European broadcasting giant RTL Group on Friday reported a 10% increase in 2019 profit as revenue reached a record €6.65 billion ($7.44 billion), driven mainly by higher sales from global content unit Fremantle and its digital business.
With sales up 3.2%, 2019 marked the fifth consecutive year that RTL’s revenue reached record levels.
The group’s earnings grew 10.1% to €864 million ($966.3 million) year on year, due largely to the capital gain from the disposal of film distribution unit Universum Film, which was bought by U.S. investment firm KKR last year and merged into Munich-based studio Leonine, which also includes the former assets of Tele München Group. Lower impairments also contributed to RTL’s profit boost.
With regard to the coronavirus crisis, RTL CEO Thomas Rabe said it was currently too early to quantify its impact on RTL Group’s results. The group has already seen the first cancellations of advertising bookings and impacts on productions, Rabe added, but stressed that he nevertheless expected the first quarter to be stable and in line with expectations.
Rabe, who also serves as CEO of RTL parent group Bertelsmann, said the group was boosting its streaming services and global content businesses. “Driven by the strong performances of our three largest business units, RTL Group achieved all financial goals in 2019.”
RTL’s strategy builds upon three priorities: strengthening its core businesses, including consolidation across its broadcasting footprint; boosting its streaming services and content division Fremantle; and fostering alliances and partnerships in the European media industry, Rabe said.
“Within this framework, we put a particular focus on becoming national streaming champions in the countries where RTL Group has leading families of channels and on building an open European tech platform for streaming services,” the CEO added.
Over the next five years, RTL aims to grow the number of paying subscribers for streaming services TV Now in Germany and Videoland in the Netherlands to between 5 and 7 million, with streaming revenue expected to reach at least €500 million ($560 million) and break even by 2025, Rabe added.
TV Now and Videoland’s paying subscribers grew 37% to 1.44 million last year while their streaming revenue grew by 46.7% to €135 million ($151 million) in 2019. Overall, RTL Group’s digital revenue increased by 8.9% to €1.07 billion ($1.20 billion), accounting for 16.1% its total revenue.
Fremantle’s revenue was up 12.6% to nearly €1.8 billion ($2 billion) as its drama business continued to grow, with the second season of “American Gods,” the first commission for Norway with “Exit,” and the second seasons of “The New Pope” and “My Brilliant Friend: The Story of a New Name.” As a result, Fremantle’s drama revenue increased by 36.2% to €414 million ($463.4 million).
In France, Groupe M6 and its technology unit Bedrock are building SVOD streaming service Salto, which is also backed by Groupe TF1 and France Télévisions and set to launch later this year.
The company’s German and French divisions, Mediengruppe RTL Deutschland and Groupe M6, saw higher audience and TV advertising market shares, while Fremantle reported revenue growth of 12.6%.
Mediengruppe RTL Deutschland’s channels slightly increased their combined audience share in the key 14 to 59 demo to 28.1%, due largely to the positive performance of flagship channel RTL Television, which increased its audience share for the first time since 2011.
Mediengruppe RTL Deutschland also outperformed Germany’s net TV advertising market. The company last year launched its latest free-to-air German channel, Vox Up, which shares its advertising breaks with affiliate Vox while broadcasting different programs and offering more net reach for advertisers.
Groupe M6 completed the acquisition of Gulli, France’s leading free-to-air digital channel for children, and five pay-TV channels from Lagardère, leading to greater audience and TV market shares for the unit.
RTL Group’s revenue remains well diversified, with 44.2% generated from TV advertising, 21.6% from content, 16.1% from digital activities, 5.5% from platform revenue, 4.1% from radio advertising and 8.5% from other revenue.
Looking forward, RTL Group expects 2020 revenue to grow organically by 2 to 3%, with TV advertising revenue slightly down and Fremantle’s revenue up by between 4 and 6%.