The difficult situation on the TV advertising market is also having a negative impact on the RTL Group. After a decline in profits in the previous year, CEO Thomas Rabe expects for 2023 that there will again be less profit left operationally. In the medium term, the manager is sticking with streaming as a beacon of hope, even if growth there has recently weakened. Rabe wants to invest millions of euros more in the division. In contrast, things are looking bleak for the magazine business acquired from the Gruner Jahr publishing house: the hoped-for synergies are likely to be even lower than expected in the coming years.
This year, sales are expected to grow to between 7.3 and 7.4 billion euros, the MDax-listed television group announced on Thursday in Luxembourg. However, earnings before interest, taxes and goodwill amortization (Ebita) adjusted for special effects should fall slightly to between 1.0 and 1.05 billion euros. That would be the second decline in a row. RTL wants to reduce its start-up losses in the important streaming area to less than 200 million euros.
Further expand streaming business
At the same time, the Bertelsmann subsidiary wants to further expand the streaming business. By 2026, 10 million people are to pay for the services RTL in Germany and Videoland in the Netherlands. Rabe expects that the previous turnover of 267 million euros will climb to one billion euros by then.
At the end of 2022, the group had almost 5.5 million paying subscribers, almost 44.3 percent more than in the previous year. However, growth is weakening. The majority of customers use the RTL service, which the group markets through a strategic partnership with Deutsche Telekom.
Linked to the plan is the idea of being able to compete with other streaming services such as Netflix or AppleTV. Rabe has already campaigned for “national champions” by merging European media companies, but nothing has come of it so far: both in France and in the Netherlands, competition watchdogs had something to complain about the merger plans.
“We are convinced that market consolidation will come sooner or later,” Rabe said in a conference with journalists. RTL wants to explore further avenues for partnerships and collaborations. In the USA, the takeover of the US book publisher Simon has already collapsed
Rabe, who is also in charge of the RTL majority shareholder Bertelsmann, was optimistic, but also acknowledged challenges. The manager is likely to include the takeover of Gruner Jahr’s magazines among these. After the acquisition last year, RTL Germany announced in early February that it would cut 700 of the 1,900 jobs at the publisher and that it would discontinue or sell dozens of titles. The group wants to keep core brands such as “Stern” and “Brigitte”.
Fewer synergy effects than initially thought
The publishing business contributed “nothing” to the 2022 operating result, Rabe justified his decision. The hoped-for synergies are also likely to be lower than previously thought. By 2025, these should now amount to 75 million euros a year – and thus a quarter less than initially expected.
In the past year, internal sales increased by 1.6 percent to 7.2 billion euros. If you include the takeover of Gruner Jahr, the increase is significantly larger. Adjusted operating profit (EBITA) fell by six percent to 1.08 billion euros. The bottom line is that profit fell to 766 million euros after around 1.45 billion euros in the previous year. In 2021, however, RTL had benefited from high capital gains.
