As the largest and most international broadcast group in Europe, RTL's results and market view had been eagerly awaited by financial analysts as indicators of the outlook for the European media sector. What they got was not pretty.
Unveiled on Wednesday September 19, first half results showed a 27% drop in pre-tax earnings. Chief executive Didier Bellens warned of tough times ahead and said that the group may miss its revised earnings target.
'Since July, markets have continued to decline and visibility has not improved. The phasing of the recovery cannot therefore be predicted with certainty.'
Bellens also announced that RTL is postponing a share issue that would have allowed the free float to increase to more than 15% and qualify the group for entry into the FT-SE 100 index. Once again he blamed 'low forward visibility in the advertising markets.' At a press meeting this morning Bellens said that he expects the US terrorist attacks to worsen profit prospects. Advertising is expected to suffer, while the costs of coverage is increased.
In the six months to end of June, revenues increased 3% to Euros2bn, EBITDA slumped to Euros235m. There were also hefty non-cash goodwill charges of Euros2.44bn relating to the acquisition of Pearson Television, which has since been renamed Freemantle TV. That pushed the total net result to a loss of Euros2.31bn compared with a net profit of Euros87m in the first half of 2000.
RTL said that it had enjoyed particularly strong performances at RTL Television in Germany and M6 in France, but that higher programme costs at Channel 5 in the UK and difficult market conditions in The Netherlands meant a 6% drop in TV EBITDA. Revenues from content sales were up 13% to Euros522m. Bellens said: 'Our core business has proved its strength in the first half of 2001. Building on our brands and our content, we have outperformed in our main markets in terms of audience and market share.'
Pearson TV's US businesses, acquired in July 2000, were restructured and its American drama activities slashed. Following a review of the business and a deterioration of equity market valuations RTL decided to write off Eur2.27bn of goodwill.
RTL's thinly traded shares managed an 11% rise from Euros 45 to Euros50.