RTL expects significantly lower profits

RTL, the European television group battling with the sharp slowdown in advertising, has said it expects profits to be “considerably lower” than last year as it unveiled an 11 per cent fall in first-quarter sales.

The German media group, owned by Bertelsmann, said first quarter sales fell to €1.19bn (€1.3bn). First-quarter earnings before interest, tax and amortization fell 54 per cent to €87m (€188m).

RTL said the profit decline came amid decreases across all “profit centres” and €18m of losses relating to the consolidation of Alpha Media Group in Greece. Restructuring costs were €9m.

The company, which has forecast a 15 per cent decline in the European television advertising market this year as advertisers and consumers cut spending, said it could not give reliable full-year guidance because advertising bookings were on such a short-term basis.

RTL is looking to cut costs across the whole business and said this would result in a significantly lower cost base by 2011.

In March the company said that profitability would just be lower than the previous year’s level.

RTL, which operates 45 TV channels and 32 radio stations in 10 countries, is the most profitable subsidiary of Bertelsmann, Europe’s largest media company which owns of 89.8 per cent of the broadcaster.

RTL said in March that it would not sell Five, the UK broadcaster, in spite of writing down almost two-thirds of its value as the advertising market deteriorates.

The media group said it would consider all options as the government looks to create a new public-service entity to secure the future of commercial broadcasters.

With flat turnover of £341m last year, Five’s revenue fell 30 per cent in the first two months of the year, after media agencies refused to agree trading terms with the smallest terrestrial broadcaster.

The UK market is ”incredibly difficult . . . probably the most challenging of all the western European countries besides Spain”, said Gerhard Zeiler, RTL chief executive, at the time.

For the year to December 31, RTL took a goodwill impairment of €337m (£312m), due to the ”significant worsening in advertising market conditions” hitting its UK TV business since September.