03 annual report 20 annual report RTL Group RTL RTL Group 45, boulevard Pierre Frieden Luxembourg - Kirchberg Tel.: (352) 421 421 Fax: (352) 421 42 2760 www.rtlgroup.com Mission statement RTL Group’s aim is to offer popular high quality entertainment and information to all our audiences by encouraging and supporting the imagination, talent and professionalism of the people who work for us. key values These are the principles and qualities that guide RTL Group: Quality: we seek excellence in everything we do. Creativity: we provide stimulating workplaces where creative talent can flourish. Focused management: we manage our businesses actively on behalf of our shareholders, while respecting the cultural needs of the communities we serve. Productivity: we seek out ways to work more efficiently as a Group. tableofcontents RTL Group in 2003 2 Key figures 3 Chairman’s statement 4 CEO’s review 8 Principal RTL Group businesses and undertakings 10 Highlights RTL Group’s businesses and markets in 2003 (review of operations) 12 Television and radio Germany 20 Production and distribution FremantleMedia 26 Television France 30 Television and radio The Netherlands 34 Television UK Five 36 Radio France 40 Television and radio Belgium 43 Television and radio Luxembourg 44 Sportfive 45 Technical services 46 Television and radio Spain 48 Television Hungary 50 Supporting our communities 51 Corporate governance 52 Group management 57 Directors’ report, Auditors’ report and Consolidated financial statements Key figures / Chairman’s statement: 3 KeyFigures 2003 Share price performance RTL GROUP BEMEDIA INDEX 200 – 180 – 160 – 140 – 120 – 100 – 80 – 60 – FromtheChairman 40 – 20 – 2003 was an encouraging year. We significantly improved Our profit centres are the engines of our growth, and 0 – our operating profit while maintaining strong audience we intend to give them full autonomy to expand and develop 02/01 02/02 02/03 02/04 02/05 02/06 02/07 02/08 02/09 02/10 02/11 02/12 and advertising market positions. their operations to meet the needs of local markets. Our Group has emerged from a protracted and testing period We owe an enormous debt to our employees. I would like of economic slowdown that has impacted on TV, radio to thank them all for their contribution – the broadcasting and content businesses everywhere – and we have never and content professionals whose programmes are enjoyed 2003 Consolidated EBITA been in better shape. Some of Europe’s most prominent by audiences across Europe and around the world, the sales 2003 Revenue breakdown per segment media groups have struggled, yet we are a fitter, more and marketing teams who have helped us achieve such by activity - € million € million focused and more competitive business than we were when a positive financial result, and the essential support staff 3 184 383 the downturn began in 2000. We have adequate financial who help to make our operations run smoothly. resources, we are highly focused and, perhaps most important of all, our talented creative teams continue to There is much work still to be done, but we can look 1 294 challenge audiences with exciting and original programming. to the future with considerable confidence. 86 241 48 70 - 337 -30 The local and corporate centre teams worked extremely TV Content Radio Others Elimination TV Content Radio Others hard during the year and achieved a fantastic result. The management team under Gerhard Zeiler, our new CEO, is now ready to take the Group into its next stage of development. We are fortunate to have such an outstanding Juan Abéllo Revenue Market Dividend Adjusted earnings Shareholder capitalisation per share per share* equity set of professionals to lead us at a critical time, when digital Chairman € million € billion € € € million multichannel is changing the media landscape. 4 054 4 362 4 452 6.8 4.4 7.3 0.50 0.70 0.80 0.90 1.61 2.14 4 585 4 402 4 262 01 02 03 01 02 03 01 02 03 01 02 03 01 02 03 * Net result adjusted for amortisation and impairment of goodwill and gain or loss from sale of subsidiaries, joint ventures and other investments, net of tax. CEO’S review 5 CEO’S review We made solid progress in 2003. Undeterred by tough We also made strong progress in the drive to diversify our market conditions, our businesses strove hard and many revenue streams, so that we are less exposed to the vagaries were rewarded with audience and advertising market of the advertising markets, although we have some way share improvements. The consistency of our performance still to go. was most satisfying – all our profit centres were EBITA-positive and many ended the year comfortably The success of our sales force, our brand diversification ahead of 2002. and the effectiveness of our cost management resulted in an EBITA for the year of €487 million, up 15% on 2002. Advertising markets remained volatile in 2003. As the year Our Group’s market capitalisation stood at €7.3 billion progressed the picture started to improve in some countries, at the year end, an increase of 65% on the year. Our net debt while in others any recovery was fitful and uncertain. position also improved significantly, down from €755 million As we anticipated, our businesses were better placed than at the end of 2002 to €298 million at the end of 2003. some of our competitors’. Our commitment to maintaining re programme quality, even during the worst of the downturn, Decentralised management has helped us build audience and market share. Several We now have a small but highly focused Group management of our broadcasting businesses posted record ratings team at our Luxembourg headquarters. The focus of our and advertising revenue, with our German and French TV business is the operating companies. These are local – they operations delivering record performances in terms understand local markets and cultures, they abide by local laws of profitability. FremantleMedia continued to impress with and regulations, and they are led by local management teams. view further international success. CEO’S review 7 Our operating companies are responsible for operational A further success was Five, which has steadily rights portfolio with the acquisition of the German sports channels, than from its core TV channel. In markets such and profit performance, and for ensuring close cooperation driven its share higher in the UK’s challenging market rights agency ISPR. The arrangement concluded in as Germany and the Netherlands we are developing along across the Group. They have the capability to drive and now has 6.6% of the 4+ audience. 2003 was also its March 2004, with Advent International, allows us to retain similar lines. The diversification business in Germany is now our business into its next, and most challenging, phase first full year of EBITA profitability. a 25% interest in a strong business. profitable with the home shopping activity projected to of development. They are building powerful families reach break even in 2005 as planned. of broadcasting and content companies with strong market We are better placed in Spain, where a change in ownership Radio positions – families that will weather the audience structure and management has improved the prospects of Our radio interests delivered another solid performance. A positive outlook fragmentation now under way across Europe and emerge Antena 3 while opening up opportunities for us to increase The radio advertising market was slow in 2003, with low Our strategy remains consistent, and we are more focused as leaders in the new multichannel digital environment. our holding. The operating business of Antena 3 is extremely single-digit growth in most countries where we have than ever before on the delivery of shareholder value. sound – the necessary restructuring costs have been interests. Once again, our holdings outperformed their We will continue to manage our cost base proactively Focusing on the core incurred and this resulted in a significant loss for the year. competitors, especially in our largest radio market, France, to drive margin improvements across the group, but in ways At the Group’s core is creativity – the ability of our However, the turnaround was already evident in the second where our family of radio stations delivered an excellent that do not impact negatively on programming or audiences. broadcasting and content teams to deliver programming that half of the year and we look forward in 2004 to further improvement in profitability. We will extend our portfolio into territories where meets the expectations of audiences in original and engaging positive developments and cooperation with our new the possibilities are attractive, while disposing of holdings ways. The success of our programming is self evident – the partners in Spain. In the Netherlands we won a new frequency for a national that we no longer regard as core. We will reduce net debt ratings say it all – but we cannot let the creative momentum FM station as well as securing improved coverage for and improve the Group balance sheet to fund both internal falter. We know that we must continue to experiment and In Belgium, we prepared the ground for our third TV channel, our existing station, Yorin FM. The new station launched in and external growth. innovate, and support our creative teams with the necessary which has now launched successfully as Plug TV providing June 2003 as RTL FM with music and news aimed at 20 to resources to deliver the next generation of ratings winners. a service aimed at 15 to 34 year-olds. This should further 49 year-olds. In Germany, we integrated the AVE holding As 2004 unfolds we are becoming more confident that We have an exceptional resource of creative and broadcasting extend our market leadership.