Interim Results 2009 Strong Ratings Despite Significant Cost Reduction
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26 August 2009 week 35 Interim results 2009 Strong ratings despite significant cost reduction plus all the major news from the last four weeks Germany United Kingdom Covering the German elections Five enters Canvas partnership United States Netherlands America’s Got Talent RTL Nederland launches heading to Vegas digital channel Interim results COVER: Strong ratings despite significant cost red Interim Results 2009 2 week 35 the RTL Group intranet RTL Group delivers strong ratings despite significant cost reduction On 26 August, RTL Group announced its interim results to 30 June 2009. Backstage asked RTL Group CEO Gerhard Zeiler about the current status of the company. Luxembourg - 26 August 2009 How did RTL Group hold up so far in these with TV, radio, production and diversification difficult economic times? businesses, which gives us the ability to overcome the current market downturn The first half of 2009 was heavily impacted by successfully. Despite the net loss in the first the weak state of the advertising markets. half of the year, we are confident that we will Everywhere in Europe, we faced the same have a positive net result for the full year 2009. picture: during the first six months of the year, the TV advertising markets were down by at What about the audience performance in the least 10 per cent, in some countries even first six months of 2009? above 20 per cent. In short: we operated in a tough economic environment? and the results From an audience ratings perspective, we have reflect that. had an excellent first half year. Despite significant programme cost savings, RTL Having said that, I also want to make clear that Group’s families of channels in the major RTL Group is a healthy company. We have a markets Germany, France, the Netherlands and double-digit operating profit margin, and this Belgium all achieved higher audience shares. despite the economic downturn and significant Especially our market-leading flagship special items which impacted our EBITA in the channels RTL Television in Germany, RTL 4 in first half of 2009. We are cash generative and the Netherlands and RTL-TVI in Belgium were debt free. And we have a broad-based portfolio significantly up year on year. Gerhard Zeiler 3 week 35 the RTL Group intranet You just mentioned cost savings. Already Secondly, new online video and catch-up TV early in the year, you talked about the need services. Professional TV content is a major to re-calibrate the cost structure in the free- growth driver of the internet. In total, RTL to-air broadcasting industry. Could you give Group’s online platforms across Europe us some details on the measures taken at registered more than 470 million video streams, RTL Group? which delivered professionally produced content to our viewers – an increase of 97 per To compensate for the advertising revenue, all cent compared to the first half of 2008. So we of our profit centres and the Corporate Centre will continue to invest in our online video have implemented varying degrees of cost platforms, making them also available on TV cutting measures. These include savings in the screens and on mobile phones. In Germany, we programme grid, overheads and also personnel just launched a new catch-up TV service for our costs. On an underlying basis – that means Vox channel. And M6 Replay is already stripping out portfolio effects and restructuring- expected to break even in 2009. related costs – the Group’s operating cost base has fallen EUR 198 million compared to last Thirdly, we are extending our online portfolio by year. This represents a compensation of 68 per increasing scale and quality. For example, we cent of the Group’s underlying revenue continue to grow Wer-kennt-wen.de, which has decrease – a result of a significant effort made become the number one social network in by all of our business units. Germany. In France, M6 Web has successfully integrated the Cyréalis group. As a result, the In Germany, France, the Netherlands and in the number of unique users per month grew by 70 UK our core broadcasting operations have all per cent to 12 million, compared to a year ago. made substantial, double-digit percentage savings of between 11 and 17 per cent in And finally an expansion in our content operating costs. activities, through a mix of acquisitions, such as Original Productions, and through organic Our goal is to achieve these savings while growth such as the recently announced maintaining our leading audience market opening of an office in India. positions. This is very challenging, but achievable. In the first half of 2009, we already In a nutshell: despite the tough economic managed to significantly reduce costs while climate we will continue to explore and secure simultaneously increasing our audience share future growth opportunities for RTL Group. in many markets. What is your outlook for the rest of 2009? Does this also mean that all investments are on hold for the time being? Given the very low visibility it is not possible to give clear full-year guidance. However, we are No, not at all. Given the difficult market not expecting a significant change for the environment, we have clear operational goals. second half of 2009. Therefore it has to be Yes, our focus on cost savings will continue. expected that the profitability level will be But while we work hard to optimise the considerably down compared to 2008, as we efficiency of our core business, we’ll also already announced in March at our 2008 results further invest in promising new opportunities. presentation. There are four main areas on which RTL Group is concentrating its growth strategy: Firstly, the development of digital channels to counter audience fragmentation. We already have a number of profitable digital channels within our families of channels – for example W9 in France or the German pay channels RTL Crime, RTL Living and Passion. More will come – RTL Nederland has just announced the launch of its new digital channel RTL Lounge in October. 4 week 35 the RTL Group intranet RTL Group Results • Reported Group revenue down 9.6 per cent • Reported EBITA margin of 12.3 per cent to EUR 2,588 million as TV advertising (2008: 17.5 per cent) markets across Europe declined by double- digit rates; RTL Group’s investments in • Net loss attributable to RTL Group content production and diversification shareholders of EUR 105 million mainly due businesses helped to better balance its to goodwill impairments for Five Group in financial position the UK and Alpha Media Group in Greece • Reported EBITA down 36.7 per cent to • Net cash from operating activities of EUR 318 million due to EUR 237 million resulting in an operating o lower profit contributions from most profit cash conversion of 98 per cent centres, o higher start-up losses (EUR 35 million) • Outlook for 2009 remains unchanged: which mainly resulted from the first-time RTL Group currently sees no significant full consolidation of Alpha Media Group in change to the European TV advertising Greece, and market conditions in the second half of o significant one-time charges including 2009, therefore it has to be expected that restructuring costs in the UK, Germany the profitability level will be considerably and Greece totalling EUR 20 million and a down compared to 2008, as already significant programme write-down at Five announced amounting to EUR 22 million Steady increase in cost savings combined with strong audience ratings • Since the fourth quarter of 2008, RTL Group points. However, EBITA of the German profit has placed a strong focus on cost cutting in centre down 25.5 per cent due to response to the substantial slowdown in significantly lower advertising revenue advertising bookings: on a constant scope basis, excluding restructuring costs and • Despite considerably lower TV advertising other one-off effects, operating costs fell revenue, Groupe M6 increased its EBITA EUR 198 million compared to the first half of 3.7 per cent, driven by significantly lower 2008 programme costs at the M6 main channel and higher profit contributions from its digital • Many operations have already reduced their channels and diversification activities costs by more than 10 per cent in the core TV business in the reporting period: • Worldwide production arm FremantleMedia o Germany – RTL Television, Vox, N-TV: continues to produce the most watched EUR 97 million (minus 15 per cent) entertainment shows in key markets such as o France – M6 main channel: the US, the UK and Germany; EBITA down EUR 48 million (minus 17 per cent) 10.3 per cent mainly due to general pressure o The Netherlands – RTL 4, 5, 7, 8: on profit margins EUR 17 million (minus 11 per cent) o UK – Five Group: • With the UK TV market strongly affected by EUR 22 million (minus 13 per cent) the economic downturn, Five Group registered an operating loss of EUR 19 • Despite significant programme cost savings, million, excluding a significant programme RTL Group’s families of channels in the write-down of EUR 22 million and major markets Germany, France, the restructuring charges of EUR 8 million Netherlands and Belgium all achieved higher audience shares; the Group’s market-leading • Newly acquired Alpha Media Group initiated flagship channels RTL Television (Germany), comprehensive restructuring and cost RTL 4 (the Netherlands) and RTL-TVI reduction measures in reaction to the (Belgium) were significantly up year on year substantial downturn of the Greek market; despite these savings, Alpha TV’s audience • Mediengruppe RTL Deutschland increased share increased