Fremantle eyes US revival to reverse revenue decline as €3bn target looms

Neighbours

Fremantle’s revenues fell 3.4% in 2023, leaving the company requiring 30% growth over the next two years to hit its self-imposed target of €3bn.

The RTL Group-owned producer-distributor saw revenues fall to €2.27bn in 2023, but added that it hoped a recovering US market would drive growth across 2024 and closer to its €3bn revenue target set in 2021.

Adjusted EBITA for 2023 was also down – 14% to €139m – but RTL Group said it would persist with its spending on Fremantle, which has seen recent acquisitions such as the €200m spend on Asacha Media Group and Beach House Pictures.

Britain’s Got Talent (David Walliams is pictured far left)

TV shows such as Got Talent in the UK and the US were highlighted by RTL in its annual results, as well as Neighbours, which returned to Amazon Freevee after being cancelled by Channel 5.

Factual duo House Of Kardashian and Waco: American Apocalypse also received special mention, while Oscar winner Poor Things and Italian film C’è Ancora Domani were also picked out.

RTL said it would maintain a focus on expanding entertainment, drama, film and docs to drive revenue at Fremantle, which saved €26m as a result of “personnel cost efficiency measures” through 2023.

Ad market woes hit RTL Group revenues

Fremantle’s results were largely replicated across RTL, with group revenues down 5.4% to €6.23bn and adjusted EBITA 15% lower at €782m.

The Germany-based operator had warned last year that revenues had been hit by a weak ad market in Q1 and it again blamed its annual declines on “significantly lower TV advertising revenue” from broadcasters – ad revenue across the group was down 8% – as well as the reduced turnover at Fremantle.

Sisi

RTL added that subscribers of German streamer RTL+ had increased by 23% to 4.9 million, largely driven by a partnership with Deutsche Telekom to bundle RTL+ Premium in Magenta TV.

Reality shows, UEFA Europa League coverage and originals such as Sisi and Pumuckl’s New Adventures were picked out as key IP powering audience attention.

The group also talked up potential in France and pointed to “additional” streaming investments totalling €100m at Groupe M6 in France, which last week unveiled its new-look service M6+ (previous 6play).

Streaming revenue was up 72% to €283m, partly because of the inclusion of 6play in France, although streaming “start-up losses” came in at €176m.

The company, which is in the process of selling Videoland in the Netherlands, added that by 2026 it aims to reach around 9 million paying subscribers and around €750m of streaming revenue.

It is also planning to increase its content spend to around €500m and to become profitable by 2026.

US to fuel Fremantle revenues

The Thomas Rabe-led firm added that it expects full-year revenues for 2024 to hit around €6.6bn, driven by RTL Deutschland’s streaming business and increasing revenues at Fremantle, the latter partly because of a recovery in the US market.

Thomas Rabe

RTL Group revenues from the US rose by €13m between 2022 and 2023, while the UK saw revenue fall from €313m to €301m, Germany dropped from €2.59bn to €2.41bn, and France declined from €1.37bn to €1.32bn.

Fremantle’s adjusted EBITA margin is expected to increase to 9% by 2026, RTL added.

Across the RTL group, EBITA is pencilled in to be around €750m depending on the German and French TV advertising markets through the rest of the year.

Thomas Rabe, RTL Group CEO, said the company had “demonstrated the resilience of our businesses in a particularly challenging environment,” pointing to ongoing investment and streaming expansion.

“The second half of 2023 was one of the most profitable half-years in the history of RTL Group despite weak advertising markets and significant investments, enabling us to pay an attractive dividend.

“Our shareholders will also benefit in 2025 from the value crystallised by the expected sale of RTL Nederland for €1.1bn.

“Our strategic framework remains unchanged. It will continue to guide us in 2024: to strengthen our core businesses, to grow our streaming and content businesses, and to build alliances and partnerships.”