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Coronavirus lockdown measures across Europe, where the company owns free-to-air networks, including RTL in Germany and M6 in France, hit television advertising sales and overall revenue slipped 4.2 percent in the first quarter of this year to $1.7 billion (1.4 billion euros). Adjusted for portfolio changes — including the $94 million (78 million euros) sale in March 2020 of French cash-back site iGraal, and the $96 million (80 million euros) sale of Canadian online multichannel network BroadbandTV — RTL saw organic revenue growth of 4.2 percent in the first quarter.
Viewers unable to leave their homes became a captured audience for RTL’s streaming offerings, which enjoyed double-digit growth across the board.
At production subsidiary Fremantle, revenue ticked up 14.9 percent in the first quarter, thanks to the launch of hit show format Game of Talents on Fox in the U.S. and ITV in the U.K., and the return of American Idol to ABC. Streaming revenue shot up 40.5 percent, helped by Fremantle-produced dramas such as The Mosquito Coast, which launched on Apple TV+ in April, and Israeli hit drama Shtisel, whose third season bowed on Netflix. In April, Fremantle took full control of Shtisel producer Abot Hameiri, based in Tel Aviv.
In-house streaming services TVNow (in Germany) and Videoland (the Netherlands) saw subscriptions shoot up, in part because of the European lockdowns, with subscriber figures jumping 71 percent to 2.7 million year-on-year. RTL has made SVOD a priority, investing heavily in original, local-language productions for its streaming platforms, which it is setting up as local complements to Netflix and Amazon Prime.
RTL CEO Thomas Rabe said that accelerating streaming growth “demonstrates how our streaming investments in content, marketing and technology — and our strategic partnerships — boost our progress toward creating national streaming champions … Driven by our streaming and content production business, RTL Group’s revenue was up by almost 4 percent organically in the first quarter — although lockdown measures led to lower TV advertising revenue.”
Rabe said RTL has seen strong TV ad growth in the second quarter and the company expects to hit its year-end targets of total revenue of around $7.4 billion (6.2 billion euros) and an adjusted operating profit (EBITA) of around $1.17 billion (975 million euros).
Going forward, Raab says there is “a strong case for consolidation in the European broadcasting industry” and indicated the company was reviewing consolidating its operations in France, Belgium and the Netherlands.
Overall, RTL has moved to divest from noncore broadcasting assets — in February it sold its U.S. ad-tech subsidiary SpotX to ad-tech group Magnite in a deal valued at $1.17 billion, including $650 million in cash and 14 million shares of Magnite stock — to double down on small-screen entertainment.
In December, RTL agreed to buy out remaining shareholders in regional broadcaster RTL Belgium to up its stake in the TV and radio group to 100 percent, and in March RTL did a deal to take full control of German free-to-air kids channel Super RTL, by buying out the Walt Disney Co.’s 50 percent stake in the network.
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