European broadcast giant RTL Group, the parent company of Fremantle, reported a 6.9 percent drop in turnover from January to September 2023 to €4.66 billion ($4.98 billion). The group CEO, Thomas Rabe, attributed this decline to challenging market conditions, particularly weak ad sales. The company now expects TV ad revenue to drop by a mid-single-digit percentage in the second half of 2023, impacting Fremantle’s full-year revenue, which is expected to be lower than previously anticipated.
On the other hand, RTL Group’s streaming business continues to show strong growth, with a 30.3 percent increase in paying subscribers, reaching 6.2 million. Streaming revenue for the nine-month period of this year was up 21 percent. The company has set ambitious growth targets for its streaming business, aiming to increase annual content spend to around €600 million ($641 million), achieve a total of 10 million paying subscribers for RTL+ and Videoland, increase streaming revenue to €1 billion ($1.07 billion), and reach profitability by 2026.
Despite the start-up losses incurred by the streaming business, which amounted to €233 million ($249 million) last year and are expected to be about €200 million ($214 million) for 2023, RTL Group is willing to continue investing in its streaming services. However, going into the fourth quarter, Rabe acknowledged that European advertising markets are turning out to be softer than expected, leading to an adjustment of the company’s outlook.
As a result, RTL Group now expects its TV advertising revenue to decline by a mid-single-digit percentage in the second half of 2023 and Fremantle’s full-year revenue to be lower than expected. The company is forecasting its full-year revenue for 2023 to come in at €6.9 billion ($7.4 billion), down from the previously expected €7 billion.
Despite the challenges, Rabe confirmed RTL Group’s commitment to supporting Fremantle’s growth, with the goal of becoming a €3 billion ($3.2 billion) business in revenue terms by 2025. The company has been actively expanding its production capabilities, acquiring several independent production companies, including Italian group Lux Vide, U.S.-based Fabel, and Irish outfit Element Pictures.
In conclusion, while RTL Group faces headwinds in the form of a weak advertising market impacting its traditional TV business, the company remains focused on driving growth in its streaming business and supporting Fremantle’s expansion efforts. The long-term strategy involves significant investments and a commitment to achieving ambitious targets in the coming years.