Europe's largest broadcasting chain, RTL Group, earned significantly less in the first half of the year due to a high write-down on its Hungarian business. Sales also declined - negative exchange rate effects, lower advertising revenues in France, and lower sales at FremantleMedia and UFA Sports were the reasons. The company subsequently lowered its forecast for the current year.
RTL now expects a slight decline in revenues. Operating profit EBITA is expected to decline even more significantly than revenues, the company said. In May, the Group, whose majority shareholder is the Bertelsmann media group, still saw revenues and EBITA at the level of the previous year.
The new advertising tax in Hungary is a particular burden on the station chain. Hungary wants to introduce a new tax for media companies staggered on revenues from advertisements. As a result, large corporations lose up to 40 percent of their advertising revenues to the state, while small, local providers have to pay little or nothing. By its own account, RTL is the only media group in Hungary that has to pay the top tax rate because of its size.
The advertising tax is "an alarming sign for all international investors in Hungary," RTL co-CEOs Anke Schäferkordt and Guillaume de Posch said. However, the company does not want to withdraw from the business. "RTL is deeply rooted in Hungary and will remain so."
RTL wrote down €88 million on the business in the first half of the year, €77 million of which was attributable to goodwill. As a result, net profit halved to 202 million euros. Last year, on the other hand, RTL still recognized income from a reversal of a write-down in Spain.
At the beginning of July, the Luxembourg-based broadcasting chain had already announced that the tax would lead RTL's Hungarian operations "structurally" into the red, which is why its activities there would have to be written down in value.
But the wind is also blowing in RTL Group's face operationally. Lower sales at the Fremantle production arm due to fewer episodes of "American Idol" and the effects of the weak dollar against the euro depressed revenues, as did the weak advertising market in France. Group sales decreased by 2.5 percent to just under 2.7 billion euros. EBITA decreased to 519 million euros from 552 million euros. By contrast, things are going well in Germany, where RTL posted a record operating profit of EUR 313 million.
Cash flow, on the other hand, continued to develop strongly at 401 million euros. For this reason, the Board of Directors decided to pay an extraordinary interim dividend of 2.00 euros in September.
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