Earnings call transcript: RTL Q4 2024 sees streaming growth amid revenue dip

RTL Group’s latest earnings call revealed a mixed financial performance for the full year 2024. Despite a stable earnings per share (EPS) of €2.97, the company’s stock price fell by 3.36% to 35.75, reflecting investor concerns over decreased adjusted EBITA and EBITDA. The company reported promising growth in its streaming segment, which may provide a positive outlook for the future. According to InvestingPro data, RTL maintains a healthy financial position with a "GOOD" overall health score of 2.78, supported by strong cash flows and moderate debt levels.

Key Takeaways

• Streaming revenue share increased from 4.5% to 6.4%.
• Total group profit reached €555 million.
• Organic revenue decreased by 1.5%.
• German TV advertising market declined by 2-3% in 2024.

Company Performance

RTL Group reported a slight increase in full-year 2024 revenue, reaching €6 billion. The company faced challenges with a 1.5% decline in organic revenue and reductions in both adjusted EBITA and EBITDA. Despite these hurdles, RTL maintained a stable EPS and saw significant growth in its streaming services, which now account for a larger share of total revenue. InvestingPro analysis shows the company maintains a robust gross profit margin of 56.08% and offers an attractive dividend yield of 6.56%, demonstrating its commitment to shareholder returns despite market challenges.

Financial Highlights

• Revenue: €6 billion, slight increase year-over-year
• Earnings per share: €2.97, stable compared to previous year
• Adjusted EBITA: €722 million, decreased from prior year
• Adjusted EBITDA: €992 million, decreased from prior year

Market Reaction

RTL Group’s stock price dropped by 3.36% to 35.75 following the earnings announcement. This decline reflects investor concerns over the decreased adjusted EBITA and EBITDA. The stock remains near its 52-week high, with an impressive YTD return of 33.77%. Based on InvestingPro Fair Value analysis, the stock appears to be trading above its intrinsic value, with technical indicators suggesting overbought conditions. Subscribers can access 12 additional ProTips and comprehensive valuation metrics through the Pro Research Report.

Outlook & Guidance

Looking forward, RTL Group expects 2025 revenue to reach approximately €6.5 billion, with an adjusted EBITDA target of €780 million. The company aims to expand its streaming subscriber base to 9 million by 2024 and achieve a 9% EBITA margin at Fremantle by 2026. With a P/E ratio of 11.39x and solid financial metrics, including a current ratio of 1.31, InvestingPro data reveals the company’s strong financial foundation for future growth initiatives.

Executive Commentary

Thomas Haase, CEO of RTL Group, emphasized the company’s commitment to transformation, stating, "We are investing in the transformation of our businesses." Additionally, Stefan Schmitter, CEO of RTL Deutschland, highlighted the importance of sports rights in the company’s content strategy, noting, "We view these rights as must-have content for sports in the DACH countries."

Risks and Challenges

• Continued decline in the German TV advertising market could pressure future revenues.
• Decrease in organic revenue suggests potential market saturation or increased competition.
• Execution risks associated with the expansion of streaming services and content strategy.
• Economic uncertainties in key markets could impact consumer spending and advertising budgets.

Q&A

During the Q&A session, analysts focused on advertising trends and streaming performance. Questions highlighted the stability of advertising in France and the expected flat revenue for Fremantle in 2025, reflecting cautious optimism about the company’s future performance.

Full transcript - RTL Group SA (RRTL) Q4 2024:

Mohit, Call Operator: Ladies and gentlemen, thank you for standing by. Welcome and thank you for joining the conference call for RTL Group’s Full Year Results 2024. I’m Mohit, the call operator. At this time, it’s my pleasure to hand over to Oliver Feilbusch. Please go ahead, sir.

Oliver Feilbusch, Presenter/Moderator, RTL Group: Yes, thank you. Good morning, everyone, and thank you for joining our analyst call for RTL Group’s Full Year Results 2024. The speakers for today’s presentation are Thomas Haase, the Group’s CEO Elmer Hecken, our Deputy CEO and COO Jern Bauer, our CFO and Stefan Schmitter, the CEO of RTL Deutschland. Our management team will first guide you through the presentation. Afterwards, we will take your questions.

The presentation for this call is available on our corporate website, atl.com, following the link included in our press release under download. The agenda on Slide two shows the areas our management team will cover today. And with this,

Thomas Haase, Group CEO, RTL Group: over to you, Thomas. Yes. Thank you, Oliver, and good morning, everyone. Thank you for taking the time to join us on this call. Today, we’ll take you through our full year results 2024, the outlook for 2025 and an update and we’ll update you on our strategy and growth plans.

A special welcome to Stefan Schwitters. After our outlook statements, he will present in more detail our largest streaming service, Arcea Plus in Germany and how Arcea Plus will reach profitability next year. After that, we’re happy to answer your questions. Starting on Slide four, let me point out the highlights. In 2024, RC Group once again demonstrated resilience and achieved solid results despite a challenging market environment, in particular in Germany.

Our streaming services continue to grow dynamically in all key dimensions. Number of paying subscribers, viewing our subscription and advertising revenue. As a result, the streaming startup losses decreased significantly and we are firmly on track to reach our long term streaming targets and profitability in 2026. Our German family of TV channels continued to perform strongly, increasing its audience lead over Proseem. Der.

Eins and further increasing its share of the German TV advertising market. As a result, TV advertising revenue across the group remained stable in 2024. We further strengthened our global content business, Fremantle, with a significant overhead reduction and the EBITDA contribution from Azaha Media Group acquired in March. Fremantle reached a record result in 2024 and significantly improved its operating margin. Our strong results and cash flows enable us once again to pay an attractive dividend of per share.

To summarize, we are investing in the transformation of our businesses and we reached turning points in our streaming service and content production business. As a result, we expect to significantly increase our adjusted EBITA to around €780,000,000 in 2025 and continuously thereafter. Finally, an update on the planned sale of Atherneteland to DPG Media. The sales team investigation of the Dutch competition authority, ACM is ongoing, and both we and the Bayer DPG Made Media are fully cooperating with the regulator. We remain confident to obtain approval and to close the transaction in the second quarter of twenty twenty five.

Over to Bjorn, who will now take you through the group’s financials in more detail. Bjorn?

Bjorn Bauer, CFO, RTL Group: Yes. Thank you, Thomas. Good morning, everyone. As a short reminder, our operating segment, Adi and Nederland, is classified as a disposal group held for sale and is presented as a discontinued operation in our consolidated account for the year 2024. In accordance with IFRS five, discontinued operations are reported separately from continuing operations.

And if not indicated otherwise, All figures in this presentation refer to continuing operations, I. E, without RTM Milanes. Let’s start with a look at our key financials on Slide six. The TV advertising markets in our two key territories, Germany and France, were slightly down or flat over the full year and weaker than expected in the second half of the year. Nevertheless, and thanks to market share gains in Germany, we managed to see TV advertising revenue across the group stable in 2024.

The same is true for freelance revenue, where the positive scope effect, primarily from the acquisition of Apara Media Group, were offset by lower than expected growth of the global production market. On the other hand, our streaming businesses continue to grow dynamically. Streaming revenue was up 42% in 2024. As a result of these effects, RTA group revenue was only slightly up to billion in 2024. Adjusted for portfolio changes and at constant exchange rate, group revenue was down 1.5% organically.

Our adjusted EBITA decreased to seven twenty two million euros in line with the guidance we provided one year ago. The decrease was mainly due to the lower profit contributions from Cook and Cies, partly offset by higher contributions from Fremantle and significantly lower streaming startup losses at RTS Deutschland. The adjusted EBITDA decreased to EUR $992,000,000. And as EBITDA is a metric used more is a metric most used by CMS competitors and also by analysts for the variation of content businesses, we will primarily comment on adjusted EBITDA going forward when we present a freelancer operating profit. For the group overall and for all other businesses, adjusted EBITDA remains the key performance indicator for operating profitability.

Total group profit was EUR $555,000,000 with EUR $428,000,000 coming from Coutinho operations. Now, earnings per share were broadly stable versus prior year at €2.97 per share. A few words on the performance of Adient Nederland. As we also present the performance figures on this slide, Adient Nederland grew both revenue and adjusted EBITA in 2024, driven by the continued growth of VideoLAN, which for the first time generated a substantial profit contribution. Moving on to the next slide.

If you break down our continuing operations by revenue stream instead of business units, you can see our total revenues well diversified with 38% from TV advertising and 32% from content. Thanks to our transformation strategy and to active portfolio management, we have significantly reduced the group’s dependency on TV advertising revenue, more cyclical in nature. Three years ago in 2021, ’40 ’6 percent of our total revenue came from TV advertising. Revenue from other rights exploitation captured ad hoc revenue from our major streaming services and among others, group entities, all division rights business SMBs. Streaming revenue includes export revenue, digital advertising and distribution revenue, all of which are significantly in 2024.

This variety reflects the hybrid business model of streaming services. The strategy of streaming revenue as the share of streaming revenue of R. A. Gross total revenue grew from 4.5% in 2023 to 6.4% in 2024. If you look at our main broadcasting businesses, the share of streaming revenue was 10% in 2024.

Moving on to Slide eight and looking at the main items below adjusted EBITDA down to group profit. The €87,000,000 significant special items mainly reflect cost efficiency measures at RTL Deutschland and Fremantle. We can see an improvement of almost €40,000,000 compared to 2023 when the restructuring of S. A. Dolce and Publishing business resulted in higher one offs.

Another positive impact came from the line their value measurement of investments and re measurement of non operations. As you know, we sold our interest in products to The U. S. Asset company, Magnein, in April 2021 and received part of the consideration of shares. Magnein share price increased significantly in the first nine months of 2024, leading to a remeasurement of the Magnein share amounting to plus EUR 40,000,000.

In September, we sold all of our remaining shares. I will come back to this in a minute with the actual statements. The financial result was minus EUR 32,000,000 from net to minus EUR 30,000,000 in 2023, mainly due to higher interest expenses. Group’s tax charge came in at million. The reported tax rate in 2024 was 26.

The normalized tax rate, I. E. Without special items, was 33%. Moving on to Slide nine with a closer look at our cash flow. Until the closing of the planned sale of RTL Miraland, RTL Group will continue to benefit from all cash flows and profits generated by Adel and Lederland.

On this slide, we present pro form a figures for our cash flow. Total net cash from operating activities, including Adel and Lederland, increased by more than 40% to EUR $761,000,000. The net cash outflow for acquisitions and disposal was EUR 46,000,000. The main items here were the outflow for the acquisition of Assata Media Group and the inflows on the disposal of shares, primarily the Magnite shares. The operating cash conversion rate for continuing operations was 102%, a significant improvement from 68% in 2023.

At the December, RDA Group had net debt of EUR $492,000,000. Our net debt to adjusted EBITDA ratio stands at approximately 0.4 times. As announced in our half year analyst call in August, this is a significant reduction from the EUR1.1 billion net debt at the June 2024. Let’s move on to Slide 10, our dividend proposal. Our dividend policy is based on the group’s full year process, attributable to RDA Group shareholders and adjusted for any material non cash impact.

And we target a payout ratio of at least 80%. In line with this dividend policy, our Board has proposed a dividend of per share for 2024, corresponding to an 83% payout ratio. The contribution of Adi and Niladani to this proposed dividend is $0.7 Based on the average share price for 2024, the proposed dividend represents a dividend yield of 8.3%. Taking the proposed dividend for 2024 into account, RPA Group will have returned around EUR 2,700,000,000.0 or EUR 17.25 per share to its shareholders from 2021 to 2025. The dividend proposal for the financial year 2024 does not yet include the significant value crystallized by the planned sale of Adi and Miraland.

With an expected capital gain of around EUR 800,000,000.0, which we will mostly take. The balance alone would result in an extraordinary dividend from cash capital gain of EUR 4 plus per share after closing of the transaction. For the business review, I will now hand over to Amar.

Oliver Feilbusch, Presenter/Moderator, RTL Group: Thank you, Bjorn, and good morning. For the business review, I will start with Arthur Deutschland on Slide number 12. In 2024, our largest business unit significantly enhanced its market positions in linear TV and streaming. We estimate that the German net TV advertising market was down minus 2% to minus 3% in 2024 with RTL Deutschland significantly outperforming the market. RTL Deutschland reached a combined average audience share of 26.3% in the target group of viewers aged 14 to 59, increasing the lead over the main commercial competitor, Proseventh and Peins, from 5.8 to 6.3 percentage points.

This is the biggest lead in over ten years. Our flagship channel, RTL, was the only major commercial TV channel to achieve year on year growth in all relevant target groups in the year of major sporting events that were largely available on the public broadcasters. In streaming, RTL plus continued its rapid growth. Paying subscribers were up 23% year on year to almost $6,100,000 at the December, while viewing time increased by 67%. Looking now at the financials of RTL Deutschland in 2024.

RTL Deutschland’s revenue grew by 1.4% to €2,660,000,000 mainly thanks to strong growth in streaming. This was partly offset by lower revenue from the publishing business due to the sale and discontinuation of some magazine titles in 2023. Adjusted EBITDA increased two percent to EUR $327,000,000. Lower streaming startup losses had a positive impact, but higher content costs for the UEFA Euro twenty twenty four matches largely balanced this out. Moving now to GroupMCS on Slide number 13.

Total revenue of Group MCs was stable at EUR1.31 billion. Rapid streaming growth was offset by scop effects and slightly lower TV advertising revenue. Adjusted EBITDA decreased to EUR253 million, mainly due to higher content costs, primarily for the broadcast of the Euro twenty twenty four matches and higher streaming costs due to the investments in M Sysplus. The launch of M Sysplus has been a major success. Compared to the previous service display, M Syspluis registers 30% more monthly users and increased streaming hours by 35%.

This plus now attracts the youngest audience amongst free and French streaming services. According to MediaMe3, M Syspluis was also the market leader in time spent per user on French streaming services in the age group 25 to 49. Let’s now turn to our global content business, Fremont. In 2024, the international market for content production was still impacted by the twenty twenty three U. S.

Strikes and by budget costs from streaming services and advertising finance broadcasters. We have seen this over the past weeks in the figures disclosed among others for ITV Studios and Bani J production business. Organically, Fremantle’s revenue was down 8%. On a reported basis, Fremantle’s revenue was stable at billion due to scope effects from the acquisition of Azaka Media Group. Adjusted EBITDA, the metrics used by most of Fremantle’s competitors, increased strongly to EUR $260,000,000, representing a margin of 11.5%.

This was slightly above the average EBITDA margin in the content production market of around 11%. Adjusted EBITDA was also up strongly to €171,000,000 the company’s highest result ever. The increase was driven by a significant reduction of overhead costs and by the first time contributions of Zaha Media Group. I will now hand you back to Thomas, who will take you through the strategy update and the outlook for 2025.

Thomas Haase, Group CEO, RTL Group: Yes, many thanks, Elmer and Bjorn. Let’s turn to Slide 16. Our strategy framework is based on three priorities core, growth and alliances and partnerships. Core means investing in premium content, strengthening our family channels, as well as cost and portfolio management. Growth areas are our streaming services, advertising technology and adjustable TV, as well as content production with Stream Atlas.

And alliances and partnerships span from advertising sales and content production to technology and data. Moving to Slide 17. Strengthening our core business means, above all, investing in premium content. In 2024, our main TV channels and streaming service in Germany and France achieved excellent audience performances with matches European Football Championship, while UEFA Champions League had a strong start in RTO plus in Hungary. Exclusive rights for live sports events are essential for both linear TV and streaming.

They reach mass TV audiences, attract new subscribers to our streaming services and drive engagement across all platforms. We continue to invest selectively and in 2024, secured additional premium sports rides. For example, GroupMC has acquired the exclusive free to air rides for most nationals of FIFA World Cups twenty twenty six and 02/1930, and RT E Der Haestrand acquired highlights rides for the German Football League for RT plus and additional free to air rights for the week. Moving on to Slide eighteen and to our global content business, Fremantle. Over the past years, Fremantle has significantly grown its portfolio across all genres and regions with acquisitions in The Nordics, The U.

S, Italy, France, U. K, Asia and Australia. Following the acquisitions of Azar Hamiliac Group and Beach Town Pictures at the start of 2024, the focus of Fremantle shifted to post merger integration and margin improvement. Elmer already pointed to the significant OS reductions in 2024. In a strategy review in the first quarter of twenty twenty five, Fremantle’s management team defined five top priorities.

First, long running formats and IP rights are the foundation of content of the content business of Fremantle. Fremantle has a proven track record in developing strong format brands and rolling them out across the globe. To further expand our IP portfolio, we’ll ramp up FreeMaths’ own IP development and invest accordingly. Secondly, we’ll explore the use of AI across the content development and production value chain. Several pilots have demonstrated the potential for significant productivity gains.

We’ve now started to systematically deploy AI at Fremantle. Thirdly, we see only limited scale returns for large mergers in the content production space. Therefore, we’ll continue to focus on IT driven acquisitions of small and medium sized production companies. Fourth, these acquisitions will help to grow our presence in attractive geographies and genres. And fifth, we plan to further increase FreeMetal’s adjusted EBITA margin to 9% by 2026 by scaling the organization with continued cost discipline and by deploying AI.

Given the high quality of earnings, we expect that FreeMetal will generate operating cash conversion rates of 90% to 100%. In 2025, Fremantle’s adjusted EBITDA is expected to be only up slightly due to the investments in IP and AI, which I alluded to. Now let’s turn to Slide 19 with a closer look at our streaming services. Streaming is at the core of the transformation of the TV industry. We’re very pleased with the dynamic growth in the past six years.

Paying subscribers grew by a factor of 8.7 times over the past six years and were up 21% in 2024 to almost 6,800,000. The partnership with Deutsche Telekom remains a growth driver. Already mentioned, we are delighted about the extension until at least 02/1930. Altair Group streaming service was up 42% streaming revenue, sorry, was up 42% in 2024 as we increased subscription prices in Germany with no significant additional churn and boosted advertising revenue in both entities, Greece in France and Artio plus in Germany. To summarize, we have invested significantly in content tech and marketing and defined ambitious midterm targets for streaming services, which are now clearly in sight.

By 2024, we aim to reach 9,000,000 paying subscribers, around €700,000,000 of streaming revenue. We plan to increase our content spend to around €500,000,000 and most importantly, to become profitable. Moving on to Slide 20. The key steps for the remaining profitability are well defined and we are making progress across the board. I’ll be brief on this and Stefan Spitzer will present more details for Altium Plus in Germany in a few minutes.

We’ll continue to grow our subscriber base by offering attractive exclusive content and by addressing new target groups. We’ll increase revenue per subscriber by increasing prices and growing both advertising and distribution revenue. And finally, we’re optimizing the cost base of our streaming services. In 2024, we announced that our largest streaming service, AltairPlus in Germany will migrate to the Bedrock technology platform, which already serves entities placed in France, Bederland in The Netherlands and AltairPlus in Hungary. The goal is to complete the migration in early twenty twenty six, creating a true European champion streaming technology Moving on to Slide ’21, we continue to actively build alliances and partnerships.

Last year, we forged the content partnership with Sky Dorsland and the Antech partnership with Proseem Lod Ains. At the same time, we have significantly stepped up internal collaboration as evidenced by the planned migration of Antibplatz in Germany to the Bedrock platform. Similarly, the advertising sales sales of RM Group and Sys will progressively integrate Smartlip’s ad tech solutions. AI technology has a power to fundamentally transform our businesses by enhancing creativity and driving productivity. We’re investing in AI, training our workforce and have entered into partnerships with AI companies such as OpenAI and Complexity.

In streaming, Bedrock will benefit from the partnership with OpenAI and will, for example, significantly improve its recommendation algorithms. Adi Deutschland is working with OpenAI on its Newsroom of the Future initiative launched last year. Project aims to support journalists by giving them more time for core tasks. Other AI projects focus on marketing, advertising, video generation and audio production. Now let’s turn to the outlook for 2025.

The geopolitical and macroeconomic environment is more volatile than ever. And the impact on Altice Group’s business has to predict. Assuming at least stable TV advertising revenue across the group, we expect full year revenue to increase to around billion, driven by significantly higher streaming revenue and portfolio effects. We expect our adjusted EBITDA to increase strongly to around €780,000,000 mainly due to another significant reduction of streaming startup losses of million in 2024 to around million this year. We expect another back loaded year, meaning that a significant part of our profits will be generated in the second half and in particular in the fourth quarter.

Hence, we will keep a or continue to keep a close eye on current trading and would implement cost measures early on to reach full year profitability and the outlook. Beyond 2025, we expect that our adjusted EBITDA will in steps increase towards billion. This will be driven by five factors. First, slight recovery of the German TV advertising market, fueled in part by the significant infrastructure and security investments planned by the new government. Second, continued outperformance by Artio Germany.

Third, profitability of Artio Streaming Services. Fourth, three metal growth and margin expansion. And fifth, AI productivity gains. Finally, our dividend policy will remain unchanged. Artyom will continue to pay out at least 80% of the adjusted fully net result, thus maintaining the balance between investing and the transformation of our business, while ensuring attractive cash returns to our shareholders.

As mentioned, Fabienne, our shareholders will benefit from the significant capital gain resulting from the planned sale of Arteo investments. This brings us to the end of our general presentation. I would like to hand over to Stefan Schmitter to to present the strong position we’ve achieved with RTL plus in Germany, German streaming and how the service will become profitable in the next two years. Stefan, over to you.

Stefan Schmitter, CEO RTL Deutschland, RTL Group: Thank you, Thomas, and hello, everyone. Thank you for listening. I’m Stefan Schmitter, the CEO of RTL Deutschland. I joined RTL more than twenty years ago and have led over the years, among others, our German radio business and the news operations at RTL Deutschland. Before taking over as CEO in 2024, I was responsible for all content and brands of RTL Deutschland.

Today, I’ll take you through the strategic priorities for RTL plus our growth trajectory and our path to profitability in 2026. Moving on to the next slide. In Germany, RTL Plus stand out as the only local player successfully competing in both linear TV and streaming under one strong be the must have local entertainment choice with live TV brands, live TV and live sports, as well as rich exclusive and non exclusive on demand content. We clearly observe advertising and streaming is gaining significance and acceptance among customers. This plays to our strengths.

For example, our sales help ad alliance boost our advertising reach and revenues or looking at the wider Bergstrom portfolio to enhance our multi entertainment offering to consumers. For example, we have audiobooks from Penguin Random House available on RTL plus And we pushed the RTL plus offering into the market through our extensive RTL product universe in Germany, from TV trailers through radio and our publishing assets such as NTFAWDA and STERM. In the bigger picture, market dynamics provide tailwinds for RTL plus Let’s look at video consumption on the next slide. Video consumption continues to dominate the media usage of Germans with almost four hours per day on the big screen, still a very impressive figure. We of course see a clear shift towards non linear viewing.

In the age group of 14 to 59 years, this already accounts for 35% of viewing and it is much higher for younger audiences. The market potential for streaming in Germany remains huge with an estimated 100,000,000 to 120,000,000 potential subscriptions. Our goal to capitalize on the shift from linear to streaming and establish RTR plus as a top three player in the market. Looking at the next slide, we can see how the market has developed over the past few years. The German streaming subscription market has doubled in size since 2020 and today count 72,000,000 subscriptions.

RTR plus shows the fastest growth in the entire market, on average more than 50% per year since 2020 significantly outgrowing the market average growth of 15% per year. Today, we count more than 6,100,000 subscribers, which means 8% to 9% of all subscriptions. Moving to the next slide. Our dynamic growth is a result of making the right strategic choices and we expect our growth to continue. Today, we rank fourth in the market by paying subscribers with Amazon Prime, Netflix and Disney plus ahead of us.

But we are the clear number two by daily usage. This point is very important. To further grow the monetization of advertising and streaming requires volume in watched hours. It also shows how relevant RPA plus and our content is to our subscribers and it is the most important KPI for churn management. Our goal is to reach around 8,000,000 paying subscribers and around 25% of all German speaking households in the DACH market and thus profitability in 2026.

Our current position versus our main competition gives us great confidence to achieve this. Moving on to the next slide. Compared to our local abode competitor, Join, Athia plus maintains leadership across all important dimensions. With six fifty million watch hours in 2024 and sixty seven million growth year on year, we further established our leading position in the German streaming space in terms of usage and engagement. We are significantly larger than join in terms of paying subscribers, watched hours and even net reach and this has a hybrid SVOD offer.

Now, let’s look ahead. As stated, our goal is to reach profitability with RTL plus in 2026. We are well on track with key initiatives underway to pave the way. For example, our new growth target groups such as family with children. As Thomas said, we renewed and extended our partnership with Deutsche Telekom with a five year distribution deal, which will generate significant additional revenues.

We are also looking at further price increases and the continued focus on video content going forward to boost our live sports and fiction offering as well as our advertising reach. The migration of RTS plus in Germany to Bedrock and AI driven efficiency will further support our journey to establish the long term success of RTS plus The Bedrock project alone will generate substantial and long term technology cost savings. We significantly cut streaming startup losses for RTL plus in Germany in 2024 and will further cut them in half this year. Allow me to share some more insights into two important drivers for profitability, our approach to pricing and content. In summer twenty twenty four, we adjusted our tiering structure and introduced a fourth plan, the advertising heavy basic plan for per month.

This move was well received by our subscribers with no impact on churn. This step increased our ARPU by more than 25% and already doubled our run rate advertising revenue as of today. The new tiering approach gives us access to new consumer groups and provides better upselling opportunities. At the same time, we can maximize the subscription and advertising revenue potential. Future price increases will boost our ARPU and help us recoup our content investments.

Let’s look at these on the next slide. On content, we have established ourselves as the local home of reality and have successfully convinced millions of subscribers with our TV best brand and shows like Amazon Epipity, Get Me Out of Here, Let’s Dance or The Daily Soap, Good Times, Bad Times, which is doing fantastically for us since 1992. In 2024, we’ve invested around 50% of our RTL plus content budget into TV content and reality formats where we have the leading market position. We have a clear content investment strategy in place to push further into streaming and grow by expanding our live sports position and fiction portfolio. In fiction, for example, we have recently added the Barbie movie, which is generating great inflow numbers fast.

Our goal is here to expand our offering of premium U. S. Fiction movies and series such as Barbie, Harry Potter and the Good Doctor as well as adding selected local fiction, Talk of Town highlights. In terms of live sports, we are already home tier one sports competitions such as the UEFA Europa and Constance League, the American NFL and the emerging Mixed Martial Arts trends. In January, we will invest further and look at all relevant upcoming sports tenders.

As we already did with the new highlights rights for all matches of the first and second Bundesliga starting with the new season in August 2025. We view these rights as must be content for sports in 2DS, in the German speaking countries and is very important for our content strategy. And they allow us to showcase again the enormous power of combining linear and streaming under one brand and one company. Let’s look at the Bundesliga sports rights in more detail. Our linear flagship channel RTL will host top matches of the second Bundesliga on Saturday evening.

Often, these matches feature some of the most iconic German football clubs with huge fan bases. These games will not only be doing great on linear TV, but are the perfect marketing platform to promote the streaming rights we acquired for RTR plus which will be the first streaming Bundesliga highlight show in the German market. These rights protect our linear audience shares and boost our live streaming capabilities, reach and monetization. In short, another strong support for our market leadership in realities and shows. Moving on to the next slide.

On the left, you can see the top streaming formats in Germany across all platforms and services by time spent. We are home to five of these 10 most consumed formats. This underlines how established format brands from Linear TV performed strongly on streaming too with little to no cannibalization. These formats will continue to be a strong backbone of our content offering. To wrap things up, we are on a clear path to turn Artio plus into a profitable and sizable business by 2026.

We operate at scale in linear and streaming with one brand in growing market with tailwinds and with an unmatched local content offering. We can bundle Artiom Plus with Deutsche Telekom’s IPTV offering Magenta TFAO into almost all tech platform on backlog. In addition, we are leveraging AI on customer engagement and customer care, thereby operating very efficiently. Hence, we have all we need to become Germany’s top three streaming service. And with that, I’m handing back to Thomas.

Thank you very much for your attention.

Thomas Haase, Group CEO, RTL Group: Well, many thanks, Stefan, and thank you all for your attention. We are now ready to take

Mohit, Call Operator: And the first question comes from Annick Maas from Bernstein. Please go ahead.

Annick Maas, Analyst, Bernstein: Good morning. Thank you for the presentation. My first question is on the first quarter TV advertising environment in Germany. If you can give us a bit more ideas of what you’ve seen so far. My second one is on M6.

You’ve been buying shares since the end of last year and into this year as well, which you hadn’t done in a very long time. With the plans that were supposed to happen in France A Couple Of Years ago that didn’t go through. Can you maybe tell us a bit more around the rationale of having bought or keeping on buying these shares? And my last one was, so I’ve been looking at the Fremantle margins and trying to look at other production distribution companies such as Panigee for example. And I see there’s big margin gap in between the two plays.

And I kind of wanted to understand from your point of view, why do you think there is this margin gap? Thank you.

Thomas Haase, Group CEO, RTL Group: Okay. Very good questions. Thank you. Let me start with the TV market, advertising market in Germany. Marg was broadly stable in January and February, weaker in March, partly due to Easter and slightly stronger most probably in April.

Most importantly, we expect that Artios advertising revenue will be flat on a full year basis, gaining market share, so we expect the market to be slightly down. This is what we’re currently seeing. On MCs, background to MCs is that the 49% limit on shareholdings in companies that have an audience share of more than 8% and hold a license. Our share, that’s a share of all markets, has dropped below 8% for the first time last year, which means that the 49% limit no longer applies to us and NMCs. And that has given us the opportunity or gives us the opportunity to increase our shareholding to above 50%.

But let me put this into perspective, we have obviously no intention to make a takeover bit. All we’ll be doing is to increase our shareholding to slightly above 50% to cement our control position. I think that is in the best interest of all shareholders. First time, as I said, the opportunity arose because of the audience and we are making use of this. At the same time, we consider the MC share price to be low and therefore the increase of the shareholding is also a good investment.

I can tell you that it’s very difficult to compare video production companies’ margins. One of the reasons we provided the EBITDA margin of FreeMetal for the first time this year is that most media production companies competing with us report on the basis of EBITDA margins, for example, Barney J. We so far reported on the basis of EBITDA only. If you look at our EBITDA margin of 11.5% and adjust for accounting differences between you will come to the conclusion that the margin difference is minimal. If you look at our EBITDA margin and compare it with Balijay and others, you’ll come to a similar conclusion.

The exception to this is ITV Studios, where the EBITA margin is higher, but I assume that this is partly due to related parties and internal transfer pricing between the TD business and the production business. So long story short, we looked into margins and margin comparisons in a lot of detail and concluded that there’s hardly any margin difference between free metal and other players in the market.

Annick Maas, Analyst, Bernstein: Thank you very much.

Mohit, Call Operator: Then the next question comes from Julien Roch from Barclays. Please go ahead.

Julien Roch, Analyst, Barclays: Yes, good morning. Thank you for taking the questions. On Q1 trends, you gave us Germany. I wonder whether you could give us France, Hungary and Netherland in case the deal doesn’t happen? And then our second question is streaming viewing in Germany, Six Forty Nine Million Hours.

Could we get total viewing? And also maybe those the total viewing and the streaming minutes on 14 to 29 so we can compare where you are versus the data you put on Page 25? And then lastly, you’re saying that Fremantle will reach EUR 3,000,000,000 of revenue in the medium term. I believe that before the target was EUR 26,000,000,000. So what do you mean by medium term?

Have you pushed back the EUR 3,000,000,000 target? Thank you.

Thomas Haase, Group CEO, RTL Group: Yes. On Fremantle, yes, we’ve pushed back the $3,000,000,000 revenue target for two reasons. First, the target is partly dependent on M and A, and we always said that. We’re very selective on M and A. And I’ll just reiterate that we will not be involved in large scale video production consolidation if it happens because we believe that the scale effects are not sufficient to justify such transactions and the complexity related to such transactions.

So we’re not going

Bjorn Bauer, CFO, RTL Group: to be

Oliver Feilbusch, Presenter/Moderator, RTL Group: part of that.

Bjorn Bauer, CFO, RTL Group: Advertising trends?

Thomas Haase, Group CEO, RTL Group: On the advertising trends?

Bjorn Bauer, CFO, RTL Group: Yes. Just with the, in France, we expect broadly stable advertising revenues in the first quarter and Hungary, we expect revenues to be up in the first quarter. And on the MINIT, total MINIT, however, this is three plus in Faltier Germany, we’re at 18,220,000,000.00 in 2024. And of that, $649,000,000 were non linear, the growth rate of 67%, and the share is up from 2% to 3.6% overall. On the 40% to $29,000,000

Oliver Feilbusch, Presenter/Moderator, RTL Group: figure, we’ll have to check

Bjorn Bauer, CFO, RTL Group: and can get back to you.

Thomas Haase, Group CEO, RTL Group: Just to add on Fremantle, I mean, if you look at the video production markets, the hey days are over. At least the growth rates have come down significantly for all players. Obviously, there are different regional differences and also genre differences. But overall, the revenue growth expectations are down significantly 4% to 5% a few years ago to probably 1% to 2% across all genres. And this has an impact, of course, on achieving the $3,000,000,000 target.

But it also means that we have shifted gears. And as I said before in our intro or in our remarks, we are now focusing increasingly on margin, margin enhancement. The margin pre match was up significantly last year, will continue to increase and we believe that AR is going to make a huge difference because it will have a significant impact on the video production value chain. The efficiency opportunities are significant, both for the video production companies, but of course also for the customers who will ask for their share and the tech providers. So the fact that we, it’s now $3,000,000,000 target medium term is just a reflection of reality of the market and the fact that we are very selective when it comes to the Oil and Medium Science M and A.

Mohit, Call Operator: And the next question comes from Conor O’Shea from Kepler Cheuvreux.

Conor O’Shea, Analyst, Kepler Cheuvreux: Three quick questions from me as well. So firstly, just to come back on the German TV advertising, I think your closest peer, as Jess said, down mid single digit overall in Q1 is, do you think you’re doing a bit better than that again? And second question, just on the streaming losses for the full year 2024 compared with what you were expecting at the first half. I understand that the increase in prices and ARPU, is that the only factor? Or did you make some adjustments in terms of what you spent versus what you expected to spend?

And then the third question on Fremantle, thanks for the guidance on 2026. In terms of 2025, can we have a little bit more detail on what you expect in terms of underlying revenue growth compared to what you see in the order book? And also should we expect to get a steady increase in the margins? Thank you.

Thomas Haase, Group CEO, RTL Group: Well, on free metal, we expect top line to be broadly flat, which is a reflection of the market dynamics, which I mentioned, maybe slightly up. Profitability will increase. But as I said in the intro remarks, we will significantly step up our investments in AI and IP development. This comes at a cost and will have an impact on short term profitability. But we believe that this is frankly in the best interest of the company and its shareholders as AI is there to stay and as I said, will have a profound impact on video production.

And own IP development, of course, takes some effort and some investment, but if done the right way, it’s incredibly value enhancing and much more so than acquired IP. So you’ll see a side step slide profitability increase of 300 this year, but then a more significant increase as we see first returns on the P and AI in the subsequent years. And as I said, a 9% EBITA margin in 2026, which is significant, which would be a significant increase. On the streaming losses, yes, I mean, we guided, I believe, for $200,000,000 losses. We ended the year at $137,000,000 but we did not compromise on top line growth as we mentioned.

So the streaming service, particularly at the Germany, continued to grow dynamically in terms of numbers of drivers and revenue. And yes, revenue came in, brought in by our expectations. We made some adjustments to the cost base, but as I said, not detriment of the top line growth, which shows that the business, as Stephan just presented, is managed very, very actively and

Bjorn Bauer, CFO, RTL Group: with

Thomas Haase, Group CEO, RTL Group: a very, very clear target of continuing top line growth and importantly, achieving profitability in 2026, which will then increase continuously in the following years. The other point to mention on the cost base, Seamingly, is the high synergies between linear TV and RTI plus Stephan, do you want to

Stefan Schmitter, CEO RTL Deutschland, RTL Group: add anything? Yes. So the combination, as I mentioned, is so strong because we can now exactly make a plan format by format where we play it out, first on linear or first on streaming platform. And the combination to have this under one brand, which is very special in whole Europe and the whole world because most of the streaming service have nonlinear television station. And some of the competitors like our colleagues from Munich, they have only a joint streaming platform and that presumes that Heinz’s linear channels.

So to have this all under one brand, you can combine the best of both worlds. And this is a really, really good position for us. And that’s why the growth is so big, it’s huge in the last few years. And that brings us to many, many new ideas in the future. And that’s why we are totally convinced that we bring this service in 2026 to profitability.

Thomas Haase, Group CEO, RTL Group: And that is of course, let me just come back to the kind of medium term outlook I gave, not towards $1,000,000,000 and it was minus $137,000,000 Schilling for startup losses. If you add this to the $721,000,000 of EBITDA this year, you’re already at $850,000,000 then you assume that Schilling will not only breakeven but will become comfortable. You add to this the 9% margin target for free matter, which is another one point x percent EBITA margin increase. And you add to this the other factors I mentioned, the ice flight recovery of Germany. Generally, the economy has been performing very, very poorly by any standard in the last years, including the CD advertising market, which has been the weakest in Europe in the last five years.

This is what will bring us to that level. In Q1 advertising, I mean, as I said, the guidance we provided, the kind of broad guidance I provided for Germany is based on the latest fact that figures. I think Pultein came out two weeks ago. We see weakness in March, as I said, partly explained by Easter, but not fully explained by Easter. We see a slight pickup in April because of Easter, but not sufficient to make up for the decline in March.

I think the most important point is the full year outlook, which continues to be zero. We’re continuing to gain market share also based on the agreements entered into with agencies for the full year. And importantly, the Airtier Lawfront management manages the cost base very, very actively. So if we, for example, would not end the year with a flat advertising revenue slightly down, we would compensate the effect by cost measures in order to hit the target results targets for Aker Germany and the overall target of $780,000,000 EBITDA for the group.

Stefan Schmitter, CEO RTL Deutschland, RTL Group: May I add one point? So, just say one thing. The last year quarter was very, very good, first quarter and last year. And now, the next quarters are are all were all in a bad shape last

Bjorn Bauer, CFO, RTL Group: year,

Stefan Schmitter, CEO RTL Deutschland, RTL Group: second quarter, third quarter and the fourth quarter. That’s why we think there are a lot of chances are coming up, especially if we get the political situation in Germany under control. That’s why we are very confident at the end that the first quarter is not really good at the moment and that there are some effects in that quarter. But at the end of the year, there are a lot of chances for us coming up, and that’s, I think, a big point to think about.

Thomas Haase, Group CEO, RTL Group: A very good point. For comps, which are honorees in the first quarter and much less so the subsequent quarters. And then clearly, as I said before, with the investment program that we’ve started, been announced, significant, biggest investment program in Germany ever, will have an effect on the economy, will have an effect on confidence and will therefore also have an effect on asset transition. Probably the out market in Europe with the biggest potential for catch up given the weakest app market in Europe. We lost 1,000,000,000 net advertising revenue in Germany since 2019.

That is very significant by any standard.

Conor O’Shea, Analyst, Kepler Cheuvreux: Indeed. Could I ask you just a quick follow-up on M6? What is your current your most up to date stake versus the 49% threshold of the 50% plus that you’re targeting? And also just to clear up, I thought I was on that the 8% threshold applied to the share as a group of channels. So it applies to individual channels?

Thomas Haase, Group CEO, RTL Group: Only the main channel and entities. And on the shares we bought, Jan, since we decided to increase our shareholding?

Bjorn Bauer, CFO, RTL Group: Yes. So we acquired shares in Q4 and Q1 and we’re currently at 48.8%. That’s the shares we are holding directly. So of course also treasury shares at level of, including them will be slightly above 49% currently.

Thomas Haase, Group CEO, RTL Group: And there’s, of course, also the 1% limit of shares acquired, cumulated on the end basis. And we will, of course, remain below this 1% because we have no intention to launch a takeover bid for MCs. Wouldn’t make any sense for us, and we believe the company is in good shape as a public company. So no problem there. We increased our shareholding in steps to 50 whatever, 51% maximum.

Conor O’Shea, Analyst, Kepler Cheuvreux: Okay, perfect.

Mohit, Call Operator: So it seems there are no more questions at this time. Then I would like to turn the conference back over to Oliver Faubusch.

Oliver Feilbusch, Presenter/Moderator, RTL Group: Yes. Thank you, everybody. Thank you for taking the time to listen on this call. If there are further questions coming up throughout the day, we are available to take your calls and answer your questions. Have a good day and talk to you

Bjorn Bauer, CFO, RTL Group: soon. Bye bye.

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