RTL Group: “High revenue growth in Q3”
November 4, 2022
RTL Group has published its quarterly statement for the January to September 2022 period.
Thomas Rabe, Chief Executive Officer of RTL Group, commented: “RTL Group had a solid first nine months of the year 2022, in the face of a challenging macroeconomic environment and its impact on advertising markets. The high revenue growth in the third quarter was primarily driven by Fremantle, which continues to deliver on its boost plan and is on track to reach a new record revenue in 2022. Organically, Fremantle grew 10 per cent from January to September 2022. RTL Group’s streaming services also continued with very good traction in the third quarter of 2022, with paying streaming subscribers growing to 4.8 million at the end of September.”
“Looking at the fourth quarter, we expect the challenging advertising market environment to continue, especially in Germany. Despite this and numerous external factors, in particular the war in Ukraine, inflation, energy supply and supply chain issues, RTL Group expects to perform in line with the Adjusted EBITA guidance provided in August,” added Rabe.
Revenue
Group revenue was up 12 per cent to €5,006 million (January to September 2021: €4,469 million), mainly thanks to the strong performance of Fremantle and RTL Nederland, scope effects at RTL Deutschland (from the acquisitions of Gruner + Jahr and Super RTL), and positive foreign exchange rate effects. Group revenue was up 3.2 per cent organically compared to the first nine months of 2021. Group revenue in the third quarter of 2022 was up 18.9 per cent to €1,730 million (Q3/2021: €1,455 million) as strong growth from Fremantle revenue and streaming revenue more than compensated for lower TV advertising revenue. Organically, Group revenue was up 10.0 per cent in Q3/2022.
Revenue from RTL Group’s content business Fremantle was up 27.8 per cent to €1,650 million (January to September 2021: €1,291 million) driven by scope effects from acquisitions in 2021 and 2022 and positive foreign exchange rate effects. Fremantle’s revenue was up 9.8 per cent organically compared to the first nine months of 2021.
Streaming revenue from RTL+ and Videoland was up 20.4 per cent to €195 million (January to September 2021: €162 million), thanks to the rapidly growing number of paying subscribers.
RTL Group’s advertising revenue was €2,517 million (January to September 2021: €2,478 million), of which €1,972 million represented TV advertising revenue (January to September 2021: €1,998 million), €259 million digital advertising revenue (January to September 2021: €232 million) and €135 million radio advertising revenue (January to September 2021: €148 million). In the third quarter of 2022, TV advertising revenue was €614 million (Q3/2021: €686 million).
RTL Group’s distribution revenue was up 2.8 per cent to €329 million (January to September 2021: €320 million).
Net cash
As of September 30th, RTL Group had net cash of €38 million (31 December 2021: net cash of €657 million).
Net TV advertising market growth rates and RTL Group audience shares in main target groups
RTL Group’s estimates for the net TV advertising markets across its key markets show a mixed picture for the first nine months of 2022. After strong growth in the first quarter, current trading and future prospects of most European TV advertising markets have softened. A summary of RTL Group’s key markets is shown in the following table, including estimates of net TV advertising market growth rates and the audience shares in the main target audience group.
Operational highlights
At the end of September 2022, RTL Group registered 4.784 million paying subscribers for its streaming services RTL+ in Germany and Videoland in the Netherlands, up 40.6 per cent year on year (end of September 2021: 3.402 million).
- Paying subscribers for RTL+ increased by 53.8 per cent year on year to 3.675 million (end of September 2021: 2.389 million). The strategic partnership with Deutsche Telekom to bundle RTL+ Premium in Magenta TV contributed significantly to the growth.
- Paying subscribers for Videoland grew 9.5 per cent year on year to 1.109 million (end of September 2021: 1.013 million), driven by the Dutch kickboxing live events of the Glory series, Videoland Original series Mocro Maffia and the fifth season of international drama series The Handmaid’s Tale, all of which are exclusively available on Videoland in the Netherlands.
RTL Deutschland is gradually expanding its cross-media offer. In August 2022, RTL Deutschland launched the RTL+ Musik app. In addition to video content, this gives RTL+ users access to more than 90 million songs as well as more than 100 radio streams. RTL+ entered into an exclusive partnership with Deezer, one of the world’s leading music streaming services. The starting price of the bundle offers comprising video and music is €9.99 per month in the ‘RTL+ Max’ tariff (instead of €12.99 – from the seventh month).
On 16 September 2022, Groupe Bouygues, RTL Group, Groupe TF1 and Groupe M6 decided to call off their plan to merge Groupe TF1 and Groupe M6, due to excessive remedies requested by the French competition authority, including at least the sale of either M6 or TF1. The parties therefore concluded that the proposed merger no longer had any strategic rationale and regret that the competition authority did not take into account the speed and extent of the changes sweeping through the French broadcasting sector.
Proposed merger between Talpa Network and RTL Nederland: The transaction is subject to approval from the competent authorities. A decision is expected in the fourth quarter of 2022.
Fremantle reported a successful first nine months of the year 2022 across all three pillars of entertainment, drama & film, and documentaries. Within its entertainment business, Fremantle scored successes with America’s Got Talent, the quiz show Password and various adaptations of Farmer Wants a Wife. Within drama & film, the delivery of the second season of The Mosquito Coast to Apple TV+ significantly boosted Fremantle’s third quarter results. Within the documentary business, Fremantle Italy launched Wanna on Netflix, a documentary on the Italian teleshopping host Wanna Marchi, which has ranked in the top ten TV shows in Italy.
Within the next three months, RTL Hungary will launch its streaming service RTL+ in Hungary. The new subscription service is based on the technology of Bedrock, the streaming tech company of RTL Group.
Outlook
RTL Group confirms its Adjusted EBITA outlook presented on August 5th 2022. Due to timing effects at Fremantle, RTL Group revised its revenue outlook.
The outlook does not reflect the announced combination of RTL Nederland and Talpa Network in the Netherlands as it is still subject to regulatory approval, but reflects the full consolidation of Gruner + Jahr (as at January 1st 2022), the acquisition of Lux Vide (as at March 3rd 2022), Dancing Ledge Productions (as at April 6th 2022) and Element Pictures (as at May 10th 2022) by Fremantle and the sales of RTL Belgium (as at March 31st 2022) and RTL Croatia (as at 1 June 2022).
On this basis and subject to the above:
- RTL Group expects its revenue to increase to around €7.2 billion (previous guidance: €7.3 to €7.5 billion). The revenue increase is explained by positive scope and foreign exchange rate effects of approximately €0.5 billion and organic revenue growth of around €0.1 billion (previously €0.2 billion to €0.4 billion), depending on the performance of the TV advertising markets in the fourth quarter of 2022.
- RTL Group expects its Adjusted EBITA for 2022 to be between €1.05 and €1.15 billion, including streaming start-up losses of up to €250 million (2021: €166 million). The Group expects its ‘Adjusted EBITA before streaming start-up losses’ to be between €1.3 and €1.4 billion. As the TV advertising markets have been weaker than expected, RTL Group expects Adjusted EBITA to come in at the lower end of the range.
- RTL Group’s dividend policy remains unchanged: RTL Group plans to pay out at least 80 per cent of the adjusted full-year net result.