RTL Group’s strategy pursues two main goals: one is the on-going, further optimisation of its core business of major TV and radio stations, the other is to advance the Group’s growth.
Further optimisation of the core business
In the years ahead, high audience shares will continue to form the basis of RTL Group’s success. So the building and extension of families of channels remains an important task in responding to increasing audience fragmentation in a digital, multi-channel world. The Group has already built up strong families of channels in Western Europe, all of which are either number one or two in their respective markets. These activities were enhanced with the addition of a number of digital channels with clearly defined profiles. They include W9 in France, RTL Lounge in the Netherlands, and Passion, RTL Crime and RTL Living in Germany. Based on this model, families of channels are to be gradually established in countries where RTL Group currently operates just one main channel. For instance, RTL 2 went on air in Croatia at the beginning of January 2011.
Optimising the core business also includes measures to keep spot prices in the TV advertising markets stable, an even closer and more flexible cooperation with advertising clients, and the development of innovative forms of advertising in addition to the classic 30-second commercial.
The company takes a flexible approach to costs. In the crisis year of 2009, RTL Group’s families of channels in nearly all countries managed to increase their audience shares despite significant programme cost savings. The results have shown that the TV industry is flexible and resilient even in difficult situations. The far-reaching freedom of action enjoyed by the CEOs of RTL Group companies in the various countries has turned out to be a solid competitive advantage. Depending on the future economic development and competitive situation, RTL Group channels will be able to keep costs stable, realise further savings or maintain their leading audience positions by stepping up their investment in programming.
Developing future growth
One focus of the growth strategy is a significant increase in non-advertising revenue by establishing a second revenue stream, continued expansion in content production and diversification businesses.
RTL Group’s aim is 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 – in the future; for new services such as high-definition TV channels, on-demand platforms and digital pay channels, and eventually the signal of the major free-TV channels, since these form the basis of the platform operators’ business.
Content production arm FremantleMedia also plays a key role in strengthening RTL Group’s non-advertising revenue streams, and the company wants to grow the business significantly across all markets. Content is vital for today’s broadcasting industry, and growth prospects are promising as ‘can’t afford to miss’ content becomes ever more valuable in the digital age. New distribution platforms – online, mobile, linear and on-demand – need exciting content to gain viewers, subscribers and advertising clients.
Finally, RTL Group will continue to work on diversifying its businesses, for example by leveraging its own brands – as in the mobile communications cooperation between M6 and Orange – through live events such as The American Idol Experience in Walt Disney World Resort Florida, casual games tying in to TV formats like Family Feud, and through e-commerce and rights trading.
The second strategic focus reflects the strong growth in non-linear TV viewing. RTL Group channels have quickly succeeded in establishing their own on-demand platforms with catch-up TV services. Examples include RTL Now in Germany, M6 Replay in France, RTL XL in the Netherlands and RTL Most in Hungary. Steep growth rates show that audiences appreciate the service: whenever they miss an episode or show, they can watch it for free on the Internet.
The usage data to date makes another point clear: broadcasters’ established format brands such as Deutschland sucht den Superstar (Idols), X Factor or Un dîner presque parfait (Come Dine With Me) are driving the on-demand experience. In the on-demand world, providers with the strongest content and shows benefit the most – and these are and will remain the major TV channels.
Developing a profitable business model from this growing viewer demand will be one of the most important tasks for RTL Group in the years ahead. The company’s strategic goal is to be present wherever viewers look for its programmes.
Geographical expansion in high-growth regions also remains on RTL Group’s agenda. With participations in ten countries, the company already has a well-balanced portfolio. Not least against the backdrop of this strong presence on the European TV markets, RTL Group is careful with its investment decisions. If, however, the company identifies a target that will help implement its strategy and create value for the Group, then the management team will pursue it.