RTL hit by €88m impairment

RTL Group has posted a €88 million (US$116.8 million) impairment in its first-half results as a consequence of the new advertising tax rules implemented by the Hungarian government.

Co-CEOs Anke Schäferkordt and Guillaume de Posch (pictured) said that new advertising tax would “strongly reduce the profitability of RTL Hungary”, which, together with continued problems in the French market and a poor showing by production arm FremantleMedia, would mean a revised outlook for the full year.

“Furthermore, today’s impairment charge demonstrates the significant damage caused by the new advertising tax in Hungary. As we already said in July: the precipitous introduction of the confiscatory advertising tax is an alarming signal for all international investors in Hungary,” the pair said.

“Our audience and financial success has always included two key elements: a local, decentralised management structure and being politically independent. RTL is and will remain deeply rooted in Hungary.”

RTL posted revenues of €2.687 billion for the first half, down 2.5% with reported EBITA of €519 million, down 6%. The drop in revenue was primarily down to negative exchange rates effects, poor advertising sales in France and lower revenues from FremantleMedia and UFA Sports.

Schäferkordt and De Posch said that “finding the new hits – big and small – is a joint priority for both our broadcasters and for FremantleMedia”.

French broadcast subsidiary M6 Group saw EBITA drop from €127 million to €113 million year-on-year due to a tough advertising environment.

The group received a much-needed boost from digital revenues, which grew 10% to €113 million. German unit Mediengruppe RTL Deutschland reported its best ever first half operating profit, with EBITA growing by 2.3% to €313 million. RTL’s Dutch unit also performed strongly.

Schäferkordt and De Posch said that online video is at the hear of the company’s digital strategy and that it expected to more than double online video views this year to 40 billion. The pair said that the company would also invest in short-form digital content and advertising technology via its SpotXchange investment.

FremantleMedia reported significantly lower EBITA of €29 million, down year-on-year from €47 million, mainly due to lower production and distribution volume, one-off costs at the company’s headquarters and negative foreign exchange rate effects.