Bartl, head of ProSiebenSat.1’s core German free-TV division, said the group’s programming budget for U.S. acquisitions last year was in line with 2007 and he expects it to remain stable for 2009. ProSiebenSat.1 has deals with Sony, Paramount, Warner Bros., MGM and Disney-ABC. RTL shares rose more than 6% Thursday to $38.17, while ProSiebenSat.1’s shares were trading at $1.28, down 90% from last year.