B'caster RTL sees record profit in first half

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COLOGNE, Germany -- RTL Group, Europe's No. 1 broadcaster, saw operating profit top €500 million for the first time in the first half, jumping 7.7% to €515 million ($704 million), the company said Tuesday.

Stronger performance in the German and French television markets, along with format sales from production subsidiary FremantleMedia ("Pop Idol," "X Factor"), helped make up for continued problems with RTL's U.K. operations, where RTL controls the Five channel and its two digital spinoffs, Five Life and Five U.S.

Net profit attributable to RTL shareholders dropped from €296 million in first-half 2006 to €290 million ($396 million), a decline RTL blamed primarily on the €123 million ($168 million) goodwill write-off on its U.K. assets.

In the plus column, this year's sale of stakes in media rights dealer Sportfive and Portugal's Grupo Media Capital added €274 million ($374 million) in cash to RTL's books.

Revenue for the group rose 1.3% to €2.89 billion ($3.9 billion).

RTL CEO Gerhard Zeiler said in a conference call Tuesday that he expects full-year revenue to exceed the €5.6 billion the company earned in 2006. But he would not be pinned down on a target figure, saying that predictions were difficult as most advertisers book at the last minute.

"Overall, we are optimistic, but we are cautious because of visibility on the way advertising is booked," Zeiler said.

Zeiler added that RTL aims to expand both "organically and also through acquisitions," citing Central Europe and Eastern Europe as key future growth markets. RTL, which is controlled by German media giant Bertelsmann, operates 39 television and 29 radio stations in 10 European countries.

Zeiler denied reports that RTL is in talks with U.K. satcaster British Sky Broadcasting about Sky's stake in top U.K. commercial broadcaster ITV. Unconfirmed reports claimed that BSkyB was in talks to swap its 17.9% stake in ITV for a controlling stake in RTL's Five Channel.

"We want to grow with Five," Zeiler said, adding that RTL was "completely committed" to the U.K. channel, which it bought in 2005. As evidence of this commitment, Zeiler cited Five's recent 10-year deal for rights to the daytime soap "Neighbours."

Zeiler was less forthcoming when asked about other possible acquisitions. He declined comment on whether RTL might bid for Merkez Yayin Holding, Turkey's second-biggest media group. Merkez Yayin controls several Turkish TV channels, including atv, Show, Skyturk and soccer channel Lig TV, as well as a number of radio stations, newspapers and magazines.

Next month's auction of the Turkish media group could raise about $1 billion, according to regulators handling the sale.

Acquisitions aside, RTL showed strong organic growth in its core German and French markets.

In Germany, where RTL holds stakes in five free-to-air channels that represent 43% of the advertising market, EBITA increased 5.6% to €169 million ($231 million). RTL's German channels also increased their ratings lead over competitor Pro7Sat.1 by 4.5%. In total, RTL's family of channels in Germany account for a 33.6% share of the key 14-49 viewer demographic.

In France, RTL's M6 boosted EBITA 7.9% to €151 million ($206 million). M6 had a gross advertising share of 24.8% of the French market, its highest ever. RTL Radio regained its pole position in the French market, adding more than 1 million listeners in a single year, the company said.

Production subsidiary FremantleMedia boosted EBITA earners 8.3% to €91 million ($124 million) in the first half. Zeiler said that Fremantle's new "Got Talent" format has sold in 13 international territories.

Shares in RTL Group were up 1% at €76.44 ($104) in early afternoon trading in Brussels.
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