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[Interview]Thomas Rabe, CEO, Elmar Heggen, Deputy CEO, RTL Group interview

[Interview]Thomas Rabe, CEO, Elmar Heggen, Deputy CEO, RTL Group

In an interview for RTL Group's intranet, CEO Thomas Rabe and Deputy CEO and COO Elmar Heggen explain the planned sale of RTL Nederland – and what it means for the future development and strategy of the Group.

RTL Nederland is a very strong and profitable business. Why do you want to sell the company?

Thomas Rabe: As management, we have two main responsibilities. The first one is to make the necessary investments to grow and transform our businesses in areas such as streaming, content production and advertising technology. Looking at RTL Nederland, the company has achieved extraordinary successes – demonstrated by market-leading audience shares in linear TV, strong growth in streaming and high profitability.

The second main responsibility is to take the long-term view on our businesses and to define and implement the right strategic answers. Our strategic analysis has been clear and consistent over the past years. The media industry is in the middle of a major transformation. This causes significant challenges and requires tough decisions. To compete with the global streaming giants such as Netflix, Amazon and Disney, we are convinced that market consolidation is necessary – and that it will happen in the European TV markets sooner or later.

As Europe's leading commercial broadcaster, it's our ambition to play an active role in this process. In other words: our answer is to scale up our broadcasting and streaming businesses. After our in-country consolidation strategy – the planned merger of RTL Nederland and Talpa Network – was blocked by the competition authorities at the beginning of 2023, the sale to DPG Media for €1.1 billion is the best strategic option for RTL Nederland and all its stakeholders.

Elmar Heggen: When we presented our consolidation strategy at the beginning of 2021, we said that we are in no rush and that we will pursue our strategy from a position of strength and confidence. This is exactly what we did. As Thomas already said, we have invested significantly in RTL Nederland, showing our commitment to grow the business. RTL Nederland CEO Sven Sauvé was named "Media Person of the Year" in the Netherlands this week. I quote: "The fact that RTL Nederland continues to invest heavily in its excellent news service and Videoland, while achieving market leadership with its linear channels, is reason for Broadcast Magazine to honour Sven Sauvé." The success over several years clearly raised interest for a strategic buyer such as DPG Media to acquire RTL Nederland. They now have a unique opportunity to build the leading media company in the Benelux region.

Why is DPG Media the best buyer for RTL Nederland?

Elmar Heggen: Our strategy was not to sell RTL Nederland, but to find the best long-term option for the company – and thus for all stakeholders, including our employees and our shareholders. When DPG Media approached us and expressed their interest in buying RTL Nederland for a very attractive price, it was our obligation as executive management of a publicly listed company to assess this option seriously. Certainly, the price of €1.1 billion is testimony to the success and attractiveness of RTL Nederland.

And it was also important that we know DPG Media very well as a company. They have a similar entrepreneurial culture, are strongly committed to independent journalism and were one of the buyers of RTL Belgium. As you can read in their press release today, DPG Media expressed strong confidence in RTL Nederland's management team and will continue running RTL Nieuws as an independent news organisation. These factors combined convinced us that DPG Media will be a very good new home for RTL Nederland.

In the press release, you talk about a strategic partnership with DPG Media. What does that mean?

Thomas Rabe: In the recent meetings of our Operations Management Committee, we have decided, together with the CEOs of our business units, to significantly step up cooperation between our businesses, in particular in technology, advertising sales and content. This cooperation with RTL Nederland will continue and possibly be extended to DPG Media. As part of the sale of RTL Nederland, we have agreed to enter into a strategic partnership, spanning from technology to advertising sales and content. The continued cooperation with our companies Bedrock, Smartclip, BCE and RTL AdAlliance builds a strong basis to jointly work on larger European solutions. We are looking forward to this cooperation with DPG.

You just mentioned the sale of RTL Belgium. Last year, you also looked into selling RTL Group's shareholding in Groupe M6, and now you plan to sell RTL Nederland, one of RTL Group's main business units. Many employees may ask themselves: What does this mean for the future of the Group? Are other units also up for sale?

Thomas Rabe: We understand the concern. But again: First and foremost, we are continuing to invest heavily in our businesses, despite the difficult economic environment. Our streaming start-up losses will amount to more than €200 million in 2023, bringing our total streaming investments for the years 2019 to 2023 to almost €700 million. The content investments at RTL Deutschland are at a record level this year, and our audience shares are up. In Hungary, we recently acquired the Champions League rights to boost our streaming service RTL+. With the management team of Groupe M6, we have agreed on a very ambitious plan to grow their streaming service 6play. All these investments future-proof our businesses – and make us even more attractive for partnerships and alliances. Are there currently any plans for further disposals? No. Are we interested in exploring consolidation opportunities if they come up? Yes, absolutely, because we strongly believe in scaling up our businesses to compete with the global tech giants. Please be assured that we will always act in the best strategic interest of our businesses and our employees.

Above all, we see ourselves as consolidators. Just think of the larger moves we tried in France and in the Netherlands. In Germany, we acquired the remaining shareholding in Super RTL, and RTL Deutschland is actively working on several important partnerships, from advertising sales to content. And finally, Fremantle plays a key role in the consolidation of the global content production business, with a series of acquisitions over the past years. This is not a final answer to this question, however, it is the factual description of where we stand and where we want to go.

RTL Belgium and RTL Nederland have always been key clients for BCE. What do these disposals mean for the long-term prospects of BCE? And could DPG Media also be interested in RTL Group's Luxembourg activities?

Elmar Heggen: As part of the agreement with DPG Media, the contract between RTL Nederland and BCE will be renewed for four years at the time of closing, based on the current terms and conditions of the service agreement. This was the same when we sold RTL Belgium to DPG Media and Groupe Rossel. This is good news for BCE. Under the leadership of Christophe Goossens, the team is implementing the company's media-as-a-service strategy, gradually shifting the focus on external, meaning non-RTL customers which do not have their own tech resources.

The strategic reasons for in-country consolidation do not apply for RTL Luxembourg, for a simple reason: We are the public-service broadcaster in our home country. In May 2022, the Luxembourg State renewed the so-called "convention de service public" for the financing of RTL Luxembourg's public service programming across TV, radio and digital media. This agreement will cover the years 2024 to 2030, with the Grand Duchy of Luxembourg contributing a maximum of €97.5 million over the period of seven years.

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