RTL, Fremantle Revenue Dips Amid Ad Troubles, Streaming Shifts

RTL Group, the European media giant that owns Fremantle, saw revenues and profits slip in the second half of 2023, amid a stubbornly weak market for traditional TV advertising.

Group revenue at Bertelsmann-owned group was down 5.4 percent to €6.2 billion ($6.8 billion), which RTL attributed to “lower TV advertising revenue and lower Fremantle revenue.” Adjusted profits (EBITA) fell to €782 million ($855 million) from €922 million ($1 billion) over the same period in 2022.

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TV ad revenue across the group dropped 8.2 percent year-over-year, a sign that free-to-air television in Europe continues to struggle. Revenue from RTL’s in-house streaming operations — RTL+ in Germany and Hungary, and France’s M6+ — were up an impressive 72.6 percent to €283 million ($310 million) from €164 million ($179 million) a year earlier, but the company still booked €179 million ($196 million) in start-up losses for its streaming operations.

RTL said it currently has 5.6 million paying subscribers across its German, French and Hungary SVOD services and hopes to hit 9 million by 2026 and for the division to become profitable with €750 million ($ 820 million) in streaming revenue.

By then, RTL plans to further boost its spending on content, increasing it to around €500 million ($547 million).

Fremantle also saw a dip in revenues but RTL Group CEO Thomas Rabe was bullish on the production group’s prospects, reasserting the group’s goal of hitting a full-year revenue target of €3 billion ($ 3.3 billion) by 2025/2026, in part by further acquisitions. Already this year, Fremantle signed deals to buy Asacha Media Group, owners of the production companies behind European hit series Death in Paradise and The Sea Beyond; and the Singapore-based group Beach House Pictures. The two deals were jointly valued at $217 million.

Fremantle is also coming off Oscar success with Yorgos Lanthimos’ Poor Things, produced by Fremantle-owned Element Pictures, which won four Academy Awards, including the best actress trophy for star Emma Stone. Its Wildside division delivered Italian box office champion There’s Still Tomorrow, the most commercially successful film in Italy last year.

Fremantle has several promising titles set to drop this year, including the Daniel Craig-starrer Queer from Call Me By Your Name director Luca Guadagnino, and Without Blood, directed by Angelina Jolie and starring Salma Hayek.

While overall revenue was down at Fremantle, distribution revenue was stable at €331 million ($362 million), on par with 2022 figures.

On the advertising side, RTL recently announced an ad tech partnership with German commercial TV group ProSiebenSat.1, which will see the two companies bundle their ad tech services to offer advertising across linear and digital channels and, it is hoped, helped counter the dominance of U.S. tech companies like Google and Meta in the digital advertising space.

For 2024, RTL said it expects full-year revenue to rebound to €6.6 billion ($7.2 billion), mainly driven by strong streaming growth and Fremantle acquisitions, as well as a recovery in the U.S. market. Adjusted profit (EBITA) is forecast to come it at around €750 million ($820 million), plus/minus €50 million ($55 million) depending on the development of the German and French TV ad markets.

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