RTL Group S.A. (RRTL) Earnings Call Transcript & Summary

Dear ladies and gentlemen, welcome to the analyst conference call of RTL Group regarding the presentation of the full year 2020 results. At our customers' request, this conference will be recorded. [Operator Instructions] May I now hand you over to Oliver Fahlbusch, who will lead you through this conference. Please go ahead.

Good morning, everyone, and thank you for joining this analyst call for RTL Group's full year results 2020. The speakers for today's presentation are Thomas Rabe, the group CEO; Elmar Heggen, our COO and Deputy CEO; and Björn Bauer, our CFO. The agenda on Slide 2 of our presentation shows the areas our management team will cover today. And with this, I now hand over to Thomas.

Yes. Thank you, Oliver. Good morning from me as well. Let's turn to Slide 4. 2020 was a year of unprecedented challenge and major achievements for RTL Group. We provided information entertainment to millions of people who faced extraordinary disruptions to their daily lives. In so doing, we outperformed our commercial competitors in audience shares in Germany, France and the Netherlands. And we boosted our streaming services, who is paying subs in Germany in the Netherlands, up 52% to 2.19 million. Our business has proved to be highly resilient as we managed to offset 70% of the revenue decline by cost savings. We continue to actively manage our business portfolio with the full acquisition of RTL Belgium, the binding agreement with Disney to fully acquire Super RTL in Germany and with the disposals of BroadbandTV and SpotX. We stated repeatedly that there's a strong case for in-country consolidation in the European media industry, in particular on television. We'll continue to review options for such consolidation and the creation of 2 national champions to compete with the U.S. platforms and to create value for our shareholders. There's more good news for our shareholders. The shareholders will benefit from the strong performance in 2020 with a dividend of EUR 3 per share proposed to the AGM. I will now hand over to Björn, who will take you through the group's financials in more detail.

Thank you, Thomas. Good morning, everyone. I will start on Slide 5 with the group financials. In my presentation, I will cover 4 points that were key to our 2020 performance. First, the strong rebound of TV ad markets; second, effective control of our costs; three, strong cash conversion; and four, higher capital gains. Let's start with a look at our key financials. On Slide 6, group revenue was down by 9.5% to EUR 6 billion, mainly due to the decline in TV advertising markets across Europe in Q2 and lower content production revenue as a result of COVID-19. On an organic basis, i.e., before scope and FX effects, revenue was down 6.8% year-on-year. RTL Group's adjusted EBITA was EUR 853 million, resulting in an adjusted EBITA margin of 14.2%. Profit for the year was EUR 625 million. Let's go to Slide 7. Here, you'll see the development of RTL Group's TV advertising revenue on a quarterly basis. The full year decrease was fully driven by the market environment in Q2 when many of our advertising clients cut their ad spend in order to safeguard liquidity. However, once the economic environment normalized over summer, TV advertising money came back quickly. This clearly shows the strength of TV with regards to reach and brand building in a quality and brand-safe environment. As a result, our broadcasting businesses even generated a higher adjusted EBITA in second half of 2020 when compared to prior year. Moving on to Slide 8, which proves our cost flexibility. The total cost compensation across the group in 2020 amounted to EUR 331 million, representing 52% of the revenue decrease. On a comparable basis, adjusted for nonrecurring items and higher streaming investments in 2020, the compensation rate was more than 70%. The main drivers were program cost savings in our broadcasting businesses as well as production cost savings at Fremantle. Looking now at the next slide, the cash flow statement. The group's EBITA to free cash flow was strong, reaching 123% in 2020. The higher cash conversion is largely due to favorable net working capital effect as a result of active cash management. The line acquisition/disposal of subsidiaries mainly reflects for cash received as part of the disposal of BroadbandTV. With no dividend payment for the financial year 2019, the cash generated in 2020 amounted to EUR 762 million. At the end of the year, RTL group was in a net cash position of EUR 236 million. Looking now at the items below EBITA down to the net profit on Slide 10. In March 2020, Groupe M6 sold its shareholding in iGraal to the German Global Savings Group. The deal took the form of a partial cash sale and a share swap. As a result, Groupe M6 has become the leading shareholder in Global Savings Group. The transaction resulted in a capital gain of EUR 78 million. In October 2020, we completed the sale of our digital video network, BroadbandTV, for EUR 102 million in cash. The transaction resulted in a capital gain of EUR 80 million. Following the decrease of the share price of Atresmedia and the decline of the Spanish TV advertising market in the first half of 2020, we had already recognized a noncash impairment of EUR 60 million against Atresmedia in our interim results. The group's tax charge came in at EUR 250 million. As a result, the group's profit for the year was EUR 625 million. On the next slide, I will walk you through the dividend proposal. Our dividend proposal -- policy is based on the group's full year profit attributable to RTL shareholders and adjusted for any material noncash impacts, and we target a payout ratio of at least 80%. The adjustments you'll see on the slide of EUR 71 million relate to noncash impairments booked in 2020, primarily Atresmedia. In line with our dividend policy, our Board has proposed a dividend of EUR 3 per share, of which EUR 2.50 represents an ordinary dividend while the remaining EUR 0.50 relate to the distribution of cash capital gains. The proposed dividend of EUR 3 per share results in a dividend payout at 83%. Based on the average share price of 2020, this translates into a dividend yield of 8.9%. For the business review, I will now hand over to Elmar.

Thank you, Björn, and good morning from me as well. In 2020, our largest unit, RTL Deutschland continued to outperform commercial competition on advertising sales, audience ratings and streaming. The German net TV advertising market was estimated to be down between 9% and 9.5% in 2020, with RTL Deutschland performing significantly better than the market. In terms of audiences, RTL Deutschland reported a combined audience share of 27.5% in our target group of viewers aged 14 to 59. This means that our German family of channels increased its lead over its main commercial competitor, ProSiebenSat. 1, from 3.1 to 3.6 percentage points. Total revenue was down 6% to EUR 2.13 billion, as higher platform and streaming revenue partly compensated for lower TV advertising revenue. Competition in our largest market, Germany, is constantly increasing, both in linear TV with one of the largest public service -- broadcast systems in the world and also in nonlinear with the U.S. platforms. This is why we continue to invest significantly into our streaming service, TV Now, and in other growth initiatives such as ad-tech. Adjusted EBITA decreased from EUR 467 million, representing a margin of 22%. On a comparable basis, adjusted for investments into our growth initiatives, mainly streaming and nonrecurring items, RTL Deutschland offset 70% of the revenue decrease by cost reductions. The nonrecurring items include the reversal of provisions in 2019 and program effects in 2020. For example, the ongoing sports rights contract. Moving now to Groupe M6 on Slide #14. The French net TV advertising market was estimated to be down 11% compared to 2019. The total revenue of Groupe M6 was down 12.6% to EUR 1.27 billion, mainly due to the decline in TV advertising revenue in Q2. Adjusted EBITA in 2020 decreased slightly to EUR 266 million, representing a margin of 21%. In 2020, Groupe M6 offset 89% of the decline in revenue through cost savings. And again, this was achieved without cutting into the substance of our business. The audience share of our French family of free-to-air channels in the commercial target group was almost stable at 22.7%. As in other countries, the main news shows on our factory channel recorded massive audience growth. M6 also succeeded in launching new audience favorites such as Lego Masters and [indiscernible]. In October, Salto, the joint subscription streaming service of Group TF1, France Télévisions and Groupe M6 was launched with more than 10,000 hours of content and a chance to stream 20 TV channels live in HD quality. Our technology company, Bedrock, provides the tech platform for the streaming service with state-of-the-art content curation and personalization features. Finally, Groupe M6 continued its strategy to focus on its core businesses, generating substantial proceeds after the sale of the Football club, Girondins de Bordeaux, and MonAlbumPhoto in 2018, the combination of iGraal with Global Savings Group in the first half of 2020 and the company finalized the sale of its home shopping business. Let's now turn on to Slide #15. The Dutch net TV advertising market was estimated to be down by 9.8% in 2020. RTL Nederlands revenue decreased by 4% to EUR 476 million as higher streaming and platform revenue partly compensated for lower TV advertising revenue. Adjusted EBITA increased by 7.4% to EUR 58 million due to significant cost savings initiated in reaction to the coronavirus crisis. The combined Dutch family of channels delivered an audience share of 31.7%, up 1.9 percentage points year-on-year. This strong audience growth was mainly driven by the main channel RTL 4, which scores high rating with shows such as Lego Masters, The Masked Singer and The Voice of Holland. As a result, RTL Nederlands family of channels increased its lead over its main commercial competitor, Talpa TV, from 6.5 to 9.9 percentage points. Turning now to our global content business, Fremantle on Slide 16. Revenue at Fremantle was down by 14.3% to EUR 1.54 billion, mainly due to fewer deliveries of shows and postponements of productions. Fremantle's adjusted EBITA was EUR 87 million. Fremantle had major creative successes across all genres in 2020 with American Idol; America's Got Talent: The Champions; the reality-dating formats, Five Guys a Week on Channel 4; and Too Hot to Handle on Netflix, which quickly topped the Netflix most watched charts globally. Despite production stops and postponements, in particular in Q2, Fremantle delivered a total of 54 dramas from 15 territories in 2020, slightly up compared to 2019. With production, such as The New Pope; The Investigations; We Are Who We Are; and Deutschland 89, Fremantle has become one of the global producers of international scripted series for all major clients, such as Sky, HBO, Amazon Prime, Netflix, Disney and Apple+. Our global content business also launched its first high-end documentary, Expedition Arktis, which will be rolled out internationally in 2021. All this demonstrates that -- all this demonstrates the strongly creative diversity across Fremantle's global footprint. I will now hand you back to Thomas, who will take you through the strategy update before finishing with the outlook segment.

Yes. Many thanks, Elmar. So let's turn to Slide 18, which is our strategic framework, which remains unchanged. It is based, as you know, on core growth and alliances and partnerships, core, meaning investing in premium content, strengthening our families of channels, driving efficiencies and managing our portfolio; growth focused on our streaming services, advertising technology and addressable TV as well as worldwide content production; alliance and partnerships, expands on advertising sales and content production to technology and data. Let's turn to Slide 19, which gives you an overview of the drivers for our long-term portfolio transformation and our framework. In linear TV, the main opportunities are massive reach, converted into high-quality and brand-safe advertising inventory; CPM increases, reflecting the true value of TV advertising; addressable TV growth, leveraging our advertising inventory by targeting; platform revenue; efficiency in cost management alliances and partnerships into resources and capabilities; and finally, consolidation of our existing portfolio and larger scale in-country consolidation in Europe. The biggest challenge, which you're well aware of is decreasing viewing time, in particular, in the younger demos. In nonlinear TV, the opportunities are: subscriber growth; viewing time increase and ARPU growth driven by excellent customer experience; and attractive local content. Further opportunities are distribution partnerships and alliances, for example, in streaming, tech and data. The biggest challenge, as you're well aware of, is the fierce competition with U.S. platforms and their significant subscriber base. In the content, we see global demand across TV networks and streamers across all genres. And for Fremantle, we see particular opportunities in scripted formats and high-end documentaries, the latter becoming a priority going forward. Let us see how we're doing on some of these KPIs, and what we're planning in linear and nonlinear TV in our main market, Germany. That's on Slide 20. We see a higher reach in linear and nonlinear. In 2020, our linear channels increased their reach driven by strong ratings of our news shows and information magazines. This demonstrated, again, when it really matters, people turn to television. We saw strong growth in nonlinear, in particular on our streaming service, TV Now, up 35% in 2020 with an acceleration in the fourth quarter, which continued in the first quarter of 2021. In November, we announced a strategic partnership with Deutsche Telekom, we agreed to integrate TV Now premium with Deutsche Telekom's offer Magenta TV, and I can tell you that we are off to a good start. And last week, we grouped with Sky to make TV Now available on the Sky Q platform from mid-2021. Looking at addressable TV. Addressable TV on Slide 21 combines the reach of linear TV with targeting solutions of digital advertising. It is still nascent with less than EUR 15 million revenue in 2020, but we expect this to increase to EUR 200 million by year 2025, based on the assumption that approximately 25% of German TV households will be addressable with video commercials. And this depends on the number of households with a smart TV device, the availability of data for targeting and reach via all distribution channels, namely broadcast, the digital cable satellite and terrestrial, IPTV services, such as Deutsche Telekom's Magenta, TV Now on SKy's Sky Q platform and our OTT distribution of our streaming service, TV Now. Importantly, and despite the sale of SpotX, we made a good progress in building a broadcaster advertising technology platform based on the Smartclip and Yospace technology, and we're deploying this technology at RTL Group and for third-party customers. Slide 22. We continue to boost our streaming services, and we confirm our midterm targets, midterm meaning until 2025 for TV Now and Videoland in the Netherlands as follows: to grow the total number of paying subscribers to between 5 million and 7 million; to grow streaming revenue to at least EUR 500 million; to be comp profitable by 2025; and in order to reach these goals, to triple the content spend for TV Now and Videoland to EUR 350 million. Now let me turn to the outlook for 2021 on Slide 26. Assuming that the economic recovery continues in 2021, in particular, in Q2, the current lockdown measures gradually ease and vaccination programs against COVID-19 progress, we expect our full year revenue to increase to approximately EUR 6.2 billion in 2021. This includes organic growth of 8% and the effect of the deconsolidation in particular of BroadbandTV. We expect our adjusted EBITA for 2021 to grow to approximately EUR 975 million. This includes significantly higher streaming start-up losses. As we grow our content spend for TV Now and Videoland, in line with our boost plans, streaming start-up losses are expected to grow from EUR 55 million in 2020 to EUR 150 million in 2021. And that means that with an adjusted EBITA before streaming start-up losses of approximately EUR 1.25 billion in 2021, operating profitability will be almost back to the pre-corona levels. As mentioned by Björn earlier, our dividend policy remains unchanged. RTL Group plans to [ pay out ] at least 80% of the adjusted full year net results, and this includes cash capital gains. This brings me to the end of our presentation. Thanks for your attention, and we will now take your questions. Thank you.

[Operator Instructions] And the first question is from Annick Maas, Exane BNP Paribas.

My first question is what sort of advertising growth are you baking in this guidance for the German market, please? And I know -- I guess you know what your competitor has guided for. Where do you believe are we spending at the moment in this range? My second one is -- I guess it's for Thomas. It's really -- how does Bertelsmann's do its RTL ownership at this stage? I guess what I would like to get to is, within RTL, what assets do you view as core and what you view as noncore going forward, so that RTL still fits into the Bertelsmann strategy. And my last one is with regards to M6, I assume you may have seen the valuation range that was suggested this morning in the core of EUR 3 billion. Maybe you could comment on that valuation and on potential and -- or well, on the potential bidders that have been awaiting these articles?

All right. Thank you. I mean, to start with advertising markets and advertising market recovery, first point to make on the German market. So we believe the market was down by a bit more than 9% last year. We clearly outperformed that. We came, as I say, approximately minus 7% or minus 7.1%, which means that the German market last year performed more strongly than the other markets in which we operate. Our current view on the market is that despite softness in January and February, we expect the advertising market to grow by approximately 3% across our footprint, and that would also apply to Germany. So that's where we are guiding. For total revenue guidance, which I provided, the EUR 6.2 billion, as I said, we see 8% organic growth. That is approximately EUR 480 million based on EUR 6 billion last year, and approximately EUR 290 million of deconsolidation effects, primarily BroadbandTV and home shopping services in France. On RTL and Bertelsmann, I mean I'm here as RTL's CEO, but what I can tell you is that Bertelsmann is very happy with RTL and RTL's performance. We consider all -- or I'd say, most of the assets as core. Clearly, we didn't consider BroadbandTV and SpotX and some of the other businesses we sold as core. But that is fully in line with RTL's views. So when we talk about consolidation in the European media industry, it's not a matter of what we consider to be core or not. We quite simply think that there's a strong case for consolidation in the European broadcasting industry. And that's why we're currently reviewing such options in the French market for the French broadcast, the Groupe M6, with a view to creating shareholder value via the creation of national champions. But let me be clear, there can be no certainty that this may lead to any type of agreement or transaction at this stage. And as far as M6 is concerned and speculation in the press, I have no comments to make beyond what I just said.

That's great. I just have one small one. So TV Now, I understand you're going to rebrand it to RTL Plus, and I think that rebranding was announced post the targets that you've given to breakeven in 2025. Just -- I was wondering if -- is this rebranding baked in the guidance that we have. Or is there maybe some risk that, that might change in the near future?

No, no, there's absolutely no risk because the rebranding is really pure rebranding. Everything else remains in place, i.e., our marketing spend, the spend on improving the customer experience and of course, the content spend. By rebranding TV Now into RTL Plus, we effectively align our linear and nonlinear business, which we believe is much stronger message to the market. But it's rebranding only. It doesn't mean that we change our strategy. It was absolutely key in Germany, in particular, our distribution partnerships. As I said, we're off to very, very good start in our partnership with Deutsche Telekom. We started in Q4 of last year and significantly accelerated in Q1 of 2021.

The next question is from Lisa Yang, Goldman Sachs.

I have a few on e-market consolidation. I mean the first question, I think, is more sort of general. I mean, clearly, there's a strong case for e-market consolidation and it has been for a while. But regulation has always been the major constraint here. So I'm just wondering, like, where do you see basically consolidation as being most likely from a regulatory standpoint, what is easier -- easiest versus where you see the strongest case for consolidation. And I'm wondering if you have had any discussions with regulators in any market. And are you sensing some, I would say, signals that regulators are becoming more favorable to e-market consolidation, especially after what happened with the pandemic crisis? That's the first question. The second one is more on the rules -- on the regulatory rules in France. I mean, my understanding is a single TV company cannot hold more than 7 TV licenses. And obviously, you're restricted to 49% ownership issue above a certain percent of voting share. Supposedly, you fit this criteria and the buyer and the combined entity and stick with someone else set the criteria, is there any chance that regulators could still block it? I'm just wondering like whether there are other factors that regulators might be looking at, apart from those 2 main roles? And the third question is, you talked about, obviously, reviewing various options on M6. But if you were to sell it, and let's say, get EUR 1 billion or EUR 1.5 billion or, let's say, up to EUR 3 billion, what would you do to the proceeds?

Well, quite a number of of questions. The first one on market consolidation and regulation, in particular. I mean it's very clear that market regulation, particular media regulation and competition regulation or competition law is outdated. To a large extent, that's from the 1990s, i.e., from the analog world and it is, in my view, not adapted to the new reality of media markets, with competition with all U.S. platforms, either for advertising or for reach, i.e., in streaming for a number of subscribers. The thing is on consolidation that everybody kind of seems to be talking about it is, but so far, the -- in the European media industry, nothing much has happened because people didn't move from talking to doing. We are ready to do and ready to act despite the current regulatory environment. And we actually believe that a transaction -- the specific transaction putting -- put on the table could be a trigger for reviewing regulation. I don't think regulation will be reviewed without there being a specific case to be assessed. So that's our take. On M6 and the potential sale or proceeds from sale, frankly, I mean that is far too early to tell and speculative because we don't know what the outcome of the current review is going to be. But as I said before, this applies generally to all of our capital gains. Capital gains will be dividended out to our shareholders in the same way as the -- as ordinary profit to the tune of 80% plus. That's exactly what we did in 2020 with our BroadbandTV capital gains. That's exactly what we would be doing in 2021 with the capital gains from the sale of SpotX when this transaction takes place and the same principle would apply to other transactions and other disposals.

And on the rules in France?

On the rules in France, well, listen, the rules in France are highly complex. And there's no general answer here because, frankly, the regulatory kind of obstacles to potential consolidation very much depend on who the partner and the consolidation is or would be. There are some partners that would face pretty high obstacles and others would face pretty low obstacles, if any at all. So it's impossible to respond to this question in a general way. But the rules and the regulations in France is pretty tight and could have an impact on some of the consolidation options.

Okay. So basically, beyond the number of licenses, you're going to have in the 49% ownership, you think there are other criteria the regulators will look at, let's say, combined market share and all those considerations, right, okay.

Yes. Absolutely. You have to see and so on. There are many obstacles here and you've got the media authorities and you've got the competition authorities. So it's a mix of criteria they will look at. That's very clear. So unless the regulators are prepared to change the market definition for competition purposes, the definition of a relevant market, no consolidation is going to happen at scale in Europe. And it's interesting. I mean, we announced 2 weeks ago that we'll increase our shareholding in Super RTL to 100%. I think that is probably the first kind of -- I mean, say, pretty modest consolidation step in Germany in the last 20 years. It tells you something. If you then look at what has happened in the U.S. in the meantime, clearly shows that we are lagging.

Actually, if I can just follow up, why you started with France and -- in terms of like you do thinking of news selling? Is it just because you're on a 48% stake? Or are you thinking once France is done, you can move on to other countries?

Well, I mean, what applies to France potentially applies to all countries in Europe, countries in which we are present and countries in which we're not present. We believe that in the large countries, the effects of in-country consolidation, I mean, always depending, of course, on regulatory conditions imposed would be in the hundreds of millions per annum. So we're really talking about, I mean, significant synergies, which we could then in part, reinvest, for example, in building very meaningful national streaming services, which will then be able to compete with the U.S. services. So I mean, the economic case is very, very, very strong. And that applies to all countries in Europe without exception.

The next question is from Julien Roch, Barclays.

I'll start again with M6 and a technical question. So in the hypothetical scenario that you would sell M6 and get a big premium, I'm very certain that the French 49% rule trumps public offer rules in France. So would you get the premium offered, again, hypothetical, only on 49% of your stake, so all shareholders get off a premium on 49% of their shares? Or will you get the premium on 100% of your 48.3% and the minorities only get a premium on 0.7% of their shares? That's my first question. The second question is the impact of M&A. You gave very quickly, and I'm sorry, I missed the number, the impact of deconsolidation of BroadbandTV and SpotX. But you also have the positive impact of Super RTL, RTL Belgium that's leading to less minorities. So could we have either the pro forma figures for full year '20 or the expected impact of full year '21 of all the M&A deals you've done recently? And then the third and last question is -- thank you very much for the data on Page 20. Extremely helpful to assess your progress on the core business. My question is on Page 21. Your addressable 2025 target is based on 25% of total TV household being able to get addressable advertising, which seems very low to me because ProSieben is saying that HbbTV 1.5 and above plus people that have signed the consent to have their data used is already at 33%. So those 2 numbers are incompatible. So I'd like to know what you feel is the current penetration of addressable TV at the moment. And why you only have 25% in 2025?

Yes. Yes. Perfect. Well, let's start with the scope changes. Björn, you want to take us through this?

Yes, sure. So the outlook, as Thomas said, assumes an organic growth of 8% and also reflects scope effects of around EUR 250-plus million, that mainly relates to BroadbandTV and the sale of HSS. With regards to the kind of 2 larger transactions that were also discussed, one, SpotX and Super RTL, the first important element is both of these are still in the regulatory approval process. So the timing is uncertain at this point. We're hopeful that both of these could close in Q2, but it could also be at a later point in time. So the impact on our '21 financials obviously depend on the timing of this process. But to give you a sense, when you look at the 2020 numbers, the revenue and the EBITA were kind of in, I would say, comparable range. The revenue of Super RTL was slightly below SpotX, and the additional EBITA contribution from the full consolidation of Super RTL versus kind of the loss of SpotX is slightly lower, but kind of in comparable ranges.

Yes. The minus EUR 290 million of deconsolidation refers to -- I mean, effect in 2021 refers to transactions put in place, right, which are done. RTL Belgium, by the way, doesn't have an impact because we've fully consolidated RTL Belgium. We bought out the minorities, but there's no impact on revenue or EBITA. There's an impact on net result share of the RTL shareholders versus minority shareholders. But that's how we dealt with Belgium. On this -- on addressable TV, listen, it's everybody's best guess at this stage. The point we wanted to make is that there is a significant market. We think there is a significant incremental market. Addressable TV will put us in a position to offer advertising solutions targeted similar to those of the U.S. platforms and better user ad inventory. I mentioned the 3 drivers for addressable TV technically in terms of distribution, et cetera, and TV sets. You can take different views on this. I mean, our starting point is EUR 500 million, that's the market size which we have estimated all along. And this is video, right? I mean, maybe the confusion with ProSieben, but I don't know, to be honest, because I don't know what numbers they stated is that they include display in this. But as far as video advertising is concerned, we believe that the EUR 500 million number is a good number, but it could be significantly higher, of course, and you can compute this very easily with the data, which we provided if the household penetration increases because of the distribution agreements, because of smart TV devices and all the other points I mentioned. So I think at this stage, it's a nascent market. The point we're making is there is potential. It could be potentially significantly higher than what we outlined. We'll keep you posted on this and share the progress we're making on a regular basis. As far as France is concerned, I mean, I really don't want to get into the details of regulation, also not of AMF regulation. It is -- you're quite right. And media law is -- provides 49% ownership limit or we would be selling. If we would be selling is a big hypothesis, is our stake in M6 at the price we agreed with a buyer. And that's all I want to say about this matter.

Well, I understand that's all you want to say, but that's quite important for RTL. In the -- again, hypothetical, because if the 49% rule trumps, normally, to be fair to all shareholders, everybody should get the same premium. Therefore, it would be logical to conclude that you'll get the premium only on 49% of your stake, not on, i.e., about 24%. Not on the whole 48.3%. Would you agree with that?

No, I wouldn't. Because we are today controlling shareholder. And we -- if we set a controlling shareholding that would, in all markets and all transactions, come at a premium. I don't think anything would change for the minority shareholders, to be honest. So I -- but frankly, I don't want to get into this and discuss this. Here, our view is selling our -- we would be selling our shares, that's the hypothesis, right, let me be very clear. And we'd be selling this at a price to be agreed with the buyer, that's all I wanted to say at this stage.

And the next question is from Conor O'Shea from Kepler Cheuvreux.

Three questions from my side as well. First question, just in terms of your hypothesis on full year advertising market growth of 3%, Thomas, for Germany and other markets. Just wondering how much that's been influenced by the first quarter. Particularly in Germany, I think your nearest competitor is talking about double-digit decline for Q1. Is that what you're seeing in Germany? And maybe a word on some of the other main markets as well as in Q1? Secondly, just on Fremantle, obviously, you expect some disruption in the first quarter from the lockdowns again. But what are you looking at? What's baked into your assumptions for 2021 in terms of growth margins and also potential ForEx headwind? And then the last question, just in terms of your asset portfolio, obviously, you got an excellent price for SpotX. Just wondering if there are any other digital assets within your portfolio potentially for sale over the coming year?

We'll start on the digital assets. I mean we sold BroadbandTV, and we are in the process of selling SpotX and we effectively liquidated StyleHaul. So the main digital business in terms of the online video business that we have in our portfolio, Divimove, which is a European leader and we have no intention to sell that business. So as far as setting noncore businesses, I think we're almost done. I mean, as Björn and Elmar said, we also sold and partly contributed IGraal [ shareholding ] business to Global Savings Group. And we sold home shopping services in France. The year before, we sold Universum Film in Germany. So our portfolio is in a pretty good shape. And I would say that bulk of the assets, I mean probably 98% are core assets, all of which, as I said before, would benefit from consolidation. But I don't think that we have any significant noncore assets left in the portfolio. As far as Fremantle is concerned, with 90% of productions and increasing, Fremantle will progress significantly this year in terms of revenue and profitability. Of course, lockdown continues in some areas, and that has an impact on production, and it has an impact on production costs, which we are not always able to transfer to the -- to our customers. There's a margin impact there. You're quite right, a significant part of the Fremantle business is U.S. business. It's, by far, our strongest market. And that's the U.S. dollar business and the U.S. dollar is what it is. I mean it has weakened significantly to the euro, and therefore, we'll see some translation effects in our accounts in 2021. The important point on Fremantle, I made this before, is that this business has significant growth opportunities in scripted and nonscripted and increasingly, in high-end documentaries, which is a business which we are going to build in the next 7 years. Remember that we started our scripted business at Fremantle at a pretty low level a few years ago, and now generate approximately EUR 500 million of revenue. And we're one of the largest international producer of drama series, both for TV networks and for the streamers. On advertising markets, Björn?

Yes, sure. So we remain optimistic that the ad recovery will continue in 2021 in an aggregate portfolio of around 3%. When you look at what happened at the beginning of the year, January and February were indeed softer, but I would say, as expected, on the one hand due the strong comps in the prior year and also due to the lockdown that we had in various countries. But I think it's important point to make that the feedback we are getting from advertisers is these are not cancellations, these are postponements for other quarters. And we're seeing improvements in March and a very significant uptake in April. Specifically about Germany, indeed, Germany is looking to be kind of double-digit down in the first quarter. But keep in mind that, at least for RTL, the first quarter of 2020 was only very limited -- was very limited to -- in a very limited way affected by the COVID and was close to 0. When you look at the other territories, we're expecting a low single-digit decline in the first quarter. And as I said, a strong rebound for April, and that overall will lead us to what we said earlier, 3% for the full year.

Excellent. Just one follow-up on the Fremantle, the U.S. dollar exposure. Is it, in a normal year, around 1/3, 40%, something like that?

40% of what?

Of the revenue.

Of the total business?

Yes.

In terms of profitability, yes, it's probably 50%.

The next question is from Richard Eary, UBS.

Three questions from my side. The first one is on the consolidation side is, if we get a successful regulatory announcement in France that allows the M6 in-consolidation story to happen, and that becomes a broader theme, are you, as a business [indiscernible] an acquirer or a seller into that event? And how does Fremantle fit within that? Because if there's an in-country consolidation thing and Fremantle is a global player, what's the position of Fremantle within the group within that in-consolidation story? That's the first question. The second part is on the asset sales in terms of the physical distributions of that. Obviously, we got a small special dividend this year. Obviously, it's difficult to distribute probably to SpotX because the deal hasn't closed. But I'm just trying to get an understanding in terms of, are we expecting to see a full distribution of those proceeds? And if so, when? And does that include, obviously, the equity state that you've now got in Magnite? Or is that something that you are looking to hold into? That's the second question. And then just the third question, just with regard to Super RTL and RTL Belgium, I may be wrong, but I didn't see any costs associated with those transactions. Can you just basically update us on the costs of those as well?

On consolidation, as I said before, we believe consolidation is necessary and will create significant value and we are not dogmatic about whether it's withdrawal of the consolidation or not. I mean, as we just heard, there's a 49% ownership restriction in France that would make it very difficult in the consolidation to become the controller shareholder condition. In Germany, which is our home turf, so to say, for Bertelsmann and for RTL, clearly. We would be a consolidator and we maintain a leading role. Fremantle is not affected by this at all. Fremantle is very -- I mean, currently independent from our broadcasting business because 90% plus of its revenue is not with RTL Group, it's with third parties. Fremantle, we see significant growth opportunities, as I said before, in all segments, both for scripted and high-end documentaries. We've made very good progress already in the last years, slightly interrupted by corona, but we'll pick up again because there's a huge demand for our content. And our objective for Fremantle will be to significantly grow the business in the next years both organically and through M&A. It's an absolute core business that benefits from the industry tailwinds. On the proceeds, yes, absolutely. Our dividend policy calls for 80%, minimum 80% payout of ordinary profits and capital gains, that is cash capital gains, it's very important. And this would, therefore, also apply to SpotX. Now the transaction is being reviewed by the regulators. There's a cash component, which you're aware of and the share component. We assume that we would monetize on higher position and pay out 80% of the gains. That would be equivalent to EUR 3, potentially EUR 4 per share, but more EUR 3 to EUR 3.50. On the last point, Super RTL and RTL Belgium, I don't know what you mean by costs, you mean the investment we made. Super RTL, we just announced at the beginning of this year. So Super RTL full consolidation is not included in the 2020 accounts. It's being reviewed by the German regulators, and we'll get a response in due course. And RTL Belgium was a transaction or is a transaction where we bought out minority shareholders in the Belgium TV and radio business. And we paid them in the form of cash in the company, i.e. in form of dividends, and we paid them in the form of RTL Group treasury shares and we paid the delta in the form of cash.

All right. Can I just follow up on the last 2 things? Did -- If I look at RTL Belgium, what's the total then outlay in terms of cash and shares for RTL Belgium? And what was the 50% investment in RTL Super or Super RTL?

Okay. Well, for Belgium, it's the total -- I mean, the 3 components I mentioned is 90. 9-0. Yes. But a significant part of that is dividend. I mean, cash in the company, which belong to the minority shareholders, anyway, that was approximately 1/3. And the rest of it, as I said, was RTL treasury shares and cash which we paid. Super RTL, we will disclose the price at the right time. It's not disclosed yet, so bear with me.

And the next question is from Nizla Naizer, Deutsche Bank.

I have 3 questions from my end as well. The first is on your M&A activity, where if you consider RTL as the acquirer rather than the seller, what sort of investment avenues would you be most interested in? And related to that, there were some media reports speaking of RTL potentially interested in Gruner + Jahr. I hope I said that right. Could you kind of give us your thoughts around how you view that particular addition if it does happen to the portfolio and what sort of value that would bring to RTL as a group? My second question is on your streaming start-up losses. Could you remind us again, where is the bulk of these investments going into? And in the context of content, what sort of content are you streaming customers most receptive to? And what have you learnt in that process over the last couple of years? And lastly, could you kind of give us an indication as to what Fremantle's exposure is to OTT customers versus other customers? And how fast that business is potentially growing as the demand for content continues to increase?

Great. Good. Let's start with the streaming service and start-up losses. The bulk of the losses is in Germany. And the bulk of the losses is driven by content investments. I mean, the investments are really threefold, investments in the platform, i.e., the technical platform, investments in marketing and investments in content. So the bulk is content. The content strategy of RTL, I mean, TV Now, is pretty broad based. I mean, it is, of course, series and films, but it's also sports, for example, soccer, which will kick in, in a big way in summer. It is documentaries, et cetera. So what we're doing in streaming in Germany was increasing in Germany to effectively replicate the breadth of our content on linear television. Our positioning is that of a main streamer. So we -- our target markets is the mainstream. And we believe that the mainstream, we look for a broad range of content. So that's -- and we also believe that this approach sets us apart from the U.S. platforms because we really spend most of our money on local content, it's a local context. It's something we're really good at because that is how we build our linear television, and it's a much broader content proposition than what you would find on the streamers. On Fremantle and OTT, well, the total revenue with the streamers in 2020 -- '21, I mean, expected, is approximately 12% of total revenue. It's more than EUR 200 million. And if you add to this the YouTube and local streamers, it is north of EUR 250 million. And that would be equivalent to approximately 14% of total revenue, and that's growing very, very significantly. It's more than doubling year-on-year. Yes. Then on Gruner + Jahr. Gruner + Jahr, as you know, is a print and digital publisher now focused on Germany. And there's already a pretty broad cooperation in place between RTL and Gruner in 3 areas in particular. The first is advertising sales, We have what we call Ad Alliance, which is the largest sales house in Germany, which RTL operates. So RTL sells TV, ad inventory, print inventory and online inventory from RTL and Gruner, but also from [indiscernible]. So it's significant. And one of the reasons for market share gains, we believe, is the strength of the other lines and the cross-media approach. The second area of corporation is content and content generation. And the third area is data and technology. And what we are now exploring is whether more cooperation between RTL and Gruner makes sense beyond the 3 areas, which I just described. We're looking into this as we speak. It's a very thorough review, on which we will conclude in the third quarter and which we would then communicate. On M&A, I mean, clearly, M&A priority is and continues to be Fremantle. Doesn't mean large-scale M&A. We're not interested in this at Fremantle. We would add small and medium-sized publishers -- sorry, producers. We would enter into deals with creative people who develop new formats, which we then produce and license worldwide via our network. And frankly, in television, I don't see significant M&A in terms of cash transactions. I see consolidation opportunities, and I believe that these consolidation opportunities will, to a very large extent, take the form of share yields.

And there are currently no further questions. [Operator Instructions] And we haven't received any further questions. I hand back to the speakers for closing remarks.

Great. Well, thank you so much for your interest in RTL. Thanks for your time and your questions, and we very much look forward to keeping in touch. All the best, and have a good weekend.

Ladies and gentlemen, thank you for your attendance. This call has been concluded. You may disconnect now.