Fremantle numbers and ad revenue slump put a dent in RTL’s Q3 earnings
The third quarter earnings at Germany’s RTL Group were down 5.5% to €1.34bn (US$1.42bn), a dip attributed to lower content revenue from production group Fremantle as well as ongoing struggles with ad revenues.
Thomas Rabe
RTL said today its revenues had dipped 5.5% to €1.34bn from €1.41bn in the same period last year.
This was largely due to stagnant performance at the Too Hot To Handle producer Fremantle.
Revenues at the production and distribution group over the first three quarters decreased by 7.1% to €1.42bn (January to September 2023: €1.53bn), as the growth of the content production market “was lower than expected”.
RTL pointed out the 2023 comparison base is high due to the delivery of Fellow Travellers in Q3/2023. This was partly offset by the first-time full consolidation of its purchased Asacha Media Group since end of March 2024. In Q4, Fremantle will deliver major productions such as Battle Camp for Netflix, dramas including Costiera and The Listeners, and the documentary Vietnam: the War that Changed America.
Fremantle is under pressure to increase full-year revenue of €3bn by 2026. At the end of last month Reuters reported RTL was exploring options for the Got Talent rights holder, including a merger or sale of a minority stake, quoting two sources familiar with the matter.
However, in today’s results RTL said it would continue to invest in the business “both organically and via acquisitions” across entertainment, drama and film, and documentaries.
“After integrating its acquired labels/production companies into the Fremantle network and reducing overhead, Fremantle’s Adjusted Ebita margin is expected to increase to 9% by 2026,” RTL said.
CEO Thomas Rabe added: “The integration of the newly acquired Asacha Media Group and Beach House Pictures into the global Fremantle network is progressing well. With a strong content lineup in the fourth quarter, Fremantle will significantly increase its full-year Adjusted EBITA.”
In the first nine months of the year, RTL Group’s TV advertising revenue increased by 2.3% to €1.61bn (January to September 2023: €1.57bn), however in Q3 these decreased by 2.3 % to €519m in Q3/2024 (Q3/2023: €531m). This was mainly attributed to the effect of the Olympic Games in August that were shown by the public broadcasters, alongside the economic environment in Germany and France.
Streaming revenue was up 40.6% to €277m (January to September 2023: €197 million), driven by a significantly higher number of paying subscribers, increased subscription prices in Germany and rapidly growing advertising revenue on RTL+ in Germany and M6+ in France.
RTL Group’s distribution revenue was up 7.3% to €264m (January to September 2023: €246 million), driven by a strong increase at RTL Deutschland.
RTL is predicting its full-year adjusted earnings will be between €700m-800m however “persistent weakness of the German economy and TV advertising market,” means the final result will be “in at the lower end of the range”. The full-year revenue outlook for 2024 has been revised to around €6.3bn (previous guidance: €6.6bn) due to the German TV advertising market and lower growth of the content production market
Rabe concluded: “We are accelerating RTL Group’s transformation in a challenging economic environment. Our streaming services continue to grow dynamically in all key dimensions: number of paying subscribers, viewing hours, subscription and advertising revenue. At the current pace, we are confident to reach the seven million paying subscribers mark by the end of the year and remain on track to reach our long-term streaming targets and thus profitability by 2026.
“Based on our strong operating performance and active cost management, RTL Group confirms its full-year profit outlook. Due to the persistent weakness of the German economy and TV advertising market, we now expect our full-year Adjusted Ebita to come in at the lower end of the outlook range of €750m, plus/minus €50m.”
