Leila Abboud is a former Bloomberg Gadfly columnist.

Investors have an excuse to do some channel surfing. That's the message from RTL Group SA, Europe's second-largest commercial broadcaster by sales.

Before you get comfortable on that couch, a brief recap of the action so far: ProSiebenSat.1 Media SE's profit warning earlier this week triggered steep declines in shares across the industry. Investors were worried that the spending slowdown that's hit major advertising agencies like WPP Plc and Havas SA would rip into the broadcasters, which rely on dollars from commercials.

Like all reality shows, this one has a twist. RTL said on Wednesday it expects to eke out a 3 percent rise in German ad revenue in the third quarter and achieve a 1 percent rise for the year. That's after a 2 percent to 3 percent decline in the first half. By contrast, ProSiebenSat.1 is braced for a mid-single digit decline in Germany in the third quarter, and flat revenue for the year.

Audience Reaction
RTL's results helped the shares to pare the decline of the previous day
Source: Bloomberg
Intraday times are displayed in ET.

Hit series like "Ninja Warrior" and "Cover My Song" are helping RTL to take a greater share of ad dollars and ratings from ProSiebenSat.1. RTL rose 2 percent on Wednesday, recovering some of yesterday's 5 percent decline.

A happy ending? Not quite.

The relief rally wasn't uniform across all European broadcasters. In Britian, ITV Plc recovered most of the prior day's losses, while France's TF1 and M6 remained largely flat after falling 7 and 8 percent respectively yesterday.

That muted celebration makes sense given the real concerns over the future of television, something Gadfly has explored before. Addicted to their smartphones, fewer young people are watching TV than their elders, and they're spending less time in front of the box. That all leads marketers to move their dollars: spending on online advertising will overtake television globally this year for the first time. The debate over that structural challenge has been going on for a while, but it means that every earnings miss turns into a near-panic.

Behind the Curve
Germany lags the U.S. and U.K. in how ad spending is shifting to new media
Source: Bloomberg Intelligence

Investors have a simple choice: avoid all TV companies for the foreseeable future, or choose a few that can deliver returns in the short term. The former stance seems extreme. Even as money moves into online ads, television remains the best way to reach a mass-market audience and the main medium to build up brands. The latter means investors have to understand the differences in how each broadcaster has navigated the shift into digital or proven they can grow ratings with hit shows.

Pair Trade
RTL's valuation multiple has caught up with rival ProSieben's for the first time in two years
Source: Bloomberg

Picking the winners becomes the whole game, so to speak. TF1's cost-cutting efforts have boosted earnings and the shares this year, and RTL is holding up well. In contrast, ProSiebenSat.1 appears to be suffering from problems of its own making: it's fallen behind in the ratings battle with RTL and spooked shareholders with its ambitions for acquisitions.

Viewers often flick through the channels for ages in search of something to watch. Investors are going to need to be just as discerning.

This column does not necessarily reflect the opinion of Bloomberg LP and its owners.

To contact the author of this story:
Leila Abboud in Paris at

To contact the editor responsible for this story:
Edward Evans at