07 July 2014, Luxembourg
RTL Group, the leading European entertainment network, has conducted a first assessment of the financial impacts of the Advertisement Tax Act which was approved by the Hungarian parliament on 11 June 2014 and was amended on 4 July 2014. The law as amended is expected to become effective in the course of August 2014 and to require first payments by RTL Hungary later in August.
The new tax will be progressive, with the top 40 per cent levy imposed on annual advertising revenue of more than 20 billion Hungarian forints (about €65 million). RTL Hungary is currently the country’s only media company to be taxed with this top 40 per cent rate.
Following its preliminary assessment, based on the amended Act, RTL Group’s tax charge would increase by approximately €15 million on a full-year basis. In 2013, RTL Hungary generated an EBITA of €15 million on revenue of €100 million.
As part of the normal closing process, RTL Group will also perform an impairment test on the goodwill of RTL Hungary for the Group’s 2014 half-year results. Given the size of the new advertising tax, RTL Group expects to have to record an impairment in its 2014 interim financial statements. The amount of this impairment is currently being assessed, and the results of this impairment test will be disclosed on 21 August 2014, alongside RTL Group’s 2014 half-year results.
Joint statement by Anke Schäferkordt and Guillaume de Posch, Co-CEOs of RTL Group: “Operationally, RTL Group continues to perform strongly in 2014. However, our first assessment shows the severe impact of the new advertising tax in Hungary: it will force RTL Hungary in a structurally loss-making position and will also reduce RTL Group’s net profit in 2014. Since 1997, RTL Group has consistently built up a very valuable asset in Hungary, employing more than 350 people and investing in local entertainment and independent news reporting. And we have paid significant amounts of taxes in Hungary. We are determined to pursue all options to protect our asset against this confiscatory tax. Our announcement today sends an alarming signal for all international investors in Hungary. We thus call on the Hungarian government, again, to revise this counter-productive tax policy seemingly specifically aiming at RTL, as it undermines its operations and raises major concerns about the freedom of journalism in Hungary.”
About RTL Group
RTL Group is the leading European entertainment network, with interests in 54 television channels and 27 radio stations and content production throughout the world. The television portfolio of Europe’s largest broadcaster includes RTL Television in Germany, M6 in France, the RTL channels in the Netherlands, Belgium, Luxembourg, Croatia, Hungary and Antena 3 in Spain – the company also operates the joint venture channels RTL CBS Entertainment HD and RTL CBS Extreme HD in Southeast Asia. RTL Group’s families of TV channels are either the number one or number two in eight European countries. The Group’s flagship radio station is RTL in France, and it also owns or has interests in other stations in France, Germany, Belgium, the Netherlands, Spain and Luxembourg. RTL Group’s content production arm, FremantleMedia, is one of the largest international creators, producers and distributors of multi-genre content outside the US. With operations in 22 countries, FremantleMedia’s comprehensive global network is responsible for 8,500 hours of programming a year and distributes over 20,000 hours of content worldwide. Combining the catch-up TV services of its broadcasters, the newly acquired multi-channel Network BroadbandTV and FremantleMedia’s more than 150 Youtube channels, RTL Group has become the leading European media company in online video.