Release Date: August 09, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Streaming revenues grew by 42% in the first half of 2024, with a 25% increase in paying subscribers across Germany, France, and Hungary.
- TV advertising revenue across the group grew by almost 5%, with RTL Germany outperforming the market.
- The acquisition of Asacha Media Group and Beach House Pictures for EUR200 million aims to expand the global content business Fremantle.
- The partnership with Deutsche Telekom and Sky Deutschland is progressing well, enhancing streaming service growth.
- The planned migration of RTL+ to the Bedrock technology platform is expected to reduce streaming tech costs and create a European champion streaming technology.
Negative Points
- Adjusted EBITA was slightly down to EUR172 million due to higher costs for sports programs, particularly the UEFA 2024 matches.
- Revenue at Fremantle decreased by 5% due to the impact of the 2023 US writers and actors strikes and budget cuts by streaming companies.
- Net debt increased to EUR1.1 billion from EUR291 million at the end of 2023, primarily due to dividend payments and acquisitions.
- The Dutch competition authority's Phase 2 investigation into the sale of RTL Nederland to DPG Media is ongoing, delaying the transaction.
- Higher content costs, particularly for sports programs, are expected to impact financial performance in 2024.
Q & A Highlights
Q: Can you give us some indication of advertising trends in your main market?
A: Thomas Rabe, CEO: We provided data for the first half of the year, showing significant advertising market share gains in Germany. For Q3, July was down single-digit in Germany, August is expected to be down double-digits due to the Olympic Games, but September is looking positive. Overall, Q3 will be down, but we are hopeful for an uptick in Q4. We expect the German market to be slightly up for the year, with us outperforming the market.
Q: What backs your confidence that the RTL Nederland transaction will go through by the end of this year?
A: Thomas Rabe, CEO: We are confident based on the market definitions used by competition authorities. DPG Media, the buyer, does not have a market share in TV, so acquiring RTL Nederland doesn't increase their market share. We are cooperating with authorities and expect the deal to be approved by year-end.
Q: How does the price of RTL+ compare to competitors in Germany, and is there scope for further price increases?
A: Thomas Rabe, CEO: RTL+ is priced at EUR6.99, increased from EUR4.99 last year with minimal churn. It compares well to competitors like Netflix at EUR13.99. We see potential for further price increases as we invest in content and user experience.
Q: Can you discuss Fremantle's 2026 guidance and the balance between organic and non-organic growth?
A: Thomas Rabe, CEO: Fremantle is in a transition year due to the US strikes and customer buying behavior. We expect 2024 revenue to be around EUR2.5 billion, including acquisitions. We anticipate a 4-5% organic growth rate in 2025 and 2026, aiming for a EUR3 billion revenue target by 2026.
Q: What is the strategy for streaming services, and how are you progressing towards profitability by 2026?
A: Thomas Rabe, CEO: We are seeing strong growth in paying subscribers, up 25% year-on-year. Streaming revenue increased by 42% in the first half of 2024. We are on track to reach our long-term streaming targets and profitability by 2026, supported by subscription price increases and high demand for advertising.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
