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Our Strategy OUR STRATEGY FOUR KEY TRENDS SHAPING RTL GROUP’S STRATEGY THREE PRIORITIES for LONG-TERM GROWTH

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Our Strategy OUR STRATEGY FOUR KEY TRENDS SHAPING RTL GROUP’S STRATEGY THREE PRIORITIES for LONG-TERM GROWTH Our strategy OUR STRATEGY FOUR KEY TRENDS SHAPING RTL GROUP’S STRATEGY THREE PRIORITIES FOR LONG-TERM GROWTH 1 / CREATE MUST-SEE TV 1 / COMPETITION 4 / CONSOLIDATION What we said What we achieved What’s next As video offers become ever more In recent years, the media industry ubiquitous, the television market moved more towards consolidation – “Finding the new hits – both big Mediengruppe RTL Deutschland signed Further strengthen the development of continues to undergo fragmentation. 3 / COMPLEXITY in broadcast, content and digital. and small – is a shared priority a deal with NBC Universal for the local fiction and factual entertainment Lower barriers to entry make In the media market some of the for both our broadcasters and our development of US procedural dramas formats (for example: Vox has launching new linear TV channels Digitisation also increases the biggest mergers are being proposed: content production arm, as they consistently generate higher commissioned a third season of local easier than in the past. This importance of technology – whether AT&T and Time Warner announced FremantleMedia.”1 ratings than serialised dramas on free-TV fiction series Club der roten Bänder) fragmentation results in increasing for aggregating content or for plans for a merger, Liberty Global is channels in Europe. In November 2016, competition for viewing time advertising sales. For example, a actively investing in the European “We have to develop our own Gone was announced as the first drama UFA Fiction will produce Deutschland 86 and audience – both linear and non- multi-channel network (MCN) needs markets, as is Discovery, while 21st formats because they strengthen from this partnership in collaboration with Amazon Prime linear. Above all, fragmentation of user guidance, a recommendation Century Fox agreed to buy Sky. In the channel brand and, most Video and RTL Television – audiences and devices in the digital engine and thumbnail optimisation, Content, Endemol merged with Shine importantly, command exclusivity Further investments in live events and to be shown in 2018 world makes it more challenging just as a linear TV channel needs and FremantleMedia acquired several in the marketplace.”2 sports rights: M6 broadcast 11 matches to generate mainstream hits – perfect audience flow. Establishing smaller production companies. In of the Uefa Euro 2016 championship blockbuster formats that reach mass high reach online translates France, RTL Group plans to combine and RTL Television signed a new audiences. But this also means into aggregating a number of small its radio and TV assets under the agreement to broadcast the European that successful formats and exclusive networks – this also leads to a Groupe M6 umbrella. In digital, the Qualifiers until 2022 content become more valuable. more fragmented way of selling market is dominated by Google and Live-sport events continue to draw record audience ratings advertising, namely tech and data Facebook who have already proved Groupe M6 produced Glacé, – a six-part for TV broadcasters driven programmatic ad sales, that they have the financial fire power thriller, broadcast in January 2017 – which with an increasing number of needed to make acquisitions across Glacé was voted best series at the attracted an audience share of 16.0 per La Rochelle TV Fiction Festival intermediate players between the the board. In order to compete cent in the commercial target group 2 / CONVERGENCE advertisers and publishers. with the increasing competition from overseas, a level playing field is Vox broadcast the second season of Rapid technological developments Additionally, TV shows and films needed throughout Europe in terms its first commissioned drama series, in devices have changed user are increasingly available on more of regulation. Club der roten Bänder, with an average behaviour in recent years, and led to services and devices, leading to audience of 14.0 per cent (channel significant business opportunities. a higher number of rights windows, average: 6.8 per cent) and 37.7 per cent Smartphone and tablet sales are which need to be considered or among women aged 14 to 29 on the rise. The highly anticipated acquired. Producers and rights owners media convergence is already a may also extract additional value “Strengthening the creative pipeline In 2016, FremantleMedia invested in: FremantleMedia continues its strategy reality on these devices. Accordingly, from catalogue and library content. – and ultimately improving the profit ■ Abot Hameiri (51%) to pursue bolt-on acquisitions and talent TV no longer stands for television margin – of FremantleMedia requires ■ Dr Pluto (25%) deals (short to medium term) alone – it also stands for ‘total video’. targeted investments in new talents, ■ Wild Blue Media (25%) genres and geographical areas.”3 ■ Dancing Ledge (25%) Increase the profit margin of For advertising-financed content, FremantleMedia back to 10 per cent the key question is: how do you “Increasing creative diversity – both Wildside produced the highly until 2020 measure, and ultimately monetise, organically and through acquisition – acclaimed The Young Pope for HBO, mobile, second-screen and other is FremantleMedia’s top priority.”4 Sky and Canal Plus FremantleMedia’s Euston Films to alternative viewing habits? produce Hard Sun for BBC One Advertisers crave better multiscreen FremantleMedia North America produced and Hulu – a pre-apocalyptic crime measurement and targeting. Given American Gods for pay-TV channel drama set in contemporary London the fragmented markets, and the Starz. It will also be available on Amazon ageing society, where young target Prime Video in more than 200 territories FremantleMedia North America has groups are increasingly consuming FremantleMedia continues its push into entered into an exclusive, multi-year first video on a non-linear basis, there high-end drama with the highly In 2016, FremantleMedia increased its look agreement with award-winning acclaimed series The Young Pope – starring Diane is a need to measure and compare Keaton and Jude Law – and American Gods. margin to 7.3 per cent author Neil Gaiman to adapt any of his success on all devices. novels for television 1 Annual Report 2014, page 15 2 Annual Report 2015, page 10 3 Annual Report 2014, page 9 4 Annual Report 2015, page 9 18 RTL Group Annual Report 2016 RTL Group Annual Report 2016 19 Our strategy Our strategy 2 / GROW AUDIENCES 3 / CAPTURE THE VALUE OF DIGITAL What we said What we achieved What’s next What we said What we achieved What’s next “We always want to be where our FremantleMedia continued its push Capture the growth of long and “To better monetise our rapidly Mediengruppe RTL Deutschland Converge advertising sales and build audiences are – and so we want into digital, by: short-form non-linear usage at least growing digital reach will require acquired Smartclip, one of the new offers (including the rebranding RTL Group to become a global force ■ founding dedicated digital studios short to medium term new skills and resources – skills like most innovative European companies and strategic realignment of RTL Group’s in online video.”6 such as the Dutch TinyRiot! aggregation and production of in online video advertising international sales house IP Network ■ increasing its stake in the leading ■ Expand distribution of RTL Group’s short-form video, and in advertising in 2017) European MCN, Divimove catch-up TV services technology.”8 SpotX continued its product development ■ Invest in digital content by building and formed partnerships with Continued investment in product RTL II started its digital video offering, and buying non-linear brands to leading tech platforms and clients development at SpotX, for example into RTL II You, available 24/7 for linear attract young audiences connected TV products (short-term) and on-demand viewing on PC, smart ■ Explore possible hybrid models for TV and all mobile devices VOD services Mediengruppe RTL Deutschland invests in data specialist Q division StyleHaul launched new verticals for Focus on marketable reach in men and millennial mums online video “Increasing competition in the digital RTL Group plans to combine Groupe M6 Manage and measure cross-screen world calls for closer co-operation and RTL Radio (France) and market both video usage (short-term) StyleHaul’s Hauk is a new BroadbandTV extended its men’s lifestyle vertical across RTL Group, to give our global with a new, fully integrated sales house partnership with the NBA advertising clients the best service.”9 Transfer programmatic model from Mediengruppe RTL Deutschland and online video into OTT and Connected TV Gruner + Jahr announced the (short to medium term) collaboration in the area of advertising sales. To this end, the sales houses Closer collaboration between the IP Deutschland and Gruner + Jahr e|MS Group’s ad tech businesses to build one have formed the Ad Alliance integrated platform NBA Playmakers is a community b y for video creators focused on basketball and basketball culture “We continue to pursue opportunities New linear TV channels launched Invest into attractive and complementary “We are confident that these digital In 2016, RTL Group’s digital RTL Group expects its digital revenue to solidify our market position and in 2016: broadcast assets (short to medium term) businesses will reach such scale over revenue13 increased by 31.9 per cent will continue to grow strongly to expand and strengthen our family ■ RTL Plus and Toggo Plus in Germany the next three years that they will
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