RTL Group revenue drops on challenging market conditions
International entertainment company RTL Group has announced the financial results of the first half of 2023 that showed how a volatile geopolitical and macroeconomic environment affected the business.
RTL Group’s TV advertising revenue decreased 12.5 per cent to €1,187 million compared to €1,357 million in the same period last year in particular in Germany. Compared to the first half of 2019 (pre-Covid), RTL Group’s TV advertising was down 15.5 per cent. RTL Group expects its TV advertising revenue to grow slightly in the second half of 2023 compared to 2022, which was marked by significant negative effects from the football World Cup in Qatar. In Germany, RTL Group’s TV advertising revenue was broadly stable year on year in June and July.
As of 30 June 2023, RTL Group served 6.041 million paying subscribers with its streaming services RTL+ in Germany and Hungary and Videoland in the Netherlands – up 34.1 per cent year on year. Paying subscribers for RTL+ increased 31.0 per cent year on year to 4.489 million.
The strategic partnership with Deutsche Telekom to bundle RTL+ Premium within Magenta TV contributed significantly to the growth. Paying subscribers for Videoland grew 17.5 per cent year on year to 1.268 million driven by its diverse content offering. − The number of paying subscribers for RTL+ in Hungary (including RTL+ Active) was 0.285 million at the end of June 2023. RTL+ in Hungary was launched in November 2022.
In the first half of 2023, RTL Deutschland’s combined audience share in the main commercial target group of viewers aged 14 to 59 increased to 27.6 per cent compared to 27.3 per cent in the same period last year, extending the lead over its main commercial competitor ProSiebenSat1 to 5.8 percentage points. This was primarily driven by the main channel RTL, which scored an average audience share of 9.8 per cent in the target group. With an average audience share of 6.2 per cent, Vox has become the number two commercial channel in the target group, ahead of Sat1 and ProSieben.
With this, RTL Deutschland has achieved a major strategic target, operating the number one (RTL) and number two (Vox) commercial channels in Germany. − In February 2023, RTL Deutschland announced a reorganisation of its publishing business to focus on its core brands such as Stern, Geo, Capital, Brigitte, Gala, Schöner Wohnen, Eltern and Chefkoch, which account for around 70 per cent of the unit’s publishing revenue. Other brands are being sold or discontinued. RTL Deutschland plans to invest a total of €80 million in its publishing business by 2025, €30 million of which would be for the expansion of its paid offer Stern+. The reorganisation is progressing with the social plan signed at the end of March 2023 and portfolio adjustments well advanced. The first disposals have already been announced.
Thomas Rabe, Chief Executive Officer, RTL Group: “The market environment in the first half of 2023 was particularly challenging, with geopolitical and macroeconomic uncertainties in addition to the long-term structural shifts in video viewing. The RTL Group team remains focused on bringing our strategy to life: strengthening our core business, growing our streaming and content businesses, and building alliances and partnerships. Based on our strong balance sheet, we are investing into business transformation through the cycle – in premium content, leading national streaming services and in advertising technology. Technology plays a key role in our transformation, and we see great opportunities from Artificial Intelligence (AI), in particular to increase efficiency and generate content. Today, we already apply AI at scale in advertising planning and have started to support content creation with generative AI.”
Fremantle is RTL Group’s global content business, spanning entertainment, drama and film, and documentaries. − Within its entertainment business, Fremantle shows continued to achieve outstanding success with audiences across the globe, producing the number one and two UK entertainment shows, The Apprentice and Britain’s Got Talent. In the US, Got Talent and American Idol significantly outperformed prime-time averages of the respective TV networks. Further bolstering its portfolio, Fremantle acquired the global rights to the hit UK series The Piano from Love Productions in March 2023.
With the reorganisation, costs are being reduced in all areas of the publishing business – especially in corporate functions, IT, office space, publishing and editorial teams by a total of €70 million per annum. Staff in publishing will be reduced by around 700 FTEs. In addition, staff will be reduced in the other RTL Deutschland businesses by around 300 FTEs by 2025, bringing the total reduction to 1,000 FTEs. − In March 2023, RTL Deutschland announced the renewal of the exclusive broadcasting and streaming rights for the Uefa Europa League and Uefa Europa Conference League. For the seasons 2024/25 to 2026/27, the matches will be shown on its linear channels RTL and Nitro as well as its streaming service RTL+.
In competing with the global tech platforms, RTL Group is fostering alliances and partnerships in the European media industry with a focus on national advertising sales consolidation, international advertising sales, as well as joint investments in advertising and streaming technology solutions via Smartclip and Bedrock. − RTL Group is actively exploring several opportunities for advertising sales consolidation in its key territories and content cooperation. For example, RTL Deutschland’s advertising sales house, Ad Alliance, is currently in talks with the German TV channel RTL Zwei (in which RTL Group holds a minority shareholding) to take over advertising sales for RTL Zwei at the beginning of 2024, subject to a review by the German Federal Cartel Office.
Thomas: “We are convinced that investing through the cycle will put us in a strong competitive position when the advertising markets recover. The half-year results came in broadly in line with our expectations. Although we are seeing first signs of market stabilisation in Germany in particular, we have adjusted our outlook for the full year 2023. RTL Group now expects an Adjusted EBITA of around €950 million after streaming start-up losses of around €200 million.”
RTL Group has confirmed the growth targets for its streaming services RTL+ in Germany and Hungary and Videoland in the Netherlands: By 2026, the Group plans to increase its annual content spend to around €600 million for its streaming services. On this basis, RTL Group aims to grow the number of paying subscribers for RTL+ and Videoland to 10 million, to increase its streaming revenue to €1 billion and to reach profitability in 2026.
