Revenues and income up sharply in 1998 / Value chain to be extended / Plans to increase investments in free-TV
CLT-UFA Luxemburg, May 20, 1999
In 1999, CLT-UFA will confirm its pole position in European broadcasting. Rémy Sautter and Rolf Schmidt-Holtz, the company's joint Presidents and CEOs, emphasized at the annual press conference held this Thursday in Luxembourg that the Group is set to reap the rewards of its growth-oriented strategy in 1999.
In 1999, the Group expects a further sharp increase in profitability, leading to a positive result. This will be achieved even without the capital gain on the sale of 45 per cent of the German pay-TV channel Premiere for ? 800 million. Already in 1998, this positive trend led to a reduced net loss, group share, of 14 million compared to the loss of 71 million in 1997. At the same time, revenues rose 9 per cent from 2,827 million in 1997 to 3,085 million in 1998.
Rolf Schmidt-Holtz, CEO of CLT-UFA, said: "We have built up a very profitable business in the fiercely competitive free-TV market due to our success with audiences and advertising clients. We are going to continue this success story."
Rémy Sautter, CEO of CLT-UFA noted: "Despite strong competition, CLT-UFA is Europe's indisputable market leader, primarily because of our pioneering spirit. After successfully launching new channels in recent years, we will be looking for new opportunities in broadcasting markets to accelerate our growth."
CLT-UFA's traditional operations, including RTL Television and M6, turned in an excellent performance. The Group also made strategic investments in free-TV markets in the Netherlands and Germany, and enhanced its position in the value chain by acquiring film distributors in France (SND) and Belgium (Belga Films), as well as video business (BMG Video) in Germany. It also purchased Europe's top soccer club Girondins de Bordeaux.
Profits up in traditional businesses
RTL Television, now the largest advertising medium in Europe, maintained its leading position in its target group of viewers aged 14-49. The German channel increased its profit to 149 million, a rise of over 40 per cent on the previous year, making it CLT-UFA's biggest profit center by far. The appointment of Gerhard Zeiler as managing director in November 1998 brought a fresh focus on creative flair and innovation in the channel's program line-up, and augurs well for future success.
In France, M6 moved into second position in terms of advertising share, with pre-tax earnings up 29 per cent compared with 1997. Today M6 derives two-thirds of its income from advertising and one-third from activities such as merchandising and production.
RTL Radio was once again market leader, while RTL 2 broke even for the first time in 1998 and Fun Radio registered an upward trend in audience share in early 1999. The move of all three of the Group's radio stations in France to shared premises in rue Bayard in Paris created synergies in marketing, advertising sales and technical services.
Successful investments in free-TV
One year on, channels launched in 1997 already showed good results. Channel 5 has won more than 5 per cent of British viewers and is on course to break even at year-end 2001 as planned. RTL Klub in Hungary became market leader in its target group of viewers aged 18-49 with 35 per cent of the market.
For CLT-UFA, 1998 was also a year of acquisition. The group raised its interest in Holland Media Groep (HMG) from 40 to 65 per cent by purchasing shares from VNU and Philips. After a successful turnaround, HMG, based in the Netherlands, saw profits triple from 1997 to 1998.
CLT-UFA invested heavily in the programming future of its German channels RTL Television, RTL2 and Super RTL. RTL2 has enhanced its program resources under a deal signed in late 1997 with RTL Television. This helped the channel move into the black, with results of 38 million. CLT-UFA’s agreement with Walt Disney Television International in October 1998 has also secured attractive content for Group channels.
The acquisition of advertising sales specialist IP was completed during the year and its operations integrated into the respective television channels and radio stations of CLT-UFA. This helped to optimize advertising sales, generating higher profits for IP.
Extension of the value chain
CLT-UFA improved its strategic position by diversifying into new segments of the value-added chain. It thus moved into film distribution by purchasing shares in French distributor SND, and through RTL TVI's acquisition of an interest in the Belgian distributor Belga Films. Likewise, the acquisition of BMG Video in Germany has allowed the Group to market video rights on its own more effectively and to make greater use of synergies at the rights acquisition.
UFA Sports raised the number of clubs it markets to include 250 soccer clubs and 50 national teams. It entered a new era by signing contracts with Hamburger SV and Borussia Dortmund, and purchasing French soccer club "Girondins de Bordeaux" together with M6. Together these transactions helped UFA Sports remain Europe's leading sports rights marketer.
Production operations continued to expand apace, making UFA Film & TV Production market leader in Germany. UFA Film & TV Production and the Trebitsch Production Holding reported a 20% increase in revenues in 1998 and will maintain the pace this year. New fields included international co-productions, new shows and feature films. Moreover, UFA is also setting up production businesses in other European countries, including Hungary, where it produces a daily soap for RTL Klub.
In 1998 CLT-UFA sold its interest in French pay-TV venture TPS to M6 and Suez-Lyonnaise des Eaux at a profit for a global price of 60 million. This sale was followed by the disposal of 65 per cent of the Luxembourg/French free-TV station RTL 9 to AB Group, and the sale of its stake in UK-based Talk Radio to a consortium headed by Kelvin McKenzie.
In April 1999 the Group sold its 45 per cent interest in Premiere, holding on to a 5 per cent stake to retain access to the German pay-TV market for its international rights trading operations. The decision to divest was based on a sharp deterioration in prospects in German pay-TV following vetoes by both the European Commission and the German anti-trust authorities that seriously curtailed scope for viable growth at Premiere.
Focus on growth to continue
Implementation of CLT-UFA's growth-driven strategy in its traditional businesses, combined with 1998 start-ups will lead to a positive gain in 1999. CLT-UFA also anticipates a vigorous rise in profits, building on stronger intra-group cooperation and the development of channels' non-broadcasting activities such as merchandising. The Group expects European advertising markets to expand visibly, a trend already observed in the first four months of 1999.
The group also plans to raise its shareholdings in free-TV channels. Finally, CLT-UFA intends to invest in new ventures in radio and free TV, where markets in Scandinavia, South and Central Europe look particularly promising.
Production and rights trading business will come in for special attention in the years ahead: by securing high quality programming for its channels, the Group strengthens its market positions and increases its independence.
CLT-UFA operates 40 radio and TV stations throughout Europe, as well as several production and rights trading businesses, most of them market leaders (e.g., RTL Television in Germany, RTL Radio in France, HMG in the Netherlands, RTL TVI in Belgium and UFA SPORTS in Europe).
Figures above are in EURO.