Revenue Up, Profit Down as RTL Group Negotiates Digital Shift

Bert Habets, CEO RTL Group
RTL Group

The European giant, which controls 'American Idol' producer Fremantle, saw strong digital growth but weaker results in traditional TV.

European TV giant RTL Group reported a slight revenue jump in the first nine months of 2018, even as profits slipped.

The company, whose assets include production giant Fremantle (X Factor, American Idol) and dozens of TV and radio stations across Europe, posted revenues of $5.12 billion (€4.468 billion) for the nine months ended September 2018, a 2.7 percent increase. Net profit attributable to RTL shareholders was down $11.5 million (€10 million) over the same period to $486 million (€424 million).

RTL is in the midst of a major strategic shift as the traditional TV giant negotiates a move to an online digital world. On the production side, Fremantle, a group built on entertainment shows like X Factor and American Idol, is pushing into high-end drama, with series such as American Gods for Starz and HBO's My Brilliant Friend

RTL's digital revenue was up 17.9 percent to $756 million (€660 million) in the first three quarters of 2018, while revenue from its online platforms grew 7.3 percent to $288 million (€251 million). Major sporting events, including the Winter Olympics and this summer's soccer World Cup, hit RTL's traditional free-to-air advertising-driven business and negative exchange-rate effects cost the company $73 million (€64 million) over the period.

TV advertising is still RTL's core business, though it now accounts for 46 percent of overall revenue, with just under 20 percent coming from the content business and around 15 percent from digital activities. RTL's nascent platform business accounted for 5.6 percent of total revenue in the first three quarters of this year, with the remainder coming from radio ads and other activities. 

“The mixed developments of the European TV advertising markets show that we are on the right track with our clear focus on two growth areas: building and expanding our nonlinear streaming platforms, and producing local exclusive content,” said RTL CEO Bert Habets. “We will substantially increase the content offers of our streaming services across all genres – this includes showing programs online first and developing original productions for these services.”

RTL confirmed that it expects to meet the company's year-end target of moderate (2.5 percent to 5 percent) revenue growth for 2018 and stable operating (EBITDA) profits of between plus-1 percent and minus-1 percent compared to 2017.