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

Ladies and gentlemen, thank you for standing by. Welcome, and thank you for joining the RTL Group full year results call. [Operator Instructions] I would now like to turn the conference over to Oliver Fahlbusch. Please go ahead.

Good morning, everyone, and thank you for joining this Analyst Call for RTL Group's Full Year Results 2021. The speakers for today's presentation are Thomas Rabe, the Group CEO; Björn Bauer, our CFO; and Jennifer Mullin, the CEO of Fremantle. The presentation for this call is available on our corporate website, company.rtl.com, following the link included in our press release under Downloads. The agenda on Slide 2 shows the areas our management team will cover today. And with this, I now hand over to Thomas.

Thank you, Oliver, and good morning from me as well. In addition to our full year results 2021 and the outlook for 2022, we'll focus today on our strategy and growth plans. A special welcome goes to Jennifer Mullin. After our outlook statement, she will present in more detail our Fremantle management team plans to grow our global content business. After that, we're happy to answer any questions you might have. Starting on Slide 4. 2021 was a successful year for RTL Group in terms of financial and operating performance and strategic progress. Three major developments marked 2021: a strong rebound of TV advertising market, the dynamic growth of our streaming and content businesses and active portfolio management and significant progress in the transformation of the group. Let me give you some highlights to illustrate these major developments. TV advertising revenue was up 16% year-on-year; Fremantle's revenue, 25%; and streaming revenue, 31%. With higher operating profit and significant capital gains, group profit reached a record level of almost EUR 1.5 billion. In addition, we saw dynamic growth of our streaming services, RTL+ and Videoland. The number of paying subscribers increased by 74% to 3.8 million and to 4.1 million by the end of February 2022. 1.5 years ago, we expressed our view that alliances and larger merger moves and that the creation of national media champions in Europe are necessary and, what we call them, the regulators to be supportive. We also say that we are ready to act. Today, we are leading the consolidation of the European TV industry. Since the beginning of 2021, we've signed agreements for 5 transactions in Germany, France, the Netherlands, Belgium and Croatia. They all have the same target: to significantly strengthen our businesses in the competition with global tech and streaming platforms. In August last year, we announced that we'll accelerate the expansion of Fremantle, targeting full year revenue of EUR 3 billion by 2025. With high organic growth and 4 acquisitions closed since April 2021, Fremantle is making clear progress to deliver on these targets. We also continued selling noncore assets, particularly in North America, with high capital gains. Our shareholders will benefit from RTL Group's strong performance, with a dividend of EUR 5 per share proposed at the Annual General Meeting. I will now hand over to Björn, who will take you through the group's financial results in more detail and through the business review.

Thank you, Thomas. Good morning, everyone. With regards to the group financial results, I will cover 3 points that were key to our 2021 performance: first, strong operating performance while ad markets rebounded; second, active portfolio management, leading to significant capital gains; and thirdly, our continued focus on cash flow to fund investment into our growth businesses and to allow for attractive shareholder returns in the form of dividends. Let's start with a look at our key financials on Slide 6. In 2021, group revenue was up by 10.3% to EUR 6.6 billion, mainly due to the strong growth of TV advertising revenue. In addition, our content and streaming growth businesses performed strongly. Fremantle's revenue was up 25.3% to EUR 1.9 billion. Streaming revenue from RTL+ and Videoland was up 31.2% to EUR 223 million, while distribution revenue, i.e., the revenue generated across the distribution platforms, cable, satellite and IPTV, including retransmission fees, increased by 9% to EUR 437 million. On an organic basis, i.e., before scope and currency effects, revenue grew by 13.5% compared to 2020. With ongoing cost control, RTL Group's adjusted EBITA increased by 35.1% to EUR 1.152 billion. This resulted in an adjusted EBITA margin of 17.4%, up 3.2 percentage points compared to 2020. The group's profit for 2021 was up by a factor of 2.3 to the record level of EUR 1.454 billion. Let's move on to Slide 7. Here, you see the development of RTL Group's total and TV advertising revenue on a quarterly basis. As mentioned before, RTL Group is back to precrisis level. Here some more details. The soft start in 2021 was marked by lower TV advertising revenue, especially in Germany and the Netherlands due to lockdown measures. As expected, TV advertising revenue grew strongly by 65% in Q2 2021 and continued to grow double digit in Q3 and Q4 compared to the same period in 2020 and 2019. We have observed the same picture in 2020. Once the economic environment started to improve, TV advertising money came back quickly. This clearly shows the strength of TV with regards to building reach and brands in a high-quality and safe environment. As a result, group revenue was back on the level of 2019 and organically up 4.3% compared to 2019. Moving on to Slide 8 that puts our operating profit in a longer-term perspective. Here, we wanted to share with you a view on our underlying profitability. With significantly higher streaming startup losses of EUR 166 million in 2021, our adjusted EBITA before streaming startup losses grew to EUR 1.318 billion. This marks a record level for RTL Group, with an adjusted EBITA margin before streaming startup losses of 20.5%. Moving on to Slide 9 and looking now at the items below EBITA down to group profit. In April 2021, RTL Group sold its interest in SpotX, the U.S. ad tech company -- sold its interest in SpotX to the U.S. ad tech company, Magnite. Since the announcement of the transaction on February 5, 2021, RTL Group exercised an option to increase the cash component of the transaction. End of April, RTL Group then received USD 640 million in cash and 12.37 million shares of Magnite stock, which are still held by RTL Group. The disposal of SpotX alone resulted in a capital gain of EUR 770 million, with Magnite share price decreasing in the second half of 2021. The effect from the reevaluation of Magnite shares was minus EUR 188 million in our 2021 accounts. This effect is put -- is part of the line fair value measurement of investments. In total, RTL Group recorded capital gains and remeasurement effect of EUR 949 million in 2021. In addition to the SpotX disposal, this line includes mainly the capital gain from the sale of Ludia, EUR 56 million, and positive effect mainly from remeasurements of Super RTL, EUR 94 million, and Stéphane Plaza Immobilier EUR 52 million. The group's tax charge came in at EUR 427 million. The higher tax charge compared to 2020 was due to the group's significantly higher profitability and the capital gains from the disposals of SpotX and Ludia, which were taxed at rates below our normalized tax rate. Accordingly, the reported tax rate was 23% compared to 29% for 2020. Looking now at the next slide, the cash flow statement. Our operating free cash flow was strong at EUR 1.248 billion, whilst the operating cash conversion rate was 114% in 2021. Last year, exceptionally high cash conversion rate was due to the favorable net working capital effects, a result of the measures that we introduced in reaction to the COVID-19 crisis at the beginning of Q2 2020. In addition, the cash flow in 2021 was impacted by investments and timing effects at the level of Fremantle. The line acquisition and disposal of subsidiaries mainly reflects the cash received as part of the disposals of SpotX and Ludia and the cash paid out for the acquisition of Gruner + Jahr, the remaining shareholding in Super RTL and for the production labels from Nent Group, which we now call This Is Nice Group. With the higher tax charge and, most importantly, the dividend payment for the year 2020 amounting to EUR 569 million, the net increase in cash in 2021 was EUR 59 million. At the end of December, RTL Group was in a net cash position of EUR 657 million, up from EUR 234 million (sic) [ EUR 236 million ] at the end of 2020. On the next slide, I will present the dividend proposal. Our dividend policy is based on the group's full year profit attributable to RTL Group shareholders and adjusted for any material noncash impact, and we target a payout ratio of at least 80%. The adjustment of EUR 335 million shown here relate to noncash capital gains from the disposal of SpotX and fair value remeasurement at the level of Super RTL, Ludia, Stéphane Plaza Immobilier and Eureka. In line with our dividend policy, our Board has proposed a dividend of EUR 5 per share for 2021, of which EUR 3.50 represents the dividend of ordinary activities, while the remaining EUR 1.50 relates to the disposals of SpotX, Ludia and the VideoAmp. Technically, the VideoAmp transaction only closed on January 5, 2022, but we have still included the gain in this proposal. The proposed dividend of EUR 5 per share results in a dividend payout of around 80%. And based on the average share price for 2021, this translates into a dividend yield of 10.3%. For the business review, I will start with RTL Deutschland on Slide 13. In 2021, our largest unit, RTL Deutschland, accelerated the growth of its streaming service, RTL+. The number of paying subscribers more than doubled to more than 2.7 million compared to the end of 2020, while the viewing time increased by 47% year-on-year. The strategic partnership with Deutsche Telekom's Magenta TV contributed significantly to the growth, which was also boosted by the growing number of original formats such as Sisi. Total revenue of RTL Deutschland was up 14% to EUR 2.4 billion, thanks to significantly higher TV advertising revenue, growing streaming revenue and the full consolidation of Super RTL as of July 1, 2021. Adjusted EBITA increased significantly to EUR 541 million, representing a margin of 22.3%. In terms of audiences, RTL Deutschland reported a combined audience share of 26.3% in the target group of viewers aged 14 to 59, which was down 1.2 percentage points year-on-year, partly due to major sporting events broadcast by the public broadcasters. Our German family of channels kept its lead over its main commercial competitor, ProSiebenSat1, broadly stable at 3.5 percentage points. RTL Deutschland's main channel successfully launched the prime time late evening news show, RTL Direkt, in the second half of 2021. Vox performed particularly well in 2021 as the channel was 4 months among the top 3 commercial channels in the target group 14 to 49, also the first time ever ahead of Sat1 in these 3 months. Moving on to Groupe M6 on the next slide. The French net TV advertising market was estimated to be up 16.1% compared to 2021. Total revenue of Groupe M6 was up 9.2% to EUR 1.4 billion, mainly due to higher TV advertising revenue, which was up 17.5%. Please note that there were significant negative scope effects at the level of Groupe M6 in 2021, resulting from the disposal of the diversification businesses, Home Shopping Service and iGraal. Adjusted EBITA increased significantly by 23.7% to EUR 329 million, representing a margin of 23.7% and this despite the programming costs of 11 live matches of the European Football Championship. The audience share of our French families of free-to-air channels in the commercial-tier group was slightly up to 22.8%. M6 scores high ratings in the prime time with its popular format brands such as Top Chef, L'amour est dans le pré and Peking Express. This was complemented by successful event programs and the broadcast of the Euro -- UEFA Euro matches. It was also a successful year for our French radio channel. Thanks to their complementary positioning, RTL, RTL2 and Fun Radio reached 10 million listeners each day. Turning now to RTL Nederland on Slide 15. The Dutch net TV advertising market was estimated to be up by 25.3% in 2021, with RTL Nederland clearly outperforming the market. RTL Nederland's total revenue increased by 20.8% to EUR 575 million. This resulted in a significantly higher adjusted EBITA of EUR 107 million, up from EUR 58 million in 2020 and a profit margin of 18.6%. The combined Dutch family of channels delivered an audience share of 34.2%, up 2.5 percentage points year-on-year. The strong audience growth was mainly driven by the main channel RTL 4, which scored high ratings with shows such as De Verraders, Make Up Your Mind, and Lego Masters. RTL Nederland's streaming service, Videoland, recorded paid subscriber growth of 20.9% compared to the end of December 2020. Videoland's growth was partly due to the third season of the original series, Mocro Maffia, and through reality format, Temptation Island, both of which are exclusive to Videoland in the Netherlands. Turning now to our global content business, Fremantle, on Slide 16. In 2021, Fremantle continued to have major creative successes across all genres. Revenue at Fremantle was up by 25.3% to EUR 1.9 billion. Revenue was up 16% organically. Fremantle's adjusted EBITA was up 62.1% to EUR 141 million. Jen will present the Fremantle story in full in a few minutes. And I'll now hand back over to Thomas, who will take you through the strategy update and the outlook.

Well, thank you, Björn. Our strategic framework remains unchanged. It is based on 3 priorities: core, growth and alliances and partnerships. Core means investing in premium content, strengthening our families of channels. It means cost and portfolio management, including larger consolidation moves. Growth focuses on our streaming services, advertising technology and addressable TV as well as content production with Fremantle. And alliances and partnerships span from advertising sales and content production to technology and data. Last year, we announced 3 major transactions to create national media champions. First, in France, with the planned combination of Groupe TF1 and Groupe M6, the closing is expected at the beginning of 2023. RTL Group's share in the combined group will be 16% after selling 11% to Groupe Bouygues. Second, in the Netherlands, with the planned combination of RTL Nederland and Talpa Network, the closing is expected in the third quarter of 2022. RTL Group's share in the combined entity will be 70%. And third, in Germany, with the combination of RTL Deutschland and Gruner + Jahr, this transaction closed at the beginning of 2022. The strategic rationale for all transactions is the same. It is about scale and pooling resources to compete with global tech and streaming platforms. It's about higher investments in exclusive local content. It's about boosting our streaming services, and it's about investments in tech and data. When we presented the rationale for in-country consolidation, we pointed to the significant value creation potential. The estimated synergies or the adjusted EBITA run rate impact from these 3 transactions are as follows: in France, EUR 250 million to EUR 350 million per annum to be realized by 2026; in the Netherlands, EUR 100 million to EUR 120 million per annum to be realized by 2025; and Germany, EUR 100 million per annum to be realized by 2025. Summarized, the midpoint estimate of the impact on the unit's operating profit exceeds EUR 500 million per annum. RTL Group's share from these synergies is approximately EUR 250 million. This is more than 1/5 of our adjusted EBITA in 2021. Moving on to Slide 20. The growth of our streaming service, RTL+ and Videoland, accelerated significantly in 2021. With more than 3.8 million paying subscribers at the end of 2021, our subscriber base grew by 74% year-on-year. This translates to average net subscriber additions of 135,000 per month in 2021, up from 63,000 in 2020. The positive momentum continued in the first weeks of 2022. As I mentioned at the end of February, the number of paying subscribers exceeded 4.1 million with more than 3 million RTL+ subscribers in Germany. This clearly demonstrates our streaming investments in marketing, technology and content as well as our strategic partnerships such as the one with Deutsche Telekom are paying off. On the basis of strong growth in paying subscribers and as a consequence of significantly increased investment, RTL Group, last year, significantly raised its midterm targets by 2026 for RTL+ and Videoland as follows: to grow the total number of paying subscribers to 10 million and streaming revenue to EUR 1 billion; to reach profitability by 2026; and to reach all these goals will increase the annual spend -- content spend to around EUR 600 million, which means that we will triple the annual content spend compared to 2021. The peak of the streaming startup losses is expected this year with around EUR 250 million. Moving on to Slide 21. In 2022, RTL will be enlarged -- RTL+ will be enlarged to Germany's first cross-media entertainment service, comprising video, audio and text. The new RTL+ offer will offer our audience with the most diverse spectrum of high-quality entertainment and independent information, all in one easy-to-use and personalized manner with a significant prime advantage for the customer. This one app or media approach is a true innovation in the German market. So motto, watch more, listen more and read more. On watch, the new RTL+ will provide a growing number of originals and more than 50,000 hours of video content across all genres as well as the HD live streams of all 14 TV channels of RTL Deutschland. On listen, the new service will also include music, audio books, audio plays and exclusive podcasts. RTL+ has agreed exclusive partnerships with Deezer, with premium package to offer a comprehensive music offering, and the publishing group Penguin Random House Deutschland for audiobooks. On read, RTL+ subscribers will also be able to read digital additions of premium magazines on Gruner + Jahr portfolio with access to a diverse range of content from popular brands such as Stern, Brigitte and GEO. The new RTL+ will use state-of-the-art technology with a high level of personalization and content recommendations for true cross-media user experience. The successful partnership with Deutsche Telekom will continue, and the new RTL+ will be integrated into the Magenta TV offer. Moving on to our global content business, Fremantle, on Slide 22. Since 2012, Fremantle has successfully expanded its scripted drama organically and via series of acquisitions. This helps to significantly grow the business with global and national streaming services. In 2021, streaming service accounted for more than 15% of Fremantle's total revenue. In addition, there's a strong and growing demand for high-end actual content and documentaries, again, in particular, from streaming services. For this reason, Fremantle has established a new global documentaries division with the aim to replicate the success in drama and scripted. Jennifer will take you through the details of this approach. Moving on to the next slide. As already mentioned, we continued to actively manage our portfolio. In addition to the 3 major consolidation moves in France and Netherlands and Germany, we acquired the outstanding 50% shareholding of Super RTL from Disney. And we decided to sell RTL Belgium and RTL Croatia, in both cases, as you know, to buyers of strong local or regional media companies. We also continued to sell our shareholdings in noncore assets, such as Ludia, VideoAmp and SpotX. Björn already explained in more detail how the proceeds from these disposals will contribute to the proposed dividend of EUR 5 per share. Moving on to the next slide. All of these results [ will result ] in a clear target structure for RTL Group's portfolio, with national media champions in Germany, France, the Netherlands and Hungary, cross-border cooperation in the areas of advertising sales, advertising technology, streaming technology and content development and, finally, as mentioned, Fremantle with ambitious growth plans. We have communicated clear targets for our growth businesses: Fremantle's EUR 3 billion revenue by 2025; streaming, EUR 1 billion revenue by 2026; addressable TV advertising, EUR 200 million revenue in Germany alone by 2025. In total, EUR 2 billion plus of revenue compared to 2021. Let me now take you through the group's outlook statements. And let me start with some key assumptions. The first is that the economic recovery continues, mainly driven by private consumption, and there is no significant impact from COVID-19 and the war in Ukraine. It is too early to quantify the potential impact of the war in Ukraine on consumer sentiment, inflation and economic growth and, thus, on our results in 2022. On this basis, we expect slightly growing TV advertising market and continued strong growth in streaming and content. As the major consolidation moves in France and the Netherlands are still subject to regulatory approval, our outlook assumes the full consolidation of Groupe M6 and RTL Nederland, the current scope for the full year 2022. Slide 26 gives you an overview of how scope changes in organic growth are expected to impact our full year revenue and adjusted EBITA in 2022. Based on these assumptions, we expect our full year revenue to increase to approximately EUR 7.4 billion in 2022. This includes organic growth of approximately 5% to 6% and positive net scope effect of around EUR 400 million. We expect our adjusted EBITA for 2022 to remain stable at approximately EUR 1.15 billion despite significantly higher streaming startup losses of approximately EUR 250 million. This means that we expect our adjusted EBITA before streaming start-up losses to increase approximately EUR 1.4 billion in 2022, a new record level. Moving on to the next slide, which gives you the summary of our outlook for 2022. As mentioned by Björn, our dividend policy remains unchanged. RTL Group plans to pay out at least 80% of the adjusted full year net results, including cash capital gains. And with this, I will now hand over to Jennifer Mullin, the CEO of Fremantle. As said, she'll give you an overview of current trends in content production but also how Fremantle plans to accelerate its growth over the next year. Jennifer, over to you.

Thank you, Thomas, and thank you, everybody, for having me. I'm excited to share our growth plans to become a EUR 3 billion company in the next few years. What I will say is it's an incredibly exciting time to be on the content side of the business. There is opportunity everywhere. And I think if we go to the next slide, please. Thank you. This is just a snapshot of where there is an incredible amount of opportunity, not only in the U.S. but globally. So obviously, we know about all the global digital platforms, and there are new ones emerging every day, but we're also seeing the regional platforms. Of course, RTL has their fair share. AVOD is an interesting, new emerging area that Fremantle is taking advantage of, largely with our catalog content and monetizing our vast catalog. But most of these platforms are starting to get into original content, which again creates opportunity for us. Pay TV is looking to commission more originals. Linear broadcasters, which is really the core of Fremantle's business and will continue to be the core. And as we could see from Thomas and Björn's presentation, the advertising market is still strong, but there is clearly a lot more investing that the linear broadcasters are doing in order to compete with the digital platforms. And then as has been referenced earlier, there is a growing demand for documentaries, largely in streaming, that Fremantle is looking to capitalize on. So next slide, please. What does this mean for us? This is probably a very conservative view, on the left, of the market. These are original titles that the digital platforms have commissioned over the last 5 to 6 years. And as you can see, it's a huge amount and, again, this 1,000 plus, it's probably conservative. And then Fremantle's opportunity, this is just a snapshot, again, of how we have capitalized on it. So Mosquito Coast is a scripted that we are producing our second season for with Apple. Apple has turned out to be a big client of ours. Amazon, we have several projects with Amazon, Veleno being one of them. This is a documentary. And then with Netflix, this is one of their most successful unscripted shows. We're on our seventh version, Too Hot To Handle. We've done 4 English-language versions. We've done 2 Spanish language versions, a Brazilian version, and we're actually shooting a German version right now. So us, again, capitalizing on the digital platforms is a big part of our strategic growth. Next slide, please. So when we think about how we are going to get to EUR 3 billion in the next 3 years, it really comes down to 3 core pillars. One is protecting and growing our core, which is our unscripted side of the business, and I'll talk more about that in a moment. It is diversifying our portfolio, which Thomas just mentioned, and this is largely our scripted film and our newly developed documentary division. And finally, it's maximizing our global network. And so this is incredibly important as the world becomes bigger and [ gets more accessed ]. Us leveraging our creative and our -- our creative relationships, our international relationships, our global footprint and scaling where appropriate is really important for us as well. And this will be some organic and some M&A. So -- but let's get into a bit more detail. If we can go to the next slide, please. So entertainment or unscripted. Again, this is our core. Right now this probably represents close to 70% of Fremantle's business. And so protecting this and growing this is incredibly important. It's our foundation. Just a couple of titles to call out: American Idol is -- we're in our 20th season this year. The show is still incredibly strong. America's Got Talent is -- or the Got Talent franchise is our most -- is the most successful franchise in the world of any production company in terms of its rollout and its scale. And nurturing these brands and keeping these brands alive and fresh is really incredibly important to get to our foundation. So to bolster that, we did 2 transactions last year. We bought the This is Nice Group -- Nent, which is now called This is Nice. It's a collection of 12 companies in the Nordic that was designed to bolster, again, our unscripted entertainment proposition around the world, keep those formats coming into the pipeline and, again, giving us a really big market share, particularly in that region. Eureka, we did a minority investment with Eureka several years ago, and we stepped up last year to a majority ownership. As Eureka operates out of Australia and the U.S., and they are a very prolific provider of unscripted IP for our pipeline. And again, these are just some of the titles. Parental Guidance is a huge title that we're rolling out right now, and they're doing business with all of the digital platforms as well. So again, protecting the core is pillar number one. We can go to the next slide, please. So our drama business, we embarked on this several years ago, and this is a unique combination of organic growth within some of our territories. And then as Thomas alluded to, we have purchased a number of companies -- acquired a number of companies along the years, and we will continue to do so. We approach this drama business with the eye to fill gaps location-wise and genre-wise. So to sort of going through a couple of these titles, Mosquito Coast, which I've mentioned, this comes out of our U.S. team and is based on a key book IP. Anna comes out of Italy and is just a nascent production. The Investigation is based on a true story about a murder of a journalist on a submarine. Exit is rooted in reality. And Reyka came out of South Africa. And so this is just a snapshot of what we're doing globally. And some of this is from companies that we've acquired, and some of these are through our own Fremantle-based production. And I really -- and look, I think this one -- we'll talk about Lux in a second, but growing this part of the business -- and we're going to get to film in a second, but growing this part of the business is a big part of Fremantle's growth strategy. There is an insatiable amount of appetite for quality premium scripted drama. So next slide, please. So film, there are a couple of territories that have done local films, Italy and Germany being 2 of them. But what we've realized, particularly with COVID and the -- almost the collapse of the traditional box office, is the demand for film has shifted and largely to digital models. And that has created an enormous opportunity for Fremantle to not only exploit our scripted capabilities, but it offers our talent. There's a lot of crossover right now between box office talent, traditional movie stars, directors who want to get into TV and then vice versa, TV talent that want to get into film. So a perfect example is The Hand of God on the right. This is from a director that we have a deal with, Paolo Sorrentino. And he's done a lot of television, but he decided to do a film. And it had a box office release, but it also had a second window with Netflix shortly thereafter. And this is up for an Academy Award next week actually for Best International Film. And so I think there's an enormous opportunity for us to leverage the key creative talent we have across the group and say that you can do a scripted drama, you can do a film. The monetization models are there that allow us to ship seamlessly and really become a home for talent that allows them tell a story, again, either in a scripted series or in a short-form film, but we're creating flexibility for our talent. So this is a very exciting opportunity for us, and as you can see, we'll release 17 films this year compared to 6 in 2019, pre-COVID. Next slide, please. And finally, documentaries. So there is a massive appetite, again, with the digital platforms for documentaries. Fremantle does some. We've been doing some local documentaries, but what we did last year was start a unit. And we're building teams largely in English-language countries, so the U.S., the U.K. and Australia and starting there. But we are -- we will probably do some very strategic M&A, do some talent deals and follow what we did with the scripted business, which is accelerate our growth in this area with some key acquisitions, people that are -- companies or talent that are already working in this space and have credibility in this space. This is very filmmaker-led. So like directors on the scripted side, these -- this is a very skilled group of directors on the documentary side. So finding the right talent to align with and the right stories to tell will be key. But that said, these titles are just 3 premium titles that our organic teams have done already. Kingdom of Dreams is the fashion industry. Planet Sex is -- comes out of our U.K. company, which is Cara Delevingne exploring sexuality all around the world and different cultures and how different cultures deal with sexuality. So we're shooting that right now. And then Phat Tuesday was a project that our U.S. team did about Black comics in the '90s after the riots. And this just recently aired on Amazon last month. So this is a big growth area for Fremantle. Next slide, please. So again, we talked about getting to our EUR 3 billion mark, and some of this will be organic growth, and some of it will be through M&A. So this is just a snapshot of activity in the last year. Abot Hameiri is an Israeli-based company, and we took a full ownership of them last year. Eureka, we talked about, this is the Australia/U.S., and we increased our stake to a majority last year as well. This Is Nice is the Nordic group that I talked about, the 12 companies in the Nordics. Lux, we just announced a couple of weeks ago. This is an Italian scripted company that is a wonderful complement to the existing businesses we have in Italy. And by complement, they produce content that is quite different than our existing 2 Italian-based scripted companies. So we are probably the largest producer of Italian content right now with this acquisition. And then just last week, we announced that we took a minority stake in Fabel Entertainment. They are a scripted company here in the U.S., and they probably are best known for the Bosch series on Amazon. So again, this is just a snapshot. We do have some others in the works. But this is -- these are very strategic acquisitions that tick our scripted and our unscripted strategy for growth. Next slide, please. And so we're a talent-led business. Everything comes down to talent, IP and then obviously, execution. So just on the previous slide, I consider all of those companies talent. When we look at those acquisitions, we look at the principles, we look at their track record, and it's all talent-based. It all comes down to who is running those companies. This is a different way of looking at talent. And so we are in business with, I think, some of the best talent in the world, and this is just a very, very small snapshot of some of the deals that we've done. So Sorrentino, we already talked about. He's our Director of The Hand of God and, again, will be up for an Oscar award next week. We announced a deal with Angelina Jolie a couple of weeks ago. Angelina, I don't think I need to tell you who she is, but she has an ambition to tell global and compelling stories around the world and then looking as to who she would partner with for this, Fremantle and her vision, our vision were really aligned. Again, we're global. We offer creative independence and creative freedom. And when we discussed with her, it just seemed like a very natural and organic partnership for us to think about films, scripted television shows and documentaries. And so this is a pretty wide-ranging relationship that's using our global scale and our footprint and our independence and the fact that we invest in content to help her realize her story. And then on the other side, Paolo (sic) [ Afua ] is a really interesting woman that we signed a deal with. She is a lawyer. She is a journalist and activist, and she decided that she wanted to take -- this is Afua, and she decided she wanted to take all of that experience that she had and turn that into a television production company and tell stories that matter to her, and again, on a global scale, so similar to Angelina but with a different experience. And so really finding key talent for us, whether it's through an acquisition, whether it's through a filmmaker, whether it's through somebody who's in front of the camera, like Afua or Angelina, is key, key, key to our ongoing success. And that is Fremantle. Thank you very much. Thomas, back over to you.

Thank you so much, Jennifer, and thanks for dialing in from L.A. and sorry for keeping you up so late. But thanks for sharing your insights. That brings us to the end of our presentation. Thanks for your attention. And we are now available for your questions.

[Operator Instructions] First question is from the line of Annick Maas from BNP Paribas Exane.

I have, first, a few questions on Fremantle and then one on RTL. So first of all, on slide, I think it's 29, you show us from where you get your revenues and suggested that linear is still the biggest client base. Can you maybe give us a bit more granular detail of what the mix is and how you expect this mix to change in the next 5 years? Then the second one on Fremantle is on M&A. So clearly, M&A is a big part of your strategy. What are the areas where you think M&A is needed at Fremantle? And typically, when you look at M&A, what type of multiples do you have in mind? And then I guess last one on Fremantle. Just -- specifically to Jennifer, I guess, can you explain us why is it advantageous for RTL -- for Fremantle to be part of RTL Group? And then just on the TV advertising market, I think you've already suggested that you see a slightly growing TV ad market. If you could give us a little bit more granularity per country, that would be great.

Jennifer, you want to go first? Jennifer?

Yes, yes. I'm sorry. Can you hear me? Yes?

Yes, we can. Absolutely. Go ahead.

Okay. Good. So in no particular order, why is it advantageous to be part of RTL Group? First of all, it's incredibly supported shareholder and will -- and understands, again, the opportunity and is willing to support investments -- strategic investments and has really set us up for this growth plan. So look, we couldn't ask for a better shareholder. And I think that I've said this often, we're incredibly fortunate to have -- just have the solidarity and the structure behind it. In terms of M&A, we -- look, right now in terms of M&A, we are looking in genre. So again, we're looking for gaps, whether it's in our drama business, and that could be regionally. We're looking at Spanish language as an area for growth and then certainly in the documentary space. As I said, this is an area that we need to scale and build, and there'll be some M&A. So those are probably the 2 areas that we're focusing on in terms of M&A. And then sorry, I think those are the 2 questions for me.

Yes, just to add from RTL's perspective, I mean, Fremantle is independently run, very important, but has excellent relationships with our broadcasters in Germany and France and the Netherlands and Hungary. But as I said, all dealings between Fremantle and RTL broadcast is on an arm's length basis, and so significantly more than 80% of Fremantle's revenue is with third parties. It's actually more than 90%. So that's very important to us. We think that's absolutely key to maintain its independence to attract the best talent at all levels of Fremantle and in all their financials. This has worked well in terms of M&A. I mean as Jennifer said, there are plenty of opportunities, and we'll take it in steps. We're not planning any significant, I mean, large-scale M&A in content production. We take it in steps as we have in the last 18 months. Objective is to increase the revenue of Fremantle this year to approximately EUR 2.2 billion and that then would leave a gap of EUR 800 million to EUR 3 billion, and we'd expect to fill approximately 50% of the gap via M&A and 50% organically. So that's how we look at it. All the funding, which Fremantle needs, be it for acquisitions, be it for talent deals and funding of production, is available. I mean RTL is very well funded and makes all these accounts of Fremantle available. For the growth plan, it's also a great relationship, I should add, between Fremantle and other [indiscernible] companies, in particular, Penguin Random House on books, which can serve as a basis for films and series and so is BMG in music. And then on the advertising markets, we said...

Revenue shares...

Yes, Björn, on revenues. Yes, go ahead.

Yes. Sorry, just on your question related to the revenue mix of Fremantle. So the business with the stream is obviously growing. It's close to 20% of revenue now, and the majority is with broadcasting clients. In terms of our strategic growth areas, around 30% is scripted. Documentaries is fast growing, as Jen pointed out, but currently still less than 5% of revenue. And the rest is kind of entertainment.

On advertising, we faced slight growth. Björn, that probably means 0% to 3%. That's our best estimate at this point, and this would apply to all markets in which we operate. Start into the year has been solid. As we said before, the potential impact from the war in Ukraine is very difficult to quantify this at this stage. We don't see any direct impact at this stage, with possible exception of Germany in March, but then the picture in Germany is much better in April. It's also the Easter effect, of course, in March and April of 2020 because Easter is 2 weeks later than in 2021. So there's a mix of elements. So we continue to stick to our view that the ad market, that's only linear advertising, right? That's very important with 0% to 3%. That is also the basis for the outlook which we provided, the EUR 1.15 billion EBITA after and EUR 1.6 billion EBITA pre-streaming start-up losses. So if more money would come in, that would clearly have a positive impact on the profit and our outlook, but at this stage, we prefer to be prudent.

Next question is from the line of Conor O'Shea from Kepler Cheuvreux.

Three questions for me as well. Just the first question, just to have a little bit more detail, if possible, on the first quarter, particularly in the German market. I think you said March was down or slightly weaker than the start. So if you could maybe give sort of an indication of TV advertising revenues in Q1 and also the potential rebound in April. And if also we could have that for France as well, that would be very helpful. And then second question, just to understand the guidance, particularly on the operating profit, you're guiding for EUR 800 million of extra revenues next year. I understand streaming, there's more investment going in, but I think that the increase in losses is less than EUR 100 million, but you're still coming out to flat EBITA at a group level. So just wondering what additional sort of extra investment is going in there that's making the operating leverage to effectively be close to 0. And then the third question, just in terms of the timing of the regulatory approvals of the major deals that you're expecting in the Netherlands and in France, I'm just wondering if we could give us an update, if you see any potential delays there, obviously, with the election in France and so on. What are sort of your latest thoughts on that?

Yes. Absolutely. Let me start with the timing of the deals. No change there. So we expect the clearance of the deal in the Netherlands in summer. It can be just before the summer or during the summer, whatever definition of summer is, but I'd say, between June and July. And in France, there's a very clear time table, which has been discussed publicly, which is that the decision would be taken and clearance would be obtained by mid of October. No change there to the timetable. As you may have seen, we've now made the formal filings, regulatory filings, to the ADLC, the competition authorities in Paris, and they're working on it. In terms of additional revenue, yes, indeed, it's EUR 800 million additional revenue from EUR 6.6 billion to EUR 7.4 billion, of which EUR 400 million are organic and EUR 400 million are scope -- net scope. Look at the guidance, that is the slide which we provided. We look at our profitability pre-streaming start-up losses, and net profitability goes up by approximately EUR 90 million year-on-year, which means that on the incremental revenue of EUR 800 million, we'll generate EUR 90 million of EBITA, which is below our average margin, but that is due to 2 effects. First, we have sold a number of businesses with pretty high margins, think about SpotX and RTL Belgium, which are no longer in the scope. And we are adding a number of businesses and assets with slightly lower margins like the production business. So it really is a business mix point more than anything. Björn?

But if I may add, when you look at the margin pre-streaming, as presented earlier, 2021 was 20.5%, and when you look at the EUR 1.4 billion, it's also around 20%. So the margin is relatively stable.

And the important point here is -- and that frankly is what we're trying to do. It's a balancing act. Once the key profitability of the company is high, particularly net profit and dividend payments, that's why we always look at net profit as a combination of operating performance and capital gains, which will continue in 2022. So we keep net profit -- I mean operating profit, net profit up to keep dividend levels up while significantly investing in our streaming business. But I think it's a pretty good balance, which we found, which I think is paying off quite nicely for the shareholders. On Q1, Björn, what would you add? For Germany, January and February were pretty solid, I mean, double digit up versus prior year. March is a bit weaker, very hard to tell what the various effects are. There is most probably Ukraine effect in the March numbers, but there's also the Easter effect, which I mentioned before. And as I said, the market is really hard to read. It's really short term. It's always been. But trying to level uncertainties right now around corona, inflation and Ukraine is very, very high by any standard. But we see, as I said, April is picking up quite nicely, but this will have to be confirmed in the next weeks. And that's why, as I said before, for the moment, let's be prudent. Let's work on the basis of 0% to 3% advertising market growth. We'll manage the costs accordingly to keep margins up. And if the situation improves, which is perfectly possible, and particularly driven by private consumption, then I am pretty certain that given our strong market positions, we will benefit significantly.

[Operator Instructions] Next question is from the line of Richard Eary from UBS.

Just a couple of questions from myself. Thomas, you talked about of the EUR 800 million of revenues, EUR 400 million was organic, EUR 400 million is in scope. Can you break those down further? I'd assume organic is going to be driven by streaming, Fremantle organic and then TV advertising. And then within scope, we've obviously got Gruner + Jahr in, some Fremantle M&A in and then we've got SpotX and RTL Belgium out. So I don't know whether you can maybe give us a more detailed bridge within that, that would be helpful. The second question is just -- can you provide an update in terms of on the streaming announcement that you made in September when the new products will become available and how do we think about that? That would be helpful. And maybe the last one is just on the Gruner + Jahr, basically, acquisition. Obviously, you talked about synergies. Can you talk about when we can expect those to flow through into numbers as well? That would be helpful.

Absolutely. Let's start with the EUR 400 million organic. The breakdown is as follows: as I said, TV advertising between 0% and 3%; Fremantle, approximately 10%; and streaming is 30%. On scope, I mean you provided most of the key elements. So in scope, additional is Gruner. It's Fremantle with some acquisitions, but we expect more acquisitions in the course of the year. This will come on top. And then obviously, the full consolidation of Super RTL in Germany and the full year effect. Consolidation, full consolidation started on the 1st of July. And then scope out would be SpotX full year effects. And RTL Belgium, we expect to complete the sale of RTL Belgium at the end of this month, which means that we'll have 3 months of revenue and 3 months of profit, and thereafter the business will be deconsolidated. Concerning the new product, the new product will be launched in the course of 2022. We're working on the launch timetable. We are very well advanced on the content agreements with third parties, in particular with Deezer, as I mentioned, and with Penguin Random House for audiobooks. And we're also very advanced on distribution, in particular, with Deutsche Telekom and the bundling with Magenta TV. So all of this in place. What we're now working on -- not working on but focusing on is to provide a product and a customer experience that matches customers' expectations. And as you know, customer expectations are driven by a series of the U.S. offerings, which are high standard. We don't want to disappoint [indiscernible]. And frankly, the main challenge of the product we're launching is that we're not just providing different media categories, but we actually want to provide [indiscernible], which is personalized across media. And that, frankly, in technology terms, is Champions League. I mean it's quite demanding. So the -- as I said, timetable, it will be this year as soon as we can driven by a product that matches customer expectations. On Gruner, we're making very good progress. Integration is running like a [ Swiss watch ]. We have a very detailed integration plan. Organizational management team level 1 and 2 -- or first level and level 1 are in place. We're working on the second level. We announced that we will go for EUR 120 million -- approximately EUR 100 million but that's EUR 120 million of synergies, of which EUR 30 million would be cost synergies and EUR 90 million revenue synergies. We have identified a significant part, I mean, very specifically of these synergies based on projects already. And if you would watch German television and our main channel, you would actually find Gruner brands already on the schedule. One example is the Chefkoch TV. Chefkoch is a brand owned by Gruner. It's one of the largest cooking communities in Europe with a huge following and user-generated content. It's now been turned into Chefkoch TV, a TV program, which runs every day, 11 to 12 in the morning, and we're off to a very good start. We also launched Gala TV, which will be a society magazine on TV, with a corresponding magazine at Gruner. We're going to extend stern TV, which is a very popular magazine, a political [ science ] magazine. And we're going to extend this to Sundays. And this will launch in April. Again, it's based on stern the brand of Gruner + Jahr. And we're also going to launch GEO TV. It's a popular science program. It's a very well-established German brand of magazine and online from Gruner, which we're now going to bring to television. So in the first year of the integration of the 2 businesses, you'll already see a significant change and impact on the -- on RTL's programs, and that, we believe, is very, very beneficial. So more to come, and we can provide a more detailed update maybe in August, the half year numbers, but the message to you is that we're off to a very good start. And much of what we're doing is already visible on the TV channels.

Can I just ask a follow-up?

Yes. Go ahead.

Yes. Just on the EUR 400 million in scope revenues, can you just outline what your expectations were for Gruner + Jahr and Super RTL in terms of revenues for this year? And then maybe just on the Gruner + Jahr integration, obviously, within the EUR 100 million to EUR 120 million, EUR 130 million worth of cost is now where you've now got first line of sight. Does that seem conservative or not?

Björn, on the scope, the details.

Yes. So when you look at RTL Germany, the G + J full consolidation and Super RTL full consolidation is around EUR 400 million positive impact in 2022 versus 2021. The other big impacts are RTL Belgium, approximately EUR 140 million less; and SpotX, which is minus EUR 60 million. And the other bigger ones are Ludia, minus EUR 45 million; and positive effect, Fremantle, all in all, is around -- over EUR 100 million more than last year.

Just to follow up on the Gruner + Jahr and Super RTL, you're saying that's EUR 400 million together?

Yes. Gruner alone was how much, Björn?

EUR 360 million.

Yes. So EUR 360 million, core publishing, print and online assets that were acquired by RTL at the beginning of this year.

Isn't that significantly below where you talked about, which was the EUR 500 million when you gave out pro forma numbers when you made the acquisition? So I'm just trying to balance your numbers.

Well, that's possible. Yes. I mean we made some changes to the scope. We ended up acquiring only the core publishing brands, the print and digital, I mean, the assets which are really synergistic with RTL. That was the focus, and that probably explains the delta. I mean we can check this further, Björn?

The additional impact, there were some consolidation effects that weren't taken into consideration. I think at the time, we said a little over EUR 400 million and, let's say, around EUR 40 million in EBITA. The EBITA contribution stands, but the revenue will be a little bit less than EUR 400 million, as I said. But this is consolidation and partly scope driven, as Thomas just described. But it's not an underperformer.

No, absolutely not. No, no, no. So the performance of Gruner + Jahr stand-alone is in line with expectations despite significantly higher prices for paper for the print business. And the synergies, as I said, are on track. I think the -- to get back to your question on the -- whether the EUR 100 million to EUR 120 million are high or low, I think it's realistic. Is there more potential on the cost side or generally on efficiencies in our German business? I'd say, yes, and we'll really tap into this. I mean I think we've got a strong record -- track record of cost control and cost management, and that applies to all of our business units. But just looking at RTL and Gruner combined, the number from the EUR 20 million by 2025, EUR 90 million revenue and EUR 30 million cost spend. And we're very confident to achieve them.

Sorry, just so to monopolize the call, but just one final question. Just on Fremantle, you talked about 10% organic growth for this year. What's the actual M&A addition into Fremantle this year in terms of absolute revenues from the consolidations?

Yes, just a second.

So I mean Fremantle ended the year at EUR 1.9 billion. At 10% organic growth, it's about EUR 200 million, and we would expect, from the known M&A effects, an additional impact of about EUR 100 million -- a little over EUR 100 million.

The EUR 2.2 billion target for this year.

Yes.

The EUR 2.2 billion target. Okay.

[Operator Instructions] There are no further questions at this time, and I would like to hand back to Oliver Fahlbusch for closing comments. Please go ahead.

Yes, thank you very much for your interest in RTL Group's full year results 2021. If you have further questions, of course, we are available to answer them throughout the day, and, of course, in the future. Yes, thank you very much, and looking forward to connecting soon again.

Yes. Thank you so much. Thanks for your time, and let's stay connected. All the best to you.

Thank you.

Ladies and gentlemen, the conference has now concluded, and you may disconnect your telephones. Thank you for joining, and have a pleasant day. Goodbye.