‘Family Feud’ Creator RTL Sells More Show Franchises as Ads Slow

RTL Group SA, the producer behind TV hits such as “Family Feud” and “American Idol,” is relying on tweaks to proven formulas and investments in digital and pay-TV to fuel growth as Europe’s ad market stalls.

Formats like dating show “Take Me Out,” where 30 women determine the fate of a single male contestant, and prison drama “Wentworth” and oldies including the “Got Talent” franchise are being adapted for new markets to expand revenue, RTL Co-Chief Executive Officer Guillaume De Posch said today.

RTL, controlled by Germany’s Bertelsmann SE, is seeking new revenue sources as continent’s economy continues to stagnate. The Luxembourg-based company -- Europe’s largest broadcaster -- is investing in digital operations and pay-TV, buying majority stakes in Broadband TV, YouTube Inc.’s fifth-largest multi-channel network, and Dutch video-on-demand provider The Entertainment Group in recent months.

“With these acquisitions, we’ve given a particular boost to our presence and expertise in the digital distribution space,” de Posch said, pushing online video views to more than 15 billion this year.

First-half sales fell 1.3 percent as Europe’s television ad market continues to lag. Most countries saw declines, except for Germany, which was “kind of flat,” de Posch said.

Net income soared 53 percent to 418 million euros ($558 million) on higher operating profit, RTL said today. Revenue was 2.78 billion euros, down from 2.82 billion euros a year earlier.

The results were better than expected with revenue broadly in line with expectations, Kepler Cheuvreux analysts said in a note.

Game Shows

U.S. game shows such as “The Price Is Right” and “Family Feud,” which has been on air since 1972, continue to perform well, helping offset the advertising decline. “Family Feud” had its best performance in 20 years and had an average audience of 5 million views in the first half of this year. RTL’s FremantleMedia produces the shows and is looking for so-called bolt-on acquisitions over the next two years, de Posch said.

RTL, which debuted on the Frankfurt stock exchange in April after Bertelsmann sold a 17 percent stake, owns 53 TV channels and 28 radio stations in 10 countries. About 60 percent of revenue comes from advertising and its top markets are Germany and France.

RTL rose 3.2 percent to 70.70 euros at 12:31 p.m. in Frankfurt. The stock also trades in Brussels, where it rose 3.1 percent to 70.65 euros.

The company will pay an extraordinary interim dividend based on “strong cash flows” of 2.50 euros a share next month.

Before it's here, it's on the Bloomberg Terminal.