RTL Lowers Full-Year Outlook Despite Streaming Growth

Dan Meier 08 August, 2023 

European broadcaster RTL Group has lowered its full-year outlook and announced staff cuts, after posting revenue decline in the first half of the year.

The media company becomes the latest European broadcast outfit to report falling ad sales, following quarterly losses at ProSiebenSat.1 (-9 percent YoY), Viaplay (-16 percent) and ITV (-11 percent for the first half of the year).

RTL’s H1 losses were less pronounced at -5.1 percent YoY, generating €3.1 billion in the first six months of 2023. But the group has reduced its expected full-year revenues to €7 billion, down from the €7.3-7.4 billion guidance previously issued. The group also announced plans to cut 1,000 jobs by 2025, with 700 layoffs in the publishing division, and 300 in other RTL Deutschland businesses.

Like its fellow European players, RTL cited the challenging TV advertising market, particularly in Germany (which is also ProSieben’s main market). RTL’s TV ad revenues reached €1,187 million in H1 2023, down 12.5 percent on H1 2022, and 15.5 percent compared with pre-Covid levels (H1 2019).

But despite the decreased annual outlook, RTL expects TV ad revenues to “grow slightly” in the second half of the year. The business expects favourable comparisons to H2 2022, which it says was negatively impacted by the World Cup in Qatar being broadcast on rival channels, namely Das Erste, ZDF and Magenta TV.

“The market environment in the first half of 2023 was particularly challenging, with geopolitical and macroeconomic uncertainties in addition to the long-term structural shifts in video viewing,” said RTL Group CEO Thomas Rabe. “The RTL Group team remains focused on bringing our strategy to life: strengthening our core business, growing our streaming and content businesses, and building alliances and partnerships. Based on our strong balance sheet, we are investing into business transformation through the cycle – in premium content, leading national streaming services and in advertising technology.”

The group has long advocated for consolidation and collaboration among European commercial broadcasters, in order to compete with global streaming giants. To that end, Ad Alliance, the ad sales house of RTL Deutschland, is in talks with the RTL Zwei (in which RTL holds a minority stake) to take over the channel’s advertising sales at the beginning of 2024. The deal is subject to review by the German Federal Cartel Office.

And in June the company announced a partnership with US demand-side platform The Trade Desk to bring programmatic buying to connected and linear TV, across multiple markets.

All eyes on streaming

There was also good news for RTL Group’s streaming services, RTL+ and Videoland, which saw streaming revenues rise 16.9 percent (to €152 million) during the six-month period. Combined, the VOD services reached 6 million paying subscribers, up 34.1 percent YoY.

In Germany, RTL+ subscribers rose 31 percent YoY to reach 4.489 million. The company credited its partnership with Deutsche Telekom, which bundles RTL+ Premium with its Magenta TV package, as a significant contributor to the growth. Meanwhile RTL+ in Hungary has gained 285,000 subscribers since launching in November 2022. And in the Netherlands, Videoland grew its subscriber base by 17.5 percent YoY, hitting 1.268 million.

RTL expects this growth to continue over the next three years, aiming to reach 10 million subs in 2026, targeting €1 billion in revenues and reaching profitability. The company said it is also in the process of launching the RTL+ “multimedia app”, which will combine video, music, podcasts, audiobooks and magazine content in one single app.

The broadcaster additionally highlighted gains in audience share, increasing its share of its commercial target group (viewers aged 14-59) to 27.6 percent. RTL said this extends its lead over main commercial competitor ProSieben to 5.8 percent.

And like ITV, the company is investing in its production business to withstand the pressure of unfavourable TV advertising conditions. RTL owns Fremantle, the London-based production and distribution company behind The Apprentice and Britain’s Got Talent. The group expects Fremantle to reach €3 billion in full-year revenues by 2025.

“To achieve this goal, RTL Group will invest in Fremantle – both organically and via acquisitions – in all territories across entertainment, drama and film, and factual shows and documentaries,” said the company.

Sports rights acquisitions are also expected to drive viewership on RTL’s linear channels and streaming services. In March, RTL Deutschland renewed its exclusive broadcast and streaming rights for the UEFA Europa League and Conference League for the 2024/25 and 2026/27 seasons. And in June, RTL Hungary acquired the broadcast rights for the UEFA Champions League, commencing in 2024/25.

But having spent €1.1 billion on broadcast and streaming content in H1, costs are being reduced in RTL’s publishing division. In February the company announced a reorganisation of the business that will see the company focus on its “core brands” (Stern, Geo, Capital, Brigitte, Gala, Schöner Wohnen, Eltern and Chefkoch), which account for around 70 percent of the unit’s publishing revenue.

Other brands are being sold or discontinued, according to the company, with plans to invest €80 million in the publishing business by 2025.

The company also highlighted AI as an investment area, using the technology to enhance its advertising operations. “Technology plays a key role in our transformation, and we see great opportunities from AI in particular to increase efficiency and generate content,” said Thomas Rabe. “Today, we already apply AI at scale in advertising planning and have started to support content creation with generative AI.”

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