A still-soft advertising market has had a negative impact on the revenue of European broadcast giant RTL Group, which reported a 6.9 percent drop in turnover from January to September 2023 to €4.66 billion ($4.98 billion). Group CEO Thomas Rabe attributed this decline to “challenging market conditions,” particularly in weak ad sales. RTL Group now expects TV ad revenue, its core source of income, to decrease by a mid-single-digit percentage in the second half of 2023, and for Fremantle’s full-year revenue to be lower than expected.
Despite this setback, RTL Group’s streaming business continues to experience strong growth. Platforms such as RTL+ in Germany and Hungary and Videoland in the Netherlands have seen a 30.3 percent increase in paying subscribers, reaching 6.2 million. Streaming revenue for the nine-month period of this year was up by 21 percent. As a result, the company continues to set ambitious growth targets for its streaming business, with plans to increase annual content spend to around €600 million ($641 million) for its streaming services, aiming to reach a total of 10 million paying subscribers between RTL+ and Videoland, and to increase streaming revenue to €1 billion ($1.07 billion) with the goal of reaching profitability in 2026.
Despite the start-up losses of €233 million ($249 million) in the previous year, RTL is willing to endure further substantial start-up losses, expected to be around €200 million ($214 million) for 2023, as it pursues its growth targets for the streaming business.
Looking ahead, Rabe acknowledged that European advertising markets are softer than expected, and despite implementing countermeasures, the company has had to adjust its outlook. As a result, RTL Group now expects TV advertising revenue to decline by a mid-single-digit percentage in the second half of 2023, and Fremantle’s full-year revenue to fall short of initial expectations. Overall, the company forecasts a full-year revenue for 2023 of €6.9 billion ($7.4 billion), down from the previously expected €7 billion.
Despite the challenges, Rabe affirmed that RTL Group continues to support Fremantle in its efforts to become a €3 billion ($3.2 billion) business in revenue terms by 2025. Fremantle’s recent expansion has been financially backed by RTL, with the acquisition of several independent production companies including Lux Vide (known for “Devils” and “Leonardo”), Fabel in the US (known for “Bosch”), and Element Pictures in Ireland (known for “Poor Things” and “Normal People”).
This continued support and investment in Fremantle’s expansion demonstrates RTL Group’s commitment to the growth and success of its parent company, even in the midst of challenging market conditions. Despite the decline in traditional TV advertising revenue, the company remains focused on expanding and monetizing its streaming services to drive future growth and achieve long-term profitability. With strategic investments and a focus on strengthening its digital offerings, RTL Group is positioning itself for success in a rapidly evolving media landscape.
