Most European commercial free-to-air TV broadcaster have had a tough time recently, not helped by the loss of essential advertising to rival Internet sites.

However, a major report from investment bank Exane/BNPP suggests that Germany’s RTL Group could be the exception, and is “less at risk” because of its strong exposure to local programming. Another crucial difference is the role of its content arm, FremantleMedia which “could also soon be a growth driver again,” says the bank’s equity analysts.

FremantleMedia is currently some 10 per cent of RTL profits but “has dragged on RTL’s organic growth despite booming demand for content. This paradox may reflect the maturity of some of its non-scripted franchises. Yet the recent focus on Drama should help it return to growth.”

The bank ranks RTL Group as “Outperform” and having examined in detail its activity says “Fremantle’s organic growth should finally turn positive in 2017 after five years in the red. While Fremantle only represents 25 per cent of RTL Group revenues and 10 per cent of profits we expect it to be the key driver of growth for the group and a differentiating factor versus other European broadcasters in the coming years.”

The bank’s report adds: “Key entertainment and reality show audiences are stabilising: Fremantle has suffered from its high dependence on non-scripted reality shows. The key show audiences are now stabilising as they benefit from broadcasters’ intentions to diversify away from US series. Therefore, related revenues should mirror this trend and even accelerate from 2018 (estimated) with the return of […] X Factor until 2019.”

(Note: American Idol returns on ABC).

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