RTL to Expand Local Content Focus to Fend Off Netflix, Amazon

  • Broadcaster also eager to grow digital business through M&A
  • Company seeks to differentiate from U.S. online rivals

RTL Group SA, seeking to rejuvenate its revenue growth and stock price, will expand local content production and is considering more acquisitions as it fights other broadcasters and internet-based rivals Netflix Inc. and Amazon.com Inc.

The Luxembourg-based company, which owns stakes in about 60 European TV channels, plans to produce more shows like German drama "Club der roten Baender," whose second season will premier this fall on the VOX channel, co-Chief Executive Officer Anke Schaeferkordt said in an interview Thursday. RTL Group is also adding content to its revamped TV Now streaming service that bundles programming from its German channels, she said.

"We’re relying very strongly on the expansion of local content production,” Schaeferkordt said by phone. “That differentiates us from video platforms that all draw on the same product and rely largely on American fiction.”

RTL Group is seeking to defend its traditional TV-advertising business, which still generates most of the company’s sales, and at the same time find fresh revenue streams in areas such as digital video as U.S. online services including YouTube and Netflix expand in the region. The broadcaster’s second-quarter sales fell 2.3 percent amid lower ad revenue, and its stock is little changed this year after two consecutive annual declines.

The company is eager to expand its content production and digital businesses with acquisitions and has earmarked an average of 250 million euros ($282 million) a year for M&A. Potential areas of interest include digital video production, aggregation and marketing, Schaeferkordt said, declining to be more concrete.

Digital revenue increased 20.5 percent to 264 million euros in the first half as viewing on multichannel networks and advertising sales increased. RTL Group attracts more than 20 billion online-video views a month and in March bought online-video advertising firm Smartclip for 47 million euros.

RTL’s digital business is becoming a “significant growth driver,” said Harald Heider, an analyst with DZ Bank AG. Heider sees “structural challenges” for RTL Group’s linear TV business, he said in an e-mailed note.

RTL Group has produced content for clients including ITV Plc and Amazon, and employs more than 10,000 people. German media group Bertelsmann SE owns 75 percent of the company.