RTL regains German market share, eyes digital M&A

By Georgina Prodhan and Jens Hack

FRANKFURT/MUNICH (Reuters) - European broadcaster RTL regained market share in its core German TV business in the first half of 2015 and lifted its full-year sales forecast on strong growth in online businesses, which it said it would expand with further acquisitions.

RTL, controlled by German media conglomerate Bertelsmann, has TV and radio channels in eight European countries and southeast Asia, with shows including The X Factor, Idols and Farmer Wants A Wife.

As advertising spending rapidly migrates online from television -- still the most popular medium -- RTL has begun to buy digital properties including an online video advertising platform and a clutch of YouTube channel networks.

RTL's digital sales almost doubled to 219 million euros ($247 million) in the first half. That represented 8 percent of RTL's total sales of 2.79 billion euros, which beat expectations thanks to both digital and German TV advertising sales.

Chief Financial Officer Elmar Heggen told Reuters the digital businesses were profitable as a whole although the so-called multi-channel networks such as HooplaKidz and StyleHaul on YouTube would take time to make money.

"It's still a situation where all the participants are trying to grab market share and reach. It's still the time of the gold rush," he said in a telephone interview. "It will take a couple of years until the businesses break even."

ACQUISITION PLANS

Heggen said RTL's annual acquisition budget was 150 to 250 million euros on average and would focus on digital and content, such as the 62 percent stake it announced its FremantleMedia unit had bought in Italian drama producer Wildside on Thursday.

RTL would invest strongly in its existing digital businesses, with growth evenly divided between them and any newly acquired ones.

RTL also reported forecast-beating core profit that rose 3 percent in the first half and said it would pay a special interim dividend of 1 euro per share in September.

Its shares, which have underperformed the European media index by 10 percent this year so far, rose 2.5 percent to 78.60 euros by 0935 GMT, broadly in line with the index.

"Results should be taken well with some disappointment on the size of the interim dividend," wrote Liberum media analyst Ian Whittaker, who rates RTL "buy".

Heggen said RTL had won back some of the market share it had lost a year ago, with an increase of 7 percent in revenues at its core German business in the second quarter, outpacing a 5 percent rise at rival broadcaster ProSiebenSat.1.

(Reporting by Georgina Prodhan; Editing by Maria Sheahan)