RTL Revenue Drops Amid Weak French Economy, FremantleMedia Challenges

RTL Group Co-CEOs Anke Schaferkordt and Guillaume De Posch

Europe's leading television group has been aggressively moving into digital media, buying YouTube channels such as StyleHaul

European television giant RTL Group finds itself in a moment of transition, caught between a sluggish traditional broadcasting business and still small, but fast-growing online operations.

The company, controlled by Germany's Bertelsmann conglomerate, reported third-quarter figures on Thursday, and numbers were down across the board.

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Revenue was off 1.6 percent in the first nine months of 2014 to $4.911 billion (€3,946 billion). Operating profit (EBITA) was down nearly 5 percent in the period to $845 million (€679 million).

Net profit attributable to RTL Group shareholders fell by 42.8 percent to $381 million (€306 million) for the period. RTL said the declines were mainly due to the difficult economic situation in France, which has hurt its broadcast operations there, and “headwinds” for television production arm FremantleMedia, producer of the X Factor and Got Talent franchises.

Things look rosier at RTL's digital division, which posted growth of 16 percent to $224 million (€180 million), thanks in part to a series of new acquisitions.

In July, RTL acquired a 65-percent stake in ‎SpotXchange, a Denver-based company that runs a marketplace for digital video advertising, for $144 million plus possible additional payments. Earlier this month, RTL took a controlling stake in YouTube multichannel network StyleHaul for $107 million. RTL plans to invest $20 million in StyleHaul to fund the company's expansion.

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RTL Group co-CEOs Anke Schaferkordt and Guillaume de Posch said the company would not wait for economic conditions at its traditional TV operations to improve but would instead use RTL's "high cash flows and strong financial position" to invest in "new growth drivers" for RTL Group. "This year, we will invest more than €240 million ($299 million) in rapidly growing digital businesses, while also launching new channels and further diversifying our content production arm."

Twitter: @sroxborough

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