RTL Group lowers outlook for 2022 amidst TV advertising market concerns

European broadcast group RTL’s second quarter revenues declined and it has lowered its outlook expectations amidst concerns about a declining ad market.

Thomas Rabe

RTL warned back in May that advertising bookings were slowing, particularly in Germany, and the situation has since deteriorated further.

RTL Group generated revenues of €1.714bn (US$1.74bn) in Q2, 6.5% more than a year earlier – although this is mainly explained by a slew of acquisitions in 2021 including publishing house Gruner + Jahr and kids’ network Super RTL.

If these portfolio effects are factored out, the picture looks far less rosy – revenues in the second quarter were down 4.1% year on year without them.

Declining TV advertising markets “especially in Germany,” were to blame, according to the company. A warning that the German advertising market had developed weaker than expected in March and April was already announced by the group when it presented its figures for the first quarter in May. Since then, “bookings and prospects in most European advertising markets have deteriorated further,” it added.

A list of factors is weighing heavy across Europe including the war in Ukraine, inflation, energy supply and supply chain issues. Broadcasters face an added problem of losing football’s World Cup from its traditional summer schedule and trying to add it into the November and December schedules which are traditionally a period of high reach and ad spend.

RTL Group has consequently now slightly lowered its outlook for the full year, with a range of €1.05bn to €1.15bn for adjusted EBITA instead of the previously fixed €1.15bn. The revenue forecast is now €7.4bn, within the previously stated corridor of €7.3bn to €7.5bn.

In the first half of the year, RTL Group increased its adjusted EBITA by 3.7% to €501m – mainly because of stronger activity in the Netherlands. However, profit rose less strongly than sales, which increased by 8.7% in the first half of the year driven by the acquisitions but remained merely stable organically.

The bottom line in the first half of the year was net profit of €303m. In the first half of 2021, the figure was €929m – at that time, however, driven by the €745m generated by the sale of SpotX. However, cashflow from operating activities also fell sharply from €214m to €84m.

Thomas Rabe, RTL Group CEO, said: “RTL Group continues to deliver on its targets for its growth businesses of streaming and content. Our streaming services continued to grow dynamically and passed the 4.5 million paying subscriber mark. In the second half of 2022, we will expand RTL+ to become a cross-media entertainment service. Our content business is also accelerating, with five acquisitions and step-ups in the past six months, major talent deals and 30 planned films for 2022.”