Europe’s Top Entertainment Network RTL Group Sees Net Profit Rise 21% to $865 Million

Europe's Top Entertainment Network RTL Group
Courtesy of RTL

LONDON — RTL Group, Europe’s leading entertainment network, reported Thursday that its net profit rose 21% to €789 million ($865 million) last year. Revenue increased 3.8% to €6.03 billion ($6.61 billion), mainly driven by higher revenue at its German broadcaster Mediengruppe RTL Deutschland, growing digital revenue and the effect of favorable exchange rates.

Revenue reflected the group’s diversified portfolio, with 53.7% from TV and radio advertising, 22% from content sales, 8.4% from digital activities, 4.1% from platform revenue and 11.8% from other revenue. Digital has become a significant driver of growth for RTL Group: digital revenue was up 72.2% to €508 million ($557 million).

“With our digital investments in North America — BroadbandTV, StyleHaul and SpotX — we’ve reached critical mass in online video within a very short period of time,” Anke Schäferkordt and Guillaume de Posch, co-chief executive officers of RTL Group, said in a joint statement.

“This is also reflected in our strong set of financial results: with more than half a billion euros in revenue, digital has become a highly dynamic third pillar for RTL Group, in addition to our market-leading broadcasting and content production businesses.”

EBITA at Mediengruppe RTL Deutschland grew by 5.2% to €684 million ($750 million), mainly driven by higher TV advertising and revenue from diversification activities.

Despite a strong performance in TV, France’s Groupe M6’s EBITA decreased to €205 million ($225 million) from 2014’s €209 million ($229 million), mainly due to lower contribution from diversification activities, such as home-shopping operations and the soccer club Girondins de Bordeaux.

EBITA at FremantleMedia, RTL Group’s content production arm, decreased to €103 million ($113 million) from 2014’s €113 million ($124 million), reflecting the reduction in “American Idol,” which is in its 15th and final season, and increased investment in the creative pipeline.

RTL Nederland’s EBITA was down 1.9% to €101 million ($111 million), reflecting start-up losses in video on demand, and the termination of the Sizz partnership with Vodafone in 2014.

At RTL Hungary, EBITA was up to €21 million ($23 million) from 2014’s loss of €1 million ($1.1 million), driven by one-off effects such as the partial reversal of a stock valuation allowance and the reclaiming of the advertising tax paid in 2014.

Schäferkordt and De Posch said: “The strong cash flows generated by our families of channels allow us to combine attractive dividend payments with further acquisitions to pursue our two main investments goals. The first is to further expand and develop our digital businesses where global scale in content aggregation and advertising technology becomes ever more important. The second goal is to further grow content production, because we’re certain that producing our own content and owning the rights to it will be one of the keys for further growth.

“As part of this strategy, FremantleMedia is making sound progress to increase its creative diversity. As FremantleMedia is already one of the biggest independent production companies, their focus is on partnering with creative talent to develop new projects for FremantleMedia’s unrivalled international network. This trend will continue and see scripted entertainment taking a larger share of FremantleMedia’s total revenue.”

FremantleMedia made a series of eight investments last year, strengthening its capabilities in the scripted, entertainment and factual genres. This included Wildside, Italy’s leading high-end TV and feature film producer, and French scripted producers Fontaram and Kwaï.

In June, the U.S. premium cable channel Starz gave the green light to FremantleMedia North America’s adaptation of Neil Gaiman’s contemporary fantasy novel “American Gods.”

In February 2015, FremantleMedia International announced an agreement with AMC’s Sundance TV that saw UFA Fiction’s “Deutschland 83” become the first German-language series to air on a U.S. channel. The title has sold to 20 broadcasters and subscription video-on-demand platforms around the world.

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