RTL raises its stakes in Netherlands, Hungary and Croatia

By
Tim Westcott

Daniel Knapp

July 29, 2011

Pan-European broadcaster RTL Group has this week closed deals in three markets, increasing its control of free-to-air broadcasters.

In the Netherlands, RTL has exercised a put option to buy back Talpa Media's 26.3 per cent minority shareholding in RTL Nederland in exchange for 100 per cent of the shares in Radio 538. Talpa Media, owned by John de Mol, will also take over Radio 10 Gold and Slam FM from RTL Nederland. In exchange, Talpa Media will reimburse RTL Nederland for the purchase prices paid when it bought the commercial radio stations. The exchange is set to take place in 2012.

The transaction should clear the way for a consortium formed by Talpa and Finnish group Sanoma to buy rival commercial TV group SBS from ProSiebenSat1. The deal agreed in April, is pending approval from the Dutch competition regulator.

In Hungary, RTL Group is acquiring an additional 31 per cent of the shares in RTL Klub from partner IKO Group, plus 100 per cent of a portfolio of seven pay TV channels: Cool, Film Plus, Film Plus 2, Reflektor, Prizma, Sorozat Plus and Muzsika TV. RTL has been a shareholder in the channel since it launched in 1997. RTL Klub accounted for 29.1 per cent share of viewing in primetime (18-49 age group) in 2010, and made a profit of €19m HUF on revenues of €105m. The deal is subject to approval by local regulators.

In Croatia, RTL is buying out minority partners in RTL Hrvatska, Atlantic and Agrokor. The two groups each own 13 per cent in the company, which operates the RTL Televizija and RTL 2 channels. RTL Televizija, launched in 2003, is facing a strong challenge from the CME-owned channel Nova TV, edged ahead in terms of viewing and net TV ad revenue market share in 2010. RTL's Croatian unit lost €3m on revenues of €38m last year.

RTL's reorganisation of its portfolio in some of its smaller markets makes relatively little differerence in the context of its overall business and compared to its recent moves to build on its foothold in Russia, a joint venture to launch channels in India, and the difficult advertising market in Germany, its key territory. In Germany, the TV ad market contracted by 0.5 per cent in H1 2011 and prospects for an H2 recovery are grim with 0.2 per cent growth forecast for full year.

In common with all companies which are mainly active in free-to-air-broadcasting, RTL is also looking for ways to increase its revenue from pay TV in order to counteract the reliance on advertising markets which are exposed to cyclical shifts.

Of course, its investments will be highly significant at local level. In the Netherlands, RTL is the leading commercial broadcaster. Having claimed a 42 per cent share of the net TV advertising market in 2010, RTL Netherlands is confortably ahead of runner-up SBS (34 per cent).

After a poor start, RTL's Hungarian operation now leads the market and the acquisition of a portfolio of theme channels is in line with its overall strategic objective of diversifying into pay TV. Such a move is critical in maturing Central and Eastern European markets as the TV advertising market is not large enough to fund the growing consumer demand for multichannel content.

By increasing its control of RTL Hrvatska, the company will also be hoping to compete more effectively with CME's rising Nova which has nearly tripled its TV net TV advertising market share of 13 per cent over the past five years from in 2005 to 38 per cent in 2010.

Tags:

Countries: Netherlands Hungary Croatia
Companies: RTL Group RTL Hrvatska RTL Klub Talpa Media ProSiebenSat.1