Production, digital channels drive growth at RTL

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COLOGNE, Germany -- European broadcasting giant RTL Group remains committed to good old-fashioned TV as growth in its bread-and-butter small screen business led to a 5% jump in adjusted earnings to $1.4 billion last year.

Calling 2007 "the most successful business year in RTL Group's history," CEO Gerhard Zeiler said TV will remain the "key medium" for RTL.

Zeiler also unveiled plans to ramp up investment in RTL unit FremantleMedia -- producers of hit formats "American Idol," "Got Talent" and "X Factor" -- with a pledge to double Fremantle's annual earnings (about $200 million) within the next five to seven years.

RTL's German operations were the group's growth engine, posting an 11.6% jump in earnings to 336 million euros ($510 million) as the group's five free TV networks boosted their share to 33.6% of the Germany 14-49 demographic, an all-time high. That compares with a 29% share for RTL's main competitor in Germany, ProSiebenSat.1.

U.S. fare was a big part of that success, with such imported series as "House" and "CSI: Miami" topping the German ratings. But RTL also can point to some strong in-house productions, including long-running action drama "Alarm fur Cobra 11" and the local versions of "Idol" and "Talent."

RTL's three new German digital pay channels -- Crime, Passion and Living -- also delivered, boasting 2 million subscribers a year after launch.

The U.K. market was another bright light for RTL, as the channel Five group boosted revenue 7.1% to 499 million euros ($757 million). Earnings were 10 million ($15 million), reversing a 1 million euro loss in 2006, when RTL launched digital channels Five Life and Five U.S.

Zeiler said that Five group's share of the U.K.'s net advertising market increased from 8.8% in 2006 to an all-time high of 9.3% in 2007, driven by sales from the digital channels.

Australian soap "Home and Away" and U.S. series "House," "NCIS," "Shark" and the "CSI" franchise were the biggest ratings draws on the main channel Five.

But with digital terrestrial television rapidly colonizing the market, Five saw its total share of the adult viewing demo shrink from 5.9% in 2006 to 5.3%.

The spread of DTT also bit into RTL's market share in France, where it controls commercial channel group M6.

RTL's underlying 2007 revenue increased 3.2% to 5.6 billion euros ($8.5 billion). But net profit was down sharply from 1.1 billion euros in 2006 to 674 million euros ($1 billion). Goodwill write-offs for RTL's U.K. operations and dodgy ad booking procedures in Germany, which resulted in a 96 million euro fine from the German cartel office, were the main reasons.
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