RTL Group is making the following trading update in advance of its interim results announcement on 14 September 2001 for the six months ended 30 June 2001. This reflects the decision of the Board of RTL Group to issue regular trading updates at the start of the interim and year-end close periods to improve the flow of information to investors.
Didier Bellens, Chief Executive Officer of RTL Group, commented:
"We have continued to outperform our peers in most of our markets, especially in our largest, Germany and France, in terms of audience and advertising market share. In Germany, our market share increased in the first half of the year, consolidating our market leading position. In France, the success of Loft Story and other formats on M6 significantly enhanced the channel's performance. This enabled M6 to achieve a 23.1 per cent advertising market share over the period. Loft Story also helped Fun Radio to grow its audience share, while RTL Radio maintained its market leadership and continued to recover from last year's decline in audience. In content, we are very excited about the opportunities presented by the sports rights deal that we struck in May with Groupe Jean-Claude Darmon and Groupe Canal Plus. In all, our focus on growing operations and controlling costs, combined with a robust balance sheet and strong credit ratings assigned by Moody's and Standard & Poor's A3/A-, leave us well-placed to deliver on our stated strategy for long-term growth."
RTL Group indicated in March that the visibility of the advertising market was low and that growth rates for advertising across its European markets would slow beyond the expectations of peers and industry bodies. The advertising markets have been tough, and RTL Group's markets showed low or negative growth for the first half of the year. Visibility has deteriorated further and the phasing of recovery in advertising conditions cannot be predicted with any certainty. Assuming current advertising market conditions continue and after taking into account management actions to control costs, RTL Group now expects EBITA for the year ending 31 December 2001, to be 10 to 15 per cent below the 2000 proforma levels of EUR 555 million. This estimate is before taking into account the restructuring of the US business which the company anticipates will cost EUR 22 million, as well as investments in new businesses of EUR 27 million.
Television
|
|
Audience market share |
Advertising market share (%) |
|||
|
|
H1 2001 |
H1 2000 |
H1 2001 |
H1 2000 |
|
|
Germany[2] |
RTL |
18.1 |
16.7 |
29.3 |
27.1 |
|
RTL II |
5.7 |
7.2 |
6.6 |
5.7 |
|
|
Super RTL |
21.0 |
19.5 |
2.0 |
1.8 |
|
|
Vox |
4.2 |
3.8 |
4.0 |
3.8 |
|
|
|
Audience market share |
Advertising market share (%) |
|||
|
France[3] |
M6 |
22.8 |
20.4 |
23.1 |
21.2 |
|
|
Audience market share |
Advertising market share (%) |
|||
|
UK[4] |
|
5.6 |
5.8 |
6.1 |
6.1 |
|
|
Audience market share |
Advertising market share (%) |
|||
|
Netherlands[5] |
RTL4 |
16.2 |
17.7 |
23.1 |
24.1 |
|
RTL5 |
4.5 |
4.2 |
4.7 |
4.4 |
|
|
Yorin |
8.3 |
9.3 |
12.7 |
15.6 |
|
|
|
Audience market share |
Advertising market share (%) |
|||
|
Belgium[6] |
RTL TVI |
25.6 |
25.5 |
- |
- |
In Germany and France, which in 2000 accounted for 70 per cent of RTL Group's total TV revenue, we outperformed our peers, both in terms of audience and advertising share in difficult market conditions.
Following a very strong performance in 2000, the television market in Germany has seen in the first six months of this year a cumulative fall in gross advertising spend of around 1.6 percent. However, RTL Group's channels have maintained their strong market position with continued ratings success with formats like "Who wants to be a Millionaire?" with over 14 million viewers, "Formula 1" and "Champions League". This has enabled RTL Group to increase its advertising market share to 41.9 per cent in the first six months of the year, up from 38.4 per cent in the same period in 2000, while the audience share rose to 30.4 per cent up from 29.9 per cent in 2000.
In France, the success of Loft Story has helped push the audience share for M6 up to 19.9 per cent, up from 18.1 per cent. Two-thirds of the audience growth was attributable to Loft Story, the remaining one-third to other programming. M6 outperformed its peers by growing its advertising share from 21.2 per cent to 23.1 per cent year-on-year against a market that fell 3.9 per cent.
The UK and the Netherlands were the first two markets to display signs of advertising slowdown and have been the worst affected as conditions have continued to deteriorate. However, Channel 5 has maintained its advertising market share of 6.1 per cent in a declining overall market, which is down by 9.6 per cent year-on-year. Channel 5 continued to invest in programming with total investment up 17 per cent in the six months, in line with our long-term aim of increasing audience share at the channel.
In the Netherlands, RTL Group's channels lost 2.3 per cent audience share and 3.6 per cent share advertising share in a market that fell 7 per cent year-on-year. The rebranding of Veronica as Yorin has resulted in an initial loss of momentum in audience and advertising share that we expect will pick up again as the new brand becomes established. In Belgium, RTL Group's channels maintained their strong position in a flat TV advertising market.
Radio
In Radio, the ratings for April show that RTL in France has successfully stemmed the audience decline from the fourth quarter of 2000. The last radio audience ratings published on 16 July 2001 confirm RTL Radio's number one position, with its audience share up to 13.3 per cent. Fun Radio grew its audience share to 5.3 per cent (up from 4.6 per cent), partially due to the coverage of Loft Story and the success of Arthur's show. RTL 2's audience share remained stable at 2.8 per cent.
Content
The company continues to build its competitive advantage in content. In May, we joined forces with Groupe Canal Plus and Groupe Jean-Claude Darmon to create a pan-European sports rights-buying company. This deal is currently awaiting approval by the European Commission.
In the US, we are restructuring our production and syndication business, Pearson TV North America, to focus on development, production and distribution of light entertainment programmes. We have downsized our international drama activities following deterioration in the economic returns from the business. This was due to a shift in viewers' tastes in Europe towards locally produced reality and game show programmes, the downturn in the US advertising market and the consolidation of the US industry. As a result, we have taken a one-off charge of EUR 22 million in our interim results.
Following the change in equity market valuations, management is in the process of performing a review of the carrying value of Pearson TV, with which CLT-UFA and former Audiofina merged in July 2000. Pearson plc. contributed Pearson TV in return for RTL Group shares, at the then prevailing market value. We will report on the results of this review, which could result in a one-off non-cash goodwill impairment adjustment, in the interim results announcement on 14 September 2001.
RTL Group's worldwide production business continues to grow. We have concluded development and co-production arrangements in several European countries both with RTL Group broadcasters and third parties. The success of Greed has continued and it is now produced in 20 countries. Our European serial dramas are as popular as they have ever been despite the recent reality and game show competition.
New Media
In New Media, we further strengthened our position as one of the leading players in Europe with more than 6 million unique visitors to our entertainment sites and over 400 million page impressions on a monthly basis, up 370 per cent on the previous year. RTL World (RTL.de) and M6 Web (m6.fr) command the leading spots in their markets as general entertainment sites. We continue our approach of controlled investments in new media activities, building on strong brands, content and community.
Furthermore, RTL Group announces a change in its Board of Directors. On 27 July 2001, the Board of RTL Group accepted the resignation with immediate effect of Mr André Desmarais and appointed Mr Jocelyn Lefebvre as an independent non-executive director.
Mr Jocelyn Lefebvre is currently a director of Imerys S.A., the Paris listed minerals processing group. In the past five years, he was a director of Orior Holding S.A. He has not held any other directorships of any other listed company during this period. Under paragraphs 6.F.2 (b) to (g) of the Listing Rules, no further information is required to be disclosed in relation to Mr Jocelyn Lefebvre.
The Company will announce its interim results on 14 September 2001 in London, at the offices of Pearson TV, 1 Stephen Street.
[1] This trading update coincides with the results announcement for the six months ended 30 June 2001 released today by Pearson plc (“Pearson”), a 22 per cent shareholder in RTL Group, as well as Groupe Bruxelles Lambert’s results announcement for the same period, to be issued on 31 July. Pearson’s and Groupe Bruxelles Lambert’s results include their respective shares of RTL Group’s estimated profits, which have been derived from unaudited estimated management accounts. Pearson’s results are prepared under UK GAAP and Groupe Bruxelles Lambert’s results under Belgian GAAP. RTL Group applies IAS (International Accounting Standards) as a basis for the preparation of its accounts.
[2] Source: GfK, Nielsen S+P
[3] Source: Mediamétrie, SECODIP
[4] Source: BARB
[5] Source: Infomart, HMI/SOV
[6] Source: Audimetrie CIM South; MDB