11 March 2010 week 10 p Grou L L RT R FULL-YEA , CEO of RESULTS 2009 Gerhard Zeiler High profitability Significant cost reduction Audience ratings up Germany Greece RTL Television presents Alpha News gains audiences football world cup line-up Belgium France Laurent Haulotte on Belgium’s Philippe Manoeuvre on the leading news programme function of casting shows week 10 the RTL Group intranet 11 March 2010 week 10 p Grou L L RT R FULL-YEA Montage, CEO of with Gerhard Zeiler, CEO of RTL Group RESULTS 2009 Gerhard Zeiler 2 High profitability Significant cost reduction Audience ratings up Germany Greece RTL Television presents Alpha News gains audiences football world cup line-up Belgium France Laurent Haulotte on Belgium’s Philippe Manoeuvre on the leading news programme function of casting shows week 10 the RTL Group intranet “We achieved good full-year results – again” The past year changed the television industry. Like all commercial TV companies, RTL Group had to deal with the recession, a downfall in advertising, and structural changes through digitisation. Backstage asked Gerhard Zeiler about RTL Group’s performance in 2009. Gerhard Zeiler Luxembourg - 11 March 2010 For the fiscal year 2009, RTL Group’s reported In 2009, almost everyone talked about the revenue was down 6.3 per cent to EUR 5,410 crisis. How is the state of RTL Group? million as most TV advertising markets across Last year, RTL Group had to operate in a tough Europe declined by double-digit rates. However, economic environment, in particular during the RTL Group’s investments in content produc- first half of the year when the TV advertising tion and diversification businesses helped to markets declined at double-digit rates. With better balance the Group’s financial posi- a strong year-end finish, RTL Group again tion. With a record second half-year EBITA of achieved good full-year results and continued to EUR 437 million (up 5.6 per cent year-on-year), operate at high levels of profitability. full-year EBITA reached EUR 755 million (down 17.6 per cent) – despite higher start-up losses RTL Group has succeeded in limiting the which mainly resulted from the first-time full-year negative EBITA impact of the advertising consolidation of Alpha Media Group in Greece, revenue shortfall and achieved a net result at and significant one-time charges, including the level of 2008. Our focus on cash generation restructuring costs in the UK, Germany and led to a significant net cash position of Greece, and a significant programme write-down EUR 789 million at the end of 2009. at Five. A year ago, you said that you wanted to RTL Group reported a healthy EBITA margin of respond to the crisis by reducing the cost 14.0 per cent, while the EBITA margins of the base in the core business of TV broadcast- big five profit contributors − Mediengruppe RTL ing. Did this work out? Deutschland, Groupe M6, FremantleMedia, Our goal was to achieve significant cost savings RTL Nederland and RTL Belgium − remained without losing audience shares, without losing stable or even increased. substance. We have clearly achieved this goal and reduced our operating costs by EUR 371 Net profit attributable to RTL Group share- million in 2009. As our local management teams holders was up 5.7 per cent to EUR 205 million combined comprehensive cost cutting with despite goodwill impairments on Five Group smart programming decisions, we managed to in the UK and Alpha Media Group in Greece. increase audience shares in almost every coun- Net cash from operating activities was EUR 763 try at the same time. million, resulting in an operating cash conversion of 106 per cent and a net cash position of EUR This shows that RTL Group’s local management 789 million at the end of 2009. teams have the right judgment about where to invest less and where to invest as much as in Following these results, Backstage asked previous years. We simply don’t believe in the Gerhard Zeiler, RTL Group CEO, how principle of slashing everything by 10 per cent RTL Group performed throughout 2009. or 15 per cent, across the board. In some areas we didn’t need to cut at all; in some we put even additional money on the table because that is 3 week 10 the RTL Group intranet what we needed. And this flexible approach is Why does the proposed dividend remain on only possible if you have a decentralised organi- the same level as for 2008? zation run by TV experts. We will continue being As a public company, our first priority remains cost conscious − but at the same time we will not to create value for all our shareholders. We are cut into the substance of our products. debt-free, with a significant positive net cash position at the end of 2009. Based on this sound But how can free-to-air broadcasters grow financial position and the fact that we don’t see again in the future? a major acquisition target in the short term, we First of all − the fundamentals of our business recommend a gross dividend payout of EUR remain strong. TV proved that it is, and will 3.50 per share, on par with the 2008 fiscal remain, the leading medium: an increase in year. I’m very proud that we are able to pay our average viewing time shows how much media shareholders a significant dividend of EUR 541 consumers love television. In many European million, even for a crisis year such as 2009. If countries – including Germany and France – this proposal is accepted at the Annual General people spent more time watching TV than in Meeting next month, it would mean that we have previous years, while in the UK, average view- returned EUR 2.5 billion over the last five years ing time was 225 minutes per day – the highest to our shareholders. figure since 1992. Beyond the traditional ways to watch television, internet and mobile video Coming back to the economic situation which content are growing markets. remains difficult – what is your outlook for 2010? Given the structural changes caused by Given the very low visibility it is not possible increasing digitisation, there are four ‘must do’ to give clear full-year guidance. Although the strategies we pursue. First: we have to continue revenue decline has slowed considerably optimising our core business − the positioning since autumn 2009, we cannot expect a quick of our channels, tight cost control, offer more recovery of advertising revenues to previous value to our advertising clients. levels. So we remain cautious. Second: we have to make a real business out The first two months of 2010 were better than of the growing non-linear TV habits of our view- we feared, with slight increases in most markets. ers. All the catch-up TV ventures we have built However, we are still way behind the advertis- up in Germany, in France, in the Netherlands, in ing levels of the years 2007 and 2008. And you Belgium, in Hungary and in the UK show cannot extrapolate the developments in January there is a huge − and rapidly rising − need for and February for the whole year. on-demand viewing. And we have to get the business model right, combining free, advertis- ing-funded services with pay models. Third, we need to establish a second revenue stream so that all the platforms − cable, Find all related satellite, IPTV − pay for the signal and the documents on content we deliver. We have to find a way so that RTLGroup.com the people who base their businesses on our signals pay an appropriate price. Fourth, we have strong channel and programme brands. Exploiting them better than we have in the past is a priority for the future. As I have already said, 2009 proved our industry’s ability to adapt. This ability has always been one of our strengths. If we do our homework, we will not only weather the current climate of economic doom and gloom, we will also turn the techno- logical changes to our advantage and see a return to growth. 4 week 10 the RTL Group intranet Football! On 4 March in Brühl near Cologne, RTL Television presented its programming and team for the upcoming football world cup in South Africa. Anke Schäferkordt Germany - 5 March 2010 Günther Jauch, Jürgen Klopp and Florian König (from left to right) Even RTL Television’s choice of location was a “Unfortunately, travelling to South Africa is nod to the Football World Cup, which will take a relatively expensive option for fans,” says place in an African country for the first time ever. Loppe. “So we decided early on to present our Despite the icy outside temperatures, an African World Cup broadcasts featuring Günther Jauch flair pervaded the Matamba Hotel in Phanta- and Jürgen Klopp from the big fan festivals in sialand, a theme park in Brühl near Cologne. Germany.” The moderators will thus be travel- RTL Television holds the exclusive live Free- ling to seven German cities in a special World TV broadcasting rights to nine matches at the Cup Truck, and analyse the matches from there. 2010 Football World Cup in South Africa: led “I look forward to working with Jürgen Klopp,” by its own dream team of Jürgen Klinsmann, says Günther Jauch. “He’s incredibly sponta- former football player and national coach of the neous, can spin ideas out of a situation and was German team, Jürgen Klopp, coach of Borussia born with a sense of humour – and the viewers Dortmund, and Günther Jauch, it will broadcast sense that too.” Guests at the event were treated six preliminary-round matches, two Round-of-16 to a taste of this when the two moderators – to games and a quarterfinal.