The international TV industry is in the midst of a major transformation, with huge opportunities for those who are prepared to shape the future.
To successfully transform RTL Group’s business, two factors are particularly important. One is higher reach – in both linear and non-linear – which requires investments in content, marketing and a state-of-the-art streaming platform. The second is better monetisation of audience reach – via targeting and personalisation/recommendation – which requires investments in advertising technology and data.
RTL Group’s Board of Directors and Executive Committee defined a strategy that builds upon three priorities:
Strengthening RTL Group’s families of channels – creating national media champions
Building and extending families of TV channels has been key to address increasing audience fragmentation and competition in a digital, multi-channel world, with the overall goal of keeping RTL Group’s audience shares and net TV advertising market shares in the various countries stable or growing them. In recent years, RTL Group’s families of channels have been extended by digital channels, including Nitro, RTL Up, Vox Up, 6ter, and RTL Z.
RTL Group’s primary focus is on organic growth. However, wherever attractive opportunities arise, the Group aims to consolidate across its existing European broadcasting footprint, including through mergers and acquisitions to create national media champions:
In 2019, Groupe M6 acquired Lagardère’s TV business, to complement its offering for families and to strengthen its overall position in the French media market, both in TV advertising and digital. This transaction included the full acquisition of Gulli (the country’s leading free-to-air digital channel for children), five pay-TV channels and the corresponding streaming services, including Gulli Replay and Gulli Max.
In March 2021, RTL Deutschland had announced a binding agreement with its previous joint venture partner, The Walt Disney Company, to acquire the outstanding 50 per cent shareholding in Super RTL. The full acquisition of Super RTL closed on 1 July 2021 and took RTL Group’s shareholding to 100 per cent.
In May 2021, Groupe TF1, Groupe M6, Groupe Bouygues and RTL Group had announced that they have signed agreements to enter into exclusive negotiations to merge the activities of Groupe TF1 and Groupe M6 and create a major French media group. The new group would be well positioned to master the challenges arising from the accelerating competition with global platforms, active on the French advertising market and in the production of quality audio-visual content. The merger project has been unanimously approved by the Boards of Groupe Bouygues, RTL Group, Groupe TF1 and Groupe M6. The completion of the transaction remains subject to condition precedents, in particular the authorisations of the competent authorities1 and the general meetings of Groupe TF1 and Groupe M6. The transaction is aimed to close by the end of 2022.
In June 2021, RTL Group and Talpa Network had announced that they have signed agreements to merge their broadcasting and affiliated media businesses in the Netherlands and create a strong Dutch cross-media group. In the growing competition with global tech platforms, the merger will allow the combined group to step up investments in local content, technology and data, offering Dutch audiences the broadest spectrum of high-quality entertainment and reliable information programmes. Both the Dutch creative industry and advertising market will benefit from the ambitious long-term strategy pursued by RTL Group and Talpa Network. The transaction, which had been approved by the Board of Directors of RTL Group and Talpa Holding, is subject to approval from the competition authorities and is expected to close in the first half of 2022.
In August 2021, RTL Group had announced that RTL Deutschland had agreed with Bertelsmann to acquire Gruner + Jahr’s German publishing assets and brands for €230 million on a cash-free and debt-free basis.2 G+J will contribute popular and trusted brands such as Stern, Brigitte, Geo, Capital, Schöner Wohnen, Eltern and Art as well as journalistic experience to RTL Deutschland. The combination will further strengthen RTL Deutschland’s position as partner of choice for Germany’s creative talent and boost the growth of its streaming service RTL+, driven by investments in local content, independent journalism, technology and data. A joint editorial team with more than 1,500 journalists will create a journalistic powerhouse to deliver reliable news, investigative reports and features in all genres across TV, audio and print.
In June 2021, RTL Group announced that it had signed a definitive agreement for the sale of RTL Belgium to the Belgian media companies DPG Media and Groupe Rossel. The transaction – with preliminary total cash proceeds of €250 million – is subject to regulatory approvals and is expected to close in the fourth quarter of 2021. With this sale RTL Group enables consolidation also for other market participants.
Another focus for strengthening the Group’s core business in broadcasting is to increase non-advertising revenue, by further growing the revenue from platform operators. RTL Group aims to receive a fair revenue share for its brands and programmes from the major distribution platforms – cable network operators, satellite companies and internet TV providers – for services such as high-definition TV channels, streaming platforms and digital pay channels.
Investing in content
Every year, RTL Group invests around €3.5 billion in content, combining the programming spend of its broadcasters and the productions of its global content business, Fremantle.
Exploring all possible ways to develop and own new hit formats and continuing to grow the Group’s investments into premium content are key to strengthening RTL Group’s core businesses.
Every investment in local, exclusive content – including the rights for live sports events – strengthens both RTL Group’s linear TV channels and streaming services. For example, in January 2020, RTL Deutschland won the full and exclusive rights to broadcast and stream the Uefa Europa League and the newly established Uefa Conference League, starting with the 2021/22 season, for a period of three years. This deal strengthens two of RTL Deutschland’s linear channels – RTL Television and Nitro – and will play an important part in attracting new paying subscribers for RTL+/TV Now. RTL Nederland had acquired the rights to broadcast certain matches of the Uefa Champions League, also starting with the 2021/22 season, for a period of three years.
In 2019, RTL Group launched a new creative unit – Format Creation Group (FC Group) – which develops non-scripted formats exclusively for RTL broadcasters and their streaming services. FC Group is jointly financed by RTL Group’s major broadcasters. The new unit aims to fulfil the growing demand for exclusive content by developing innovative formats and intellectual property, fully owned and controlled by RTL Group.
Streamlining RTL Group’s portfolio
RTL Group’s management continuously reviews the Group’s portfolio of assets. In the last three years, RTL Group sold several non-core assets such as the football club Girondins de Bordeaux and the website MonAlbumPhoto in France, the home entertainment and theatrical distribution company Universum Film in Germany, and the Vancouver-based digital video network BroadbandTV (BBTV).
In February 2021, RTL Group signed a definitive agreement for the sale of SpotX to the US ad-tech company Magnite. The transaction closed on 30 April 2021.
In September 2021, RTL Group had announced that its global content business, Fremantle, has completed the sale of its 100 per cent shareholding in Ludia Inc. to US-based mobile entertainment company Jam City for US-$165 million (€139 million).
These disposals are consistent with RTL Group’s strategy to focus on growing its European digital businesses in the areas of streaming and advertising technology, alongside the Group’s global content business, Fremantle.
Increasing operational efficiency
Management continuously assesses opportunities to reduce costs and to reallocate resources to growth areas such as its streaming services. In 2019, RTL Group’s Executive Committee reviewed the role of the Group’s Corporate Centre. As a result of this review, the Group’s Corporate Centre was significantly reduced and partly transferred to Cologne, Germany. In December 2020, RTL Deutschland announced that it will free up resources for significant additional investments in streaming content, technology and data by reallocating budgets as well as through cost savings. These cost savings will target overhead and structural costs such as events and travel, including personnel.
Building national streaming champions
RTL Group is building national streaming champions in the European countries where it has leading families of TV channels. Making the most of the Group’s competitive advantage in local programming, these streaming services will complement global services such as Netflix, Amazon Prime and Disney+.
The strategy is rolled out either through stand-alone services such as TV Now in Germany and Videoland in the Netherlands, or through national partnerships such as Salto in France.
RTL Group’s stand-alone services will gradually adopt a hybrid business model – combining a free, advertising-funded offer with a premium pay content bundle that offers RTL Group TV programmes (both live and on demand) with licensed content from third parties and content production ‘originals’ exclusive to these services.
On 30 of June 2021, RTL Group registered 3.045 million paying subscribers for its streaming services TV Now in Germany and Videoland in the Netherlands – 72 per cent more than in the same period last year. The viewing times of TV Now and Videoland also increased in the first half of 2021, by 51 per cent and 12 per cent respectively.
To further boost the expansion of RTL Group’s streaming services over the next five years, RTL Group will grow:
In November 2020, RTL Deutschland and Deutsche Telekom announced a strategic partnership. The partners integrated the RTL streaming service TV Now Premium in Deutsche Telekom’s TV offer, Magenta TV. Since then, the price plans for both Magenta TV Smart and Magenta TV Smart Flex include TV Now Premium without any additional fee for customers. Both companies have also agreed to increase cooperation in advertising technology, advertising sales and content, with a special focus on addressable TV. First tests in 2021 will be based on RTL Group’s ad-tech solutions, Smartclip and Yospace, and will be open for additional partners from the media and TV industry.
In March 2021, RTL Deutschland and Sky Deutschland announced an agreement for closer collaboration in the areas of streaming and content. TV Now Premium has been available for an additional premium on the Sky Q platform since June 2021. As part of the agreement, Sky exclusively sub-licenses Formula One free-to-air rights to RTL Deutschland for the seasons 2021 and 2022.
In July 2020, RTL Nederland announced a new hybrid model for Videoland, adding an entry subscription model at a lower price that shows advertising, and a Plus subscription model that includes the use of more screens. This strategic step has opened up Videoland to advertising clients of the Dutch Ad Alliance.
In June 2021, RTL Nederland and T-Mobile in the Netherlands announced that Videoland will become part of T-Mobile’s new ‘Unlimited & Entertainment’ proposition. With the new offer, customers gain access to both Videoland Plus and Netflix Standard as well as unlimited 5G data, calling and SMS in the T-Mobile network in the Netherlands with an attractive price advantage.
In October 2020, Salto – the joint subscription streaming service of Groupe TF1, France Télévisions and Groupe M6 – was launched in France with more than 10,000 hours of content, and the chance to stream 20 TV channels live in HD quality. RTL Group’s technology company Bedrock provides the tech platform for the streaming service, which offers state-of-the-art content curation and personalisation features.
Expanding RTL Group’s global content business, Fremantle
RTL Group’s content business, Fremantle, is one of the world’s largest creators, producers and distributors of scripted and unscripted content. Fremantle has an international network of teams across production and distribution, operating in more than 25 countries, producing 12,700 hours of original programming and distributing over 30,000 hours of content worldwide.
Fremantle targets full-year revenue of €3 billion by 2025. To reach this goal and keep up with the increasing demand for content, RTL Group will significantly invest in Fremantle – both organically and via acquisitions – in all territories across scripted, non-scripted as well as factual shows and documentaries.
Fremantle pursues three strategic goals:
Given current market trends, drama series are key for RTL Group’s expansion plans for both its streaming services and its global content business, Fremantle.
Since 2012, Fremantle has invested heavily in high-end productions, to accelerate its growth in scripted series. With a series of acquisitions – including Miso Film in Scandinavia, Wildside in Italy, KwaÏ in France, Abot Hameiri in Israel, Eureka in the US and Australia and Nent Studios in the Nordics – Fremantle has created a global network that now comprises 19 production sites for drama series.
Fremantle also bought minority stakes in a number of newly founded production companies, to secure first access to their creative talent and output. Working with world-class storytellers is key to Fremantle’s scripted strategy. Currently, Fremantle – together with broadcasters and streaming platforms – is working on the realisation of at least 60 scripted series ideas.
As a result of this strategy, Fremantle generated 21 per cent of its total revenue in 2020 from drama productions and expects this share to grow further over the coming years.
Investing in technology and data
Combining key success factors of TV advertising – such as high reach, brand safety and emotional storytelling – with data and targeting offers significant growth potential for RTL Group’s largest revenue stream: advertising.
RTL Group’s largest unit, RTL Deutschland, is responsible for the Group’s ad-tech business Smartclip. The objective is to create an open ad-tech platform, based on the technology developed by Smartclip and tailored for the needs of European broadcasters and streaming services. Accordingly, RTL Deutschland will invest further in evolving and growing the Smartclip platform.
In 2019, RTL Deutschland and ProSiebenSat1 launched d-force, a joint demand-side platform for addressable TV and online video in Germany and Austria.
The tech platform for RTL Group’s streaming services is built by the French technology company Bedrock, a company owned by RTL Group and Groupe M6. A common platform allows RTL Group to bundle its investments in streaming technology. The Bedrock platform serves the French subscription service Salto and Videoland in the Netherlands, as well as the RTL streaming services in Belgium, Hungary and Croatia. RTL Deutschland’s TV Now platform and Bedrock will increasingly share components.
Within the area of data, the open log-in standard NetID was developed by the European NetID Foundation and initiated by RTL Deutschland, ProSiebenSat1 and United Internet. The standard offers a single sign-on that can be used on numerous German websites, and which already has a reach of more than 35 million users.
Creating Europe’s leading digital talent network and content studio
RTL Group’s digital video businesses have built significant reach among the young audiences that are highly sought after by advertisers.
In 2019, RTL Group combined its digital video companies Divimove, United Screens, UFA X and RTL MCN, and acquired Tube One Networks. Following the combination, Berlin-based Divimove was repositioned and rebranded as We Are Era.
In competing with the global giants, new alliances and partnerships between European media companies have become increasingly important.
In autumn 2019, RTL Group’s management started to promote new partnership opportunities – all based on the philosophy of bundling European broadcasters’ resources to establish open and neutral platforms. RTL Group offers these partnership opportunities in areas such as advertising sales, advertising technology, streaming technology, content creation and data.
Driving international advertising sales via RTL AdConnect
One key development for RTL Group’s largest revenue stream – advertising – has been the increased demand from advertisers and agencies for global ad-buying opportunities. As a consequence, RTL Group is expanding its international sales house, RTL AdConnect, to give international advertisers and agencies easy access to RTL Group’s large portfolio of TV and streaming services, digital video networks and advertising technology, in a brand-safe environment. To be more relevant in all key European markets, RTL AdConnect’s portfolio also encompasses leading partners such as ITV in the UK, RAI in Italy and Medialaan in Belgium. Thanks to these partnerships, RTL Group is one of the only media companies in Europe that can offer advertisers pan-European digital video campaigns.
Building one-stop sales houses for cross-media campaigns
Ad Alliance, launched in Germany in 2017, offers high reach to advertisers and agencies, and is a one-stop-shop for the development of cross-media solutions and innovative advertising products. Its portfolio spans television, radio/audio, print, and digital. Ad Alliance is the only sales house in Germany that can offer complex, all-media campaigns from a single source. After the sales house Media Impact (Axel Springer) became a partner of the German Ad Alliance for its digital inventory in January 2020, Ad Alliance and Media Impact agreed to intensify their partnership and expand their advertising sales cooperation to Media Impact’s print titles, such as Bild and Welt. This cooperation started in January 2021. Together, the platforms of the Ad Alliance reach 99 per cent of the German population. Ad Alliance remains open to additional partners.
RTL Nederland followed the German example by building an integrated advertising sales network for the Dutch market, also called Ad Alliance. The Dutch Ad Alliance integrates the sales activities of RTL Nederland, BrandDeli, Adfactor and Triade Media, and is also open to new partners.
Pooling Bertelsmann’s content expertise
At the beginning of 2019, RTL Group’s majority shareholder formed the Bertelsmann Content Alliance in Germany. Bertelsmann is a creative powerhouse, investing more than €5 billion in creative content each year, of which €2 billion is invested in Germany. The Bertelsmann Content Alliance in Germany pools the Bertelsmann Group’s content expertise to fully exploit the potential of its most important market.
The Audio Alliance, launched in May 2019, is a production company for audio content which provides a centralised platform, Audio Now, for the content produced by the Bertelsmann Content Alliance members in Germany. As part of the Bertelsmann Content Alliance UK, Fremantle, Penguin Random House UK and BMG launched in 2020 the new podcast company, Storyglass, which represents the UK Audio Alliance.
1 The antitrust authorities (Autorité de la Concurrence) and media regulator (Conseil Supérieur de l'Audiovisuel).
2 The following Gruner + Jahr assets are not part of the transaction and will remain with Bertelsmann: DDV Mediengruppe (Sächsische Zeitung), Territory, AppLike Group and G+J’s 25 per cent shareholding in Spiegel Gruppe