The future of the international TV industry brings significant opportunities for those who are ready for transformation – alongside real challenges, video usage is growing, but is shifting from linear to non-linear viewing. And competition in non-linear or streaming is fierce, with numerous national and global players competing. Demand for video content is booming, resulting in rising prices for the best content and talent. And consolidation is happening, in particular in the US, creating large and often vertically integrated players.
RTL Group’s strategy is based on three priorities. Firstly, to strengthen RTL Group’s core businesses by investing in premium content, strengthening our families of channels, managing our costs and portfolio, and driving consolidation. Secondly, to expand our growth businesses, in particular streaming, advertising technology and addressable TV, and global content production from Fremantle. And finally, to foster alliances & partnerships which span a wide variety of areas, from content creation to streaming, advertising sales and advertising technology.
To compete with the global tech platforms, alliances and partnerships between European media companies have become increasingly important. RTL Group’s approach is based on bundling European broadcasters’ resources to establish powerful technology solutions accessible to all.
Core: national media champions
Since the summer of 2020, we have expressed our conviction that mergers and the creation of national TV champions in Europe are necessary. Given the ever-growing competition from the global technology platforms, we believe it is essential to scale up our broadcasting businesses. This will enable us to increase our investments in exclusive, local content, in our streaming services and in tech & data.
RTL Group has announced four major transactions to create national media champions. In Germany, RTL Deutschland acquired an outstanding 50 per cent shareholding in Super RTL from the Walt Disney Company. Then, RTL Group combined RTL Deutschland and Gruner + Jahr (G+J) to create a German cross-media champion. As of January 2022, G+J contributes popular and trusted brands such as Stern, Brigitte, Geo and Capital to RTL Deutschland. The combination further strengthens RTL Deutschland’s position as a partner of choice for Germany’s creative talent and will boost the growth of its streaming service RTL+.
Secondly in the Netherlands, we plan to combine RTL Nederland and Talpa Network, the leading two players in the market. RTL Group expects a decision from the authorities in the fourth quarter of 2022. Lastly, we planned the combination of Groupe TF1 and Groupe M6 in France, which regrettably we had to withdraw due to excessive remedies requested by the French competition authority – including at least the sale of either M6 or TF1. Although the parties concluded that on this basis the proposed merger no longer had any strategic rationale, we remain convinced that market consolidation will happen in the European TV markets sooner or later. With a strong presence across TV, radio and streaming, Groupe M6 will play a key role in any consolidation moves in the French TV industry.
Growth: alliances & partnerships
Alliances and partnerships are also key to boost our growth businesses streaming, content production and advertising technology.
In November 2020, RTL Deutschland and Deutsche Telekom announced a strategic partnership to integrate the streaming service RTL+ Premium with Deutsche Telekom’s TV offer, Magenta TV. Since then, Magenta TV Smart and Magenta TV Smart Flex have included RTL+ Premium with no additional fee for customers. The partnership contributes significantly to the high growth in paying subscribers of RTL+.
As a next step, RTL Deutschland is gradually expanding its cross-media offer following the industry trend of media bundling. In August 2022, RTL Deutschland launched the RTL+ Musik app. In addition to video content, the app gives RTL+ users access to more than 90 million songs and more than 100 radio streams. For this, RTL+ entered into a partnership with Deezer, one of the world’s leading music streaming services, which is exclusive in the German market.
Working with world-class storytellers and being the partner of choice for international talent – such as Angelina Jolie – is key to the strategy of Fremantle, RTL Group’s content business. Fremantle is one of the world’s largest creators, producers and distributors of scripted and unscripted content, targeting full- year revenue of €3 billion by 2025. To reach this goal and keep up with the increasing demand for content, RTL Group will invest significantly in Fremantle – both organically and via acquisitions – in all territories across drama, film, entertainment, factual shows and documentaries. To secure first access to creative talent and output, Fremantle bought stakes in a number of new production companies.
RTL Group launched a special creative unit – Format Creation Group (FC Group) – which develops non-scripted formats exclusively for RTL broadcasters and their streaming services. The unit aims to fulfil the growing demand for exclusive content by developing innovative formats and intellectual property, fully owned and controlled by RTL Group. In June 2022, the successful FC Group format Who can beat us? launched on M6 in France: a general knowledge game pitting 100 candidates against six of the channel’s experts on their favourite topic.
In advertising technology, our 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. 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. AddressableTV will grow available inventory, attract new advertisers and deliver higher CPMs.
Another key development for the RTL Group’s largest revenue stream – advertising – has been the increased demand from advertisers and agencies for global ad-buying opportunities. Consequently, RTL Group is expanding its international advertising sales to give international advertisers and agencies easy access to the Group’s large portfolio of TV and streaming services, digital video company and advertising technology, in a brand-safe environment. To do this, RTL Group combined its fully owned businesses RTL AdConnect, G+J iMS and the media division of Smartclip to create RTL AdAlliance, an international advertising sales champion. It will be the only European sales house that can offer advertisers international cross-media campaigns out of one hand. In addition, the new unit will closely cooperate with RTL Group’s ad-tech services provided by Yospace and the ad-tech division of Smartclip.
To summarise, I would like to quote media analyst Michael Nathanson from a Financial Times article on streaming wars: “The only way to compete is spending more and more money on premium content.” According to the Financial Times, the top eight media groups in the US plan to spend at least $115 billion on new movies and television shows in 2022. Content remains king, which is essential for RTL as Europe’s leading entertainment company. With our national TV champions and our global content producer Fremantle, we are well equipped for the future of the international TV industry.