Streaming boom: RTL ticks off a tough Corona year

Friday March 12th 2021

Streaming boom
RTL ticks off a tough Corona year

In the Corona crisis, RTL Group is like all media companies: advertising income is falling, profits are suffering. In the current year things should go up again. The boom in in-house streaming services should help.

After a profit slump in Corona year 2020, RTL Group expects a recovery for the current year and is continuing its own strategy in the booming streaming market. Media houses suffered from a collapse in advertising – RTL did the same. The bottom line was that the group had to accept a drop in profits of around a third. The profit attributable to the shareholders fell from 754 million to 492 million euros, as the TV group announced in Luxembourg. From April she hopes for an upswing in advertising, an important pillar.

While sales fell by almost a tenth to around 6.02 billion euros, the Corona year had positive effects on streaming – i.e. accessing video content outside of the current TV program: the number of paying subscribers for the media group's TVNOW platform RTL Deutschland rose by 64 percent to around 1.29 million, in 2019 it was 783,000. The Dutch RTL streaming platform Videoland achieved a plus of 38 percent and around 900,000 paying subscribers (2019: around 650,000). The streaming turnover, which is made up of subscriptions, advertising and individual sales, was 170 million euros (plus 20 percent).

The RTL Group, which is majority owned by the Bertelsmann Group, is sticking to its goal: by 2025, TVNOW and Videoland should have 5 to 7 million paying subscribers. The streaming turnover should be at least 500 million euros in 2025 and then the profit zone should also be reached. To this end, the group intends to increase program investments to up to 350 million euros annually.

The RTL Group, to which more than 60 TV channels, several streaming platforms and dozen radio stations in several countries belong, is assuming better figures for the current year: sales should increase by around 8 percent to 6.2 from their own resources Billions of euros are increasing. The adjusted operating result (Ebita) is expected to increase by around 14 percent to around 975 million euros. This would mean that the group would still be below the values ​​of the pre-Corona year (2019 turnover: 6.65 billion euros, Ebita: around 1.16 billion euros).

Rabe: RTL should be the "national champion"

RTL expects this trend on the assumption that the economy continues to recover, especially in the second quarter, with a possible gradual relaxation of current lockdown measures and that the vaccination goes ahead. For the advertising market, RTL expects a significant increase in the second quarter after a subdued start to the year – the media group ProSiebenSat.1 recently made a similar statement. In addition to streaming, RTL sees growth opportunities in customizable advertising and entered into a cooperation with Deutsche Telekom months ago.

RTL group boss Thomas Rabe, who is also Bertelsmann CEO, renewed the objective that RTL wants to be "national champion". ProsiebenSat.1 is pursuing a similar strategy with the Joyn streaming platform in Germany. In the midst of the worldwide streaming boom, giants such as Netflix, Apple, Disney and Amazon, who have also secured shares in Germany, are competing. RTL's strategy is to be the big voice, focused on the local national market.

It goes with the fact that RTL wants to strengthen its own brand name – the logos in countries such as Germany, the Netherlands, Belgium and Croatia are to be standardized. TVNOW will also be called RTL + in the future. RTL has been talking about a consolidation of the European TV business for some time. In Germany, the group wants to become the sole owner of the children's program Super RTL and buy Disney's 50 percent stake. Another move between RTL in Germany and the Hamburg magazine publisher Gruner + Jahr ("Stern", "Geo") is also being examined. The publisher is also part of Bertelsmann, and the group has been relying on synergies in its divisions for a long time.

For the RTL group, there is also a possible change in the second most important market, France – RTL holds 48.5 percent of the listed TV group M6. Media speculated about a possible sale. Rabe just reiterated that options for the control stake are being examined – "with the aim of creating value for our shareholders. At this time, there can be no certainty that this will lead to an agreement or transaction." He left a point in time for a decision open.

The RTL Group in Luxembourg is the parent company of Mediengruppe RTL Deutschland. Among other things, it operates several private TV channels. This also includes the news channel ntv.