The international TV industry is experiencing a major transformation, with huge opportunities for those who are prepared to shape the future.
To successfully transform RTL Group’s business, two factors are particularly important. One is higher reach – combining linear and non-linear – which requires investments in content, marketing and a state-of-the-art streaming platform. The second is better monetisation of audience reach – via targeting and personalisation or recommendation – which requires investments in advertising technology and data.
RTL Group’s Board of Directors and Executive Committee have defined a strategy that builds upon three priorities:
1 Strengthening the Group’s core businesses.
2 Expanding RTL Group’s growth businesses, in particular in the areas of streaming, content production and technology.
3 Fostering alliances and partnerships in the European media industry.
Strengthening RTL Group’s families of channels – creating national media champions.
Wherever attractive opportunities arise, the Group aims to consolidate across its existing European broadcasting footprint, including through mergers and acquisitions to create national cross-media champions. The strategic rationale is about scale, pooling resources and creativity to compete with global tech platforms in the respective national markets. It is about higher investments in exclusive, local content to boost the growth of RTL Group’s streaming services. And it is about investments in tech and data and, in particular, addressable TV advertising. Hence, the following consolidation steps will create significant value for all shareholders through significant synergies.
In May 2021, Groupe TF1, Groupe M6, Groupe Bouygues and RTL Group announced they had signed agreements to enter into exclusive negotiations to merge the activities of Groupe TF1 and Groupe M6 and create a major French media group. The merger project was unanimously approved by the Boards of the four groups concerned. In July 2021, Groupe Bouygues and RTL Group signed agreements relating to the merger following the favourable opinions of the employee representative bodies. The potential synergies (Adjusted EBITA run-rate impact) were estimated at between €250 million and €350 million per year, to be fully realised by 2026. On 16 September 2022, Groupe Bouygues, RTL Group, Groupe TF1 and Groupe M6 decided to call off their plan to merge Groupe TF1 and Groupe M6. This decision came after the parties appeared at the hearings of the French competition authority’s board (Collège). Following the debates with the authority and despite the additional remedies proposed, it appeared that only structural remedies – involving at the very least the divestment of the TF1 TV channel or of the M6 TV channel – would have been sufficient to approve the proposed merger. The parties therefore concluded that the proposed merger no longer has any strategic rationale. The parties regret that the French competition authority did not take into account the speed and extent of the changes sweeping through the French broadcasting sector.
In June 2021, RTL Group and Talpa Network announced that they had signed agreements to merge their broadcasting and affiliated media businesses in the Netherlands and create a strong Dutch cross-media group. The merger will allow the combined group to step up investments in local content, streaming, technology and data, offering Dutch audiences the broadest spectrum of high-quality entertainment and reliable information programmes. Both the Dutch creative industry and advertising market will benefit from the ambitious long-term strategy pursued by RTL Group and Talpa Network. The transaction is subject to approval from the competent authorities. The potential synergies of the merger (Adjusted EBITA run-rate impact) are estimated at between €100 million and € 120 million per year, to be fully realised by 2025.
In July 2021, RTL Deutschland acquired the outstanding 50 per cent of the shares in Super RTL from its previous joint venture partner, The Walt Disney Company. RTL Group’s shareholding in Super RTL is now 100 per cent.
In January 2022, RTL Deutschland fully acquired Gruner + Jahr’s (G+J) German publishing assets and brands from Bertelsmann for €213 million on a cash-free and debt-free basis1. The potential synergies of the transaction (Adjusted EBITA run-rate impact) are estimated at around €100 million per year, to be fully realised by 2025. As of 1 January 2022, G+J contributes popular and trusted brands such as Stern, Brigitte, Geo, Capital, Schöner Wohnen, Eltern and Art to RTL Deutschland. The combination further strengthens RTL Deutschland’s position as partner of choice for Germany’s creative talent and will boost the growth of its streaming service RTL+, with investments in local content, positive entertainment and independent journalism, as well as technology and data. A joint editorial team with more than 1,500 journalists creates a journalistic powerhouse to deliver reliable news, investigative reports and features in all genres across TV, audio and print.
At the end of March 2022, RTL Group closed the sale of RTL Belgium to the Belgian media companies DPG Media and Groupe Rossel. In June 2022, RTL Group confirmed the close of the transaction to sell RTL Croatia to Central European Media Enterprises (CME). The sales of RTL Belgium and RTL Croatia are in line with RTL Group’s strategy to drive consolidation in the European TV industry.
Building and extending families of TV channels has been key to addressing increasing audience fragmentation and competition in a digital, multi-channel world, with the overall goal of keeping RTL Group’s audience shares and net TV advertising market shares in the various countries stable or growing them. In recent years, RTL Group’s families of channels have been extended by digital channels, including Nitro, RTL Up, Vox Up, 6ter, and RTL Z.
Another focus for strengthening the Group’s core business in broadcasting is to increase non-advertising revenue, by further growing the revenue from platform operators (distribution revenue). RTL Group aims to receive a fair revenue share for its brands and programmes from the major distribution platforms – cable network operators, satellite companies and internet TV providers – for services such as highdefinition TV channels, streaming platforms and digital pay channels.
Investing in content
Every year, RTL Group invests around €3.5 billion in content, combining the programming spend of its broadcasters and the productions of its global content business, Fremantle.
Exploring all possible ways to develop and own new hit formats while continuing to grow the Group’s investments in premium content are key to strengthening RTL Group’s core businesses.
Investment in local, exclusive content – including the rights for live sports events – strengthens both RTL Group’s linear TV channels and streaming services. For example, in January 2020, RTL Deutschland won the full and exclusive rights to broadcast and stream the Uefa Europa League and the newly established Uefa Conference League, starting with the 2021/22 season, for a period of three years. In March 2021, RTL Deutschland and Deutsche Telekom agreed on the sub-licensing of exclusive rights to 17 Uefa Euro 2024 matches, as part of the companies’ strategic partnership, announced in November 2020. The agreement covers the broadcast of 14 group phase matches, two round-of-16 matches and one quarter-final to be broadcast exclusively on free-to-air TV on RTL Television and live streamed on RTL+. In May 2022, RTL Deutschland announced an extensive deal with Uefa to broadcast half of all football matches of the German national team in the Uefa Nations League until 2028, the European Qualifiers for the Fifa World Cup 2026 and Uefa Euro 2028. In addition, the deal includes the broadcast of test matches of the German national team as well as final round matches of the Uefa Nations League even without German participation. These deals strengthen RTL Deutschland’s linear channels and will play an important part in attracting new paying subscribers for RTL+. RTL Nederland also acquired the rights to broadcast certain Uefa Champions League matches, starting with the 2021/22 season, for a period of three years.
RTL Group’s management continuously reviews the Group’s portfolio. In the past four years, RTL Group sold several non-core assets in Europe such as the football club Girondins de Bordeaux and the website MonAlbumPhoto in France, and the home entertainment and theatrical distribution company Universum Film in Germany, and the Vancouver-based digital video network BroadbandTV (BBTV).
These disposals are consistent with RTL Group’s strategy to focus on growing its European digital businesses in the areas of streaming and advertising technology, alongside the Group’s global content business, Fremantle.
Building national streaming champions
RTL Group is building national streaming champions in the European countries where it has leading families of TV channels. Making the most of the Group’s competitive advantage in local programming, these streaming services will complement global services such as Netflix, Amazon Prime and Disney+.
The strategy is rolled out either through stand-alone services such as RTL+ in Germany and Videoland in the Netherlands, or through national partnerships such as Salto in France.
RTL Group’s stand-alone services have gradually introduced a hybrid business model – consisting of various price packages. Lower-priced or free packages are predominantly financed by advertising. The various premium price packages include, for example, several parallel streams on various devices, the live signal of RTL TV channels in HD quality and premium content bundles including the programmes of the Group’s linear TV channels in the respective countries, plus premium content either exclusively produced or licensed from third parties.
At the end of September 2022, RTL Group registered 4.784 million paying subscribers for its streaming services RTL+ in Germany and Videoland in the Netherlands, up 40.6 per cent year on year (end of September 2021: 3.402 million).
The rapidly growing German streaming service was rebranded as RTL+ in November 2021 and, on average, provides more than one original per week. In 2022, RTL+ was expanded to a cross-media entertainment service, comprising video, music and podcasts , which is a unique selling proposition in the German-speaking market.
As a consequence of these increased investments in RTL+ and following the strong growth of the Group’s streaming services, RTL Group raised its streaming targets in November 2021 and will therefore grow:
In November 2020, RTL Deutschland and Deutsche Telekom announced a strategic partnership. The partners integrated the RTL streaming service RTL+ Premium within Deutsche Telekom’s TV offer, Magenta TV. Since then, the price plans for both Magenta TV Smart and Magenta TV Smart Flex have included RTL+ Premium with no additional fee for customers.
In March 2021, RTL Deutschland and Sky Deutschland announced an agreement for closer collaboration in the areas of streaming and content. RTL+ Premium has been available for an additional premium on the Sky Q platform since June 2021. As part of the agreement, Sky exclusively sub-licenses Formula One free-to-air rights to RTL Deutschland for the 2021 and 2022 seasons.
In June 2021, RTL Nederland and T-Mobile in the Netherlands announced that Videoland will become part of T-Mobile’s new Unlimited & Entertainment proposition. The new offer gives customers access to both Videoland Plus and Netflix Standard as well as unlimited 5G data, calling and SMS in the T-Mobile network in the Netherlands with an attractive price advantage.
Expanding RTL Group’s global content business, Fremantle
RTL Group’s content business, Fremantle, is one of the world’s largest creators, producers and distributors of scripted and unscripted content. Fremantle has an international network of teams across production and distribution, operating in more than 25 countries, being responsible for around 12,000 hours of programming per year, and distributing content worldwide.
Fremantle targets full-year revenue of €3 billion by 2025. To reach this goal and keep up with the increasing demand for content, RTL Group will invest significantly in Fremantle – both organically and via acquisitions – in all territories across drama and film, entertainment and factual shows and documentaries.
Fremantle pursues three strategic goals:
Given current market trends, drama series are key for RTL Group’s expansion plans for both its streaming services and its global content business, Fremantle.
Since 2012, Fremantle has invested heavily in high-end productions, to accelerate its growth in scripted series. With a number of acquisitions – including Miso Film in Scandinavia, Wildside and Lux Vide in Italy, Kwaï in France, Abot Hameiri in Israel, This is Nice Group in the Nordics, Dancing Ledge in the UK and Element Pictures in Ireland – Fremantle has created a global network that now comprises 20 production sites for drama series.
Fremantle also bought minority stakes in a number of new production companies, to secure first access to their creative talent and output. Working with world-class storytellers is key to Fremantle’s scripted strategy. Fremantle – together with broadcasters and streaming platforms – delivered 81 scripted productions across drama, film and soaps in 2021.
As a result of this strategy, Fremantle generated 29 per cent of its total revenue in 2021 from drama productions and expects this share to grow further over the coming years.
Investing in technology and data
Combining key success factors of TV advertising – such as high reach, brand safety and emotional storytelling – with data and targeting offers significant growth potential for RTL Group’s largest revenue stream: advertising. Addressable TV will grow available inventory, attract new advertisers and deliver higher CPMs. Market studies predict that addressable TV could account for 30 to 50 per cent of all TV advertising spend in Europe in the long term.
RTL Group’s largest unit, RTL Deutschland, is responsible for the Group’s ad-tech business, Smartclip. The objective is to create an open ad-tech platform, based on the technology developed by Smartclip and tailored for the needs of European broadcasters and streaming services. Accordingly, RTL Deutschland will invest further in evolving and growing the Smartclip platform.
In October 2021, RTL Group announced a comprehensive cooperation with the advertising technology company Amobee, to strengthen both companies’ ad-tech businesses in continental Europe. As part of TechAlliance, RTL Group and Amobee will establish a jointly owned sales and services company for the ad-tech services of Amobee and Smartclip in Europe. The TechAlliance offering will also use Yospace’s technology solutions. TechAlliance will give advertisers programmatic access to the addressable TV inventory of broadcasting partners from RTL Group and Smartclip.
The tech platform for RTL Group’s streaming services is built by Bedrock, a French technology company. A common platform allows RTL Group to bundle its investments in streaming technology. The Bedrock platform serves Groupe M6’s streaming service, 6play, the French subscription service Salto, Videoland in the Netherlands, and the RTL streaming service in Hungary.
Within the area of data, the open log-in standard NetID was developed by the European NetID Foundation and initiated by RTL Deutschland, ProSiebenSat1 and United Internet. The standard offers a single sign-on that can be used on numerous German websites, and which already has a reach of more than 35 million users.
In 2021, We Are Era launched the Social Intelligence Hub, pooling its data-driven services for brands, broadcasters, NGOs and platforms. It will offer partners psychographic and demographic insights and analyses covering communities across all social networks plus deep social listening insights about online conversations.
In competing with the global tech platforms, new alliances and partnerships between European media companies have become increasingly important.
In autumn 2019, RTL Group’s management started to promote new partnership opportunities – all based on the philosophy of bundling European broadcasters’ resources to establish open and neutral platforms. RTL Group offers these partnership opportunities in areas such as advertising sales, advertising technology, streaming technology, content creation and data.
Driving international advertising sales
One key development for RTL Group’s largest revenue stream – advertising – has been the increased demand from advertisers and agencies for global ad-buying opportunities. Consequently, RTL Group is expanding its international advertising sales to give international advertisers and agencies easy access to the Group’s large portfolio of TV and streaming services, digital video company and advertising technology, in a brand-safe environment.
In February 2022, RTL Group announced its decision to combine its fully-owned businesses RTL AdConnect, G+J iMS and the media division of Smartclip to create an international advertising sales champion called RTL AdAlliance. RTL AdAlliance will provide international advertisers with simplified access to a unique portfolio of media brands across TV, digital video, radio/audio, online, mobile and print.
Building one-stop sales houses for cross-media campaigns
Ad Alliance, launched in Germany in 2016, offers high reach to advertisers and agencies, and is a one-stop-shop for the development of cross-media solutions and innovative advertising products. Its portfolio spans television, radio/audio, print, and digital. Ad Alliance is the only sales house in Germany that offers complex, all-media campaigns from a single source. After the sales house Media Impact (Axel Springer) became a partner of the German Ad Alliance for its digital inventory in January 2020, the companies agreed to intensify their partnership and expand their advertising sales cooperation to Media Impact’s print titles, such as Bild and Welt, from January 2021. Together, the platforms of Ad Alliance reach 99 per cent of the German population. Ad Alliance remains open to additional partners.
RTL Nederland followed the German example by building an integrated advertising sales network for the Dutch market, also called Ad Alliance. The Dutch Ad Alliance integrates the sales activities of RTL Nederland, BrandDeli, Adfactor and Triade Media, and is also open to new partners.
1 The following Gruner + Jahr assets are not part of the transaction and will remain with Bertelsmann: DDV Mediengruppe (Sächsische Zeitung), Territory, AppLike Group and G+J’s 25 per cent shareholding in Spiegel Gruppe.