A very good year: RTL rings up profit record

Group sees 80.4% jump from '05

Europe's biggest broadcaster had another banner year.

RTL Group booked record profits of €1.1 billion ($1.4 billion) last year, a phenomenal 80.4% jump from 2005, as strong results from continental Europe, particularly its core market of Germany, more than made up for a decline at the U.K.'s Five channel.

Overall, revenue increased 10.3% to €5.6 billion ($7.4 billion).

"2006 was a very satisfying year for RTL Group," CEO Gerhard Zeiler said. "Our biggest profit contributors — the German family of channels, M6 in France, (U.K. production group) FremantleMedia, (the Netherland's) RTL Nederland and An-tenne 3 in Spain — delivered particularly strong performances."

Operating profit at RTL's German operations soared, increasing 23% thanks to such imported hits as "CSI: Crime Scene Investigation" and FremantleMedia format "Who Wants to Be a Millionaire."

Fremantle also increased operating profits by 23% last year, with its locomotive "Idols" format leading the charge.

Net profit at France's M6 held steady at €152.3 million ($200 million) despite M6's sale of its stake in local pay player TPS to pay TV group Canal Plus.

The U.K. was the only weak spot in RTL's portfolio. An overall decline in ad revenue in the region hit RTL-owned Five, which booked an operating (EBITA) loss of €1 million ($1.3 million) last year, compared with €36 million in 2005.

Zeiler also pointed to the cost associated with the launch of two digital channels in the U.K. — Five U.S. and Five Life — as a reason for the poor showing.

RTL is looking to digital TV and other nontraditional revenue sources to maintain growth, particularly in mature markets in Western Europe. In addition to the U.K., RTL launched three digital specialty channels in Germany last year and operates two digital channels in France.

Nonadvertising revenue last year accounted for 39% of total sales at RTL, up from 38% in 2005.

When it comes to user-generated content, Bertelsmann-controlled RTL has taken a different tack than many of its competitors. Instead of buying up local viral video sites, RTL has launched its own, with www.clipfish.de in Germany and www.wideo.fr in France.

"We prefer to fragment ourselves than to let others fragment us," Zeiler said, adding that one of the major growth markets in the future will be mobile TV transmitted over cellular networks.

For 2007, Zeiler kept his cards close to his chest, saying that he is "cautiously optimistic" about the advertising market but refusing to give any concrete forecasts.
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