Following traditional TV’s post-pandemic resurgence last year, 2022 has so far been more of a mixed bag for European broadcasters.
Viewing has settled back down to pre-pandemic levels, but TV ad prices have risen as advertiser demand remains high. Netflix and Disney+ have announced plans to begin running ads on their services, which on the one hand is a vindication of the ad-supported model, but on the other hand will bring these services into even more direct competition with the broadcasters. And global affairs have put a potential dampener on advertiser demand.
By and large, European broadcasters’ earnings for the first quarter show they are still seeing positive growth – for the time being. But we’ve seen the first signs of an ad market slowdown, making broadcasters’ non-advertising revenues all the more important.
Here’s where the major European broadcasters found growth in Q1, and how they’re planning for the months ahead.
ITV and RTL See Strongest Growth
Looking firstly at overall revenues, we saw quite a wide range of results across Europe.
At the top end, UK broadcaster ITV posted 18 percent year-on-year growth in total revenues. Unlike the others listed here apart from MFE, ITV didn’t specifically report organic growth, but we know at least that organic growth for its studios division was almost equal to reported growth – suggesting that total organic growth may not have been far off 18 percent.
NENT (now rebranded to Viaplay) was also one of the stronger performers, with organic revenue growth of 9.9 percent.
Others were a little further behind. TF1 reported 6.6 percent like-for-like growth, RTL posted 4.4 percent organic growth, and ProSiebenSat.1 saw three percent organic growth. MFE-MediaForEurope posted 3.2 percent consolidated net revenue growth of 3.2 percent.
Sky actually saw revenues down by 4.5 percent – but Sky’s business is quite different from the others, since a lot of its revenues come from the telco side of the business.
Ad Revenues Hold Strong for Most
Advertising revenue growth tended to either match or outperform total revenues, signalling the continued strength of the TV ad market.
ITV’s total ad revenues were up 16 percent, with digital ad revenues specifically up 27 percent. RTL’s TV ad revenues were up 11.2 percent, with total ad revenues up by a similar proportion. Meanwhile ProSieben, Sky, and TF1 each reported ad revenue growth of 10, 7.9, and 5.4 percent respectively. MFE saw somewhat lower growth of two percent in Italy, and 2.3 percent in Spain.
TF1 was the only broadcaster to delve deeper into this growth, saying that it had seen a return to TV by cosmetics and travel/tourism brands.
The major outlier was NENT, which saw a 1 percent decrease on an organic basis. NENT attributed this fall to the fact the Winter Olympics, which were popular in NENT’s markets, were carried on other channels, drawing ad spend elsewhere. NENT also said the Ukraine invasion had an impact on ad revenues.
But there were also signs elsewhere that future quarters may be weaker. Some will see weaker growth over the summer due to particularly strong revenues last year, caused by the Olympics and Euros. But RTL said it has already seen a weaker-than-expected ad market in April and May.
Studios and Streaming Keep Performing
Outside advertising, streaming and studios were generally strong performers across the broadcasters.
NENT and ITV, two broadcasters which have placed a big focus on growing out their streaming services, both saw significant growth from their digital offerings. NENT said the launch of its Viaplay service in the Netherlands helped it add 778,000 paying subscribers in the first quarter. ITV meanwhile reported 24 percent growth in digital revenues.
Studios continue to perform well as the streaming wars put content in high demand. ITV Studios revenues were up 23 percent, TF1’s Newen Studios saw 16.1 percent revenue growth, and ProSieben’s content revenues grew by 13 percent.
TF1 said the European Audiovisual Media Services, which requires streaming services to host a substantial amount of local content for each individual market, is increasing demand for new shows even further.
There were a couple of references to broadcasters’ own content strategies too. MFE said its revenue growth was the result of strong performance by its TV channels – it claimed Mediaset Italia was the only Italian broadcaster to see ratings growth during the period. Canale 5 and Italia 1 were picked out as star performing channels.
TF1 meanwhile said its strength in news has been crucial during the period, given ongoing global affairs as well as the French presidential election.
Well-Picked Partnerships at the Heart of Strategy
It’s no surprise that while already a strong performer, streaming is also at the heart of many broadcasters’ strategies for future growth. This is perhaps clearest of all at NENT, which since its Q1 results has formally rebranded to Viaplay (the name of its streaming service).
Elsewhere ITV’s upcoming reworked streaming service ITVX remains central to its plans; RTL’s all-encompassing subscription product RTL+ is a major focus for RTL; and TF1 said its MYTF1 MAX will be key to combating a decrease in daily viewing time.
Another common theme was the importance of well-picked partnerships. NENT said a distribution agreement signed with Tele2 in Sweden has already allowed it to upgrade its full year subscriber target. And RTL said its multi-year programme deal signed with Warner Bros. Entertainment, which will give RTL Deutschland access to exclusive films and series in German, will help grow its streaming service.
ITV on the other hand said it has taken the decision to reduce the availability of pre-transmission drama drops and box sets outside of its own streaming services, for example on Sky and Virgin, since it can’t “serve and monetise dynamic advertising” through those partners.
Cautious Optimism for the Year Ahead
Most broadcasters avoided giving any exact figures about expected performance for the full year.
RTL and ProSieben were the exceptions, forecasting 11-12 percent growth and 4.6 percent growth respectively.
Meanwhile others generally maintained that they expect a solid financial performance for the year ahead, albeit with some seeing less-favourable comparisons for ad revenues over the summer months.
Most referenced the war in Ukraine, and said they have so far not seen a direct impact on their revenues, while acknowledging that conditions could change.
But as mentioned earlier, RTL said it had seen a worse-than expected ad market at the beginning of Q2, and MFE said that in Spain it had seen a double-digit year-on-year decline in the TV ad market during April.