March 7, 2018 / 11:06 AM / 5 months ago

UPDATE 1-RTL targets local viewers in response to global streaming platforms

* Rolling out video on demand in European markets

* Global platforms spur ‘total video’ transformation - CEO

* Ramping up output of scripted programming

* RTL sees 2018 revenues up 2.5-5 pct, core profits flat (New throughout with CEO interview, details)

By Douglas Busvine

FRANKFURT, March 7 (Reuters) - Broadcaster RTL Group will speed up a push into exclusive programming, offering locally focused video-on-demand services in its European markets in response to platforms like Netflix and Amazon.

RTL, controlled by German publisher Bertelsmann, has weathered weak TV advertising demand better than rivals but is nonetheless accelerating a ‘total video’ strategy that seeks to address changing viewing habits.

“We are seeing the challenging TV markets in a macroeconomic development which is very prosperous – this is a very clear signal to us to accelerate our strategic execution,” CEO Bert Habets told Reuters in an interview.

RTL earlier reported solid 2017 results, with revenues up 2.2 percent to 6.37 billion euros ($7.92 billion). Earnings before interest, taxation and amortisation (EBITDA) rose by 3.8 percent to 1.46 billion euros, broadly in line with forecasts.

RTL, whose core markets are Germany, France and the Benelux countries, forecast revenue growth of between 2.5 percent and 5 percent this year. Core earnings would remain broadly unchanged, adjusting for a one-off gain from property sales last year.

RTL shares were 2 percent lower, amid broadly weaker sentiment towards the media sector after U.S. consumer products giant Procter & Gamble said it would cut spending on ad agencies.

LOCAL VS GLOBAL

The rise of the global platforms, and U.S. entertainment group Comcast’s bid for Britain’s Sky, threaten to marginalise European broadcasters that still rely on advertising for the bulk of their revenues.

But, rather than take a leaf out of their book, RTL wants to focus on national audiences by offering more original programming, including via subscription services delivered as and when viewers want to watch.

It plans new video-on-demand services in Belgium, Hungary and Croatia, all based on its existing French 6play platform.

“We are very confident to continue developing and investing in these on-demand services in all countries where we have a strong family of channels,” said Habets, who recently became sole CEO at RTL.

RTL has a strong background in game-show formats, but has backed production arm Fremantle Media’s move into producing scripted television dramas.

That has attracted the interest of the mega-platforms: Amazon recently commissioned Deutschland 86, the follow-up to an espionage serial that first aired on RTL in Germany.

There’s still mileage in the ad-driven TV model, said Habets, pointing to the outperformance of RTL’s core franchises in Germany and France last year. Of total revenues, advertising still accounts for 47.5 percent, less that its main competitors.

The company wants to increase the share of digital revenues as a percentage of the total to 15 percent by 2020 from 13 percent last year.

“The power of linear TV will continue to be very strong, especially in the European markets, where fragmentation is ongoing, but less severe than in other continents of the world,” said Habets.

RTL said it would propose a final dividend of 3 euros per share, on top of an interim dividend of 1 euro paid last September, representing a dividend yield of 5.9 percent to its shareholders. ($1 = 0.8047 euros) (Reporting by Douglas Busvine Editing by Ludwig Burger and Jane Merriman)

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