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RTL Group Sees Record Revenue for First Half of 2018

Results Fuelled by Strong Q2 Performance of FremantleMedia

AMERICAN IDOL: Television's biggest event, AMERICAN
Courtesy of Fox

RTL Group, Europe’s leading entertainment network, saw record revenues for the first half of 2018 fuelled by a strong second quarter. Announcing its figures to June 30 on Wednesday, the Luxembourg-based media giant revealed revenues hit €3.05 billion ($3.55 billion) for the first half of 2018, a 2.3% rise compared to the same period of 2017. It marks the fourth consecutive year that RTL has seen revenues rise year-on-year across the first six months.

The company said growth had been driven by its digital business, which saw a $40.8 million (9%) rise year-on-year to $494.6 million; and FremantleMedia, which added $38.5 million in new revenue across the half-year period.

Earnings before interest, tax, depreciation and amortization hit $744 million, a rise of 1.9% against 2017. RTL said this was mainly thanks to the performance of its Dutch operation, RTL Nederland, which saw its own EBITDA rise 68.4% from $22.2 million in the first half of 2017 to $37.3 million in 2018 driven by higher TV advertising revenue.

A strong Q2 also helped drive the first-half results, driven by FremantleMedia. RTL saw Q2 revenues of $1.9 billion, a 3.6% rise against Q2 2017, while EBITDA was up 4.7% at $441.9 million. RTL said the successful return of FremantleMedia’s “American Idol” (pictured) on U.S. network ABC – which aired from March 11 to May 21 – had “more than compensated for negative exchange rate effects.”

The group expects its total full-year revenue to grow between 2.5% to 5% with EBITDA likely to remain steady between -1% and +1%.

“The good results for the first half of 2018 highlight once again the key strengths of RTL Group: with our broad international footprint across broadcast, content, digital, and an ever-more diversified revenue mix, we continue to grow organically, even in challenging market environments,” said Bert Habets, CEO of RTL Group, announcing the results. “Our high levels of profit margins and cash generation allow us to combine attractive dividends with significant organic growth initiatives.

Habets said that in a rapidly changing industry, with growth mainly coming from non-linear or streaming services, RTL would be further increasing investments in its video-on-demand services “with a clear focus on local, exclusive content.” He said the goal was to “gradually adopt a hybrid model – combining a free, advertising-financed service with a premium pay product.”

As well as building its VOD services, Habet’s said the RTL Group would also be fostering more organic growth by continuing FremantleMedia’s push into scripted drama. He cited FremantleMedia Australia’s “Picnic at Hanging Rock,” starring Natalie Dormer, which sold to Amazon Prime for the U.S., as a recent success story in scripted drama.

“Every investment in local, exclusive content strengthens both our linear TV channels and our non- linear on demand services,” said Habets. “This local, exclusive content focus is the power engine for our Total Video offers. Especially with FremantleMedia’s push into scripted drama, we are fuelling our content pipeline.”

Habets said FremantleMedia was currently seeking funding for at least 35 scripted series ideas. “As a consequence, international drama productions will already generate more than 20% of FremantleMedia’s total revenue in 2019,” he added.

RTL sees 47.7% of its revenue come from TV advertising; 18.7% from content; 13.9% from its digital businesses; 5.5% from platform revenue; 4.2% from radio advertising; and the remaining 10% from other sources.