RTL Group shares drop 11% as weak ads, profit decline overshadow streaming growth

Investing.com -- Shares of RTL Group (ETR:RRTL) fell more than 11% on Monday following the release of its 2024 financial results, as investors reacted to a 7.8% decline in adjusted EBITA and weaker TV advertising revenue in the fourth quarter. 

The entertainment company’s total advertising revenue slipped 4.7% in Q4, raising concerns about broader industry trends despite strong growth in its streaming business.

Revenue for the year remained stable at €6.3 billion, while adjusted EBITA fell to €721 million, down from €782 million in 2023. 

RTL Group attributed the decline to lower profit contributions from Groupe M6 in France, which offset gains from Fremantle and reduced streaming losses. 

The company’s adjusted EBITA margin fell from 12.5% to 11.5%, reflecting pressure on profitability.

Streaming remained a bright spot, with revenue surging 42% to €403 million. The number of paying subscribers increased 21% to 6.8 million across Germany, France, and Hungary. 

RTL Group also made progress in cutting streaming start-up losses, which declined from €176 million to €137 million. The company remains on track to reach streaming profitability by 2026.

Despite steady full-year TV advertising revenue of €2.35 billion, the fourth quarter saw a 6.4% decline to €742 million, following a strong first half of the year. Digital advertising, however, rose 9% to €405 million, helping offset some of the losses.

Content production through Fremantle remained stable at €2.25 billion, despite lingering effects from the 2023 U.S. writers’ and actors’ strikes and budget cuts by streaming services. 

The company continued to expand, acquiring Asacha Media Group and an 80% stake in Beach House Pictures to strengthen its footprint in scripted and non-scripted content.

RTL Deutschland’s audience share slipped to 26.3%, but the broadcaster extended its lead over rival ProSiebenSat.1 to 6.3 percentage points, its largest margin in over a decade. 

In France, Groupe M6’s audience share declined to 19.6% among commercial viewers aged 25 to 49, maintaining its position as the country’s second-largest commercial broadcaster.

Total (EPA:TTEF) group profit declined to €555 million, down from €598 million in 2023. Operating cash flow, however, remained strong, rising to €761 million from €537 million, with a cash conversion rate of 102%, up from 68% the previous year. 

Net debt stood at €492 million at the end of 2024, compared to €291 million a year earlier.

RTL Group expects adjusted EBITA to rise to €780 million in 2025, driven by lower streaming losses. 

Full-year revenue is projected to increase to around €6.45 billion, with streaming playing a key role. 

RTL Group cut its dividend to €2.50 per share, down from €2.75 per share in 2023, reflecting the decline in profit. The company maintained its policy of distributing at least 80% of net profit, despite weaker earnings and advertising pressures.