RTL to stay in UK despite Five writedown

RTL chief executive Gerhard Zeiler has said the European entertainment group is committed to the UK despite writing down nearly two-thirds of Five's value.

The group's full year results for 2008 revealed that Five's revenue was flat in pounds sterling at £341m, but that "adverse currency effects" had reduced revenue as accounted in Euros by 13.4% year-on-year. Earnings before interest, tax and amortisation for Five's main channel plunged 50% year-on-year, while losses at Five's digital services improved from £17m in 2007 to £11m in 2008.

RTL said that despite the UK's television advertising market being "severely hit" by the economic downturn in the second half of 2008, Five managed to grow its share of the advertising market by 0.3% year-on-year. In terms of audience share, Five's main channel dropped by 0.2% compared to 2007, standing at 5.1% for the year. Five's bouquet of services as a whole, however, improved their total audience share from 6.15% in 2007 to 6.24% in 2008.

However, RTL said that a writedown of €337m was made against the value of Five because of "a significant slowdown in television advertising growth rates in the short-term" and "weaker audience share development in an increasingly fragmented UK television market affecting all established broadcasters".

Zeiler said RTL is a "long-term investor" in the UK but said the market is "incredibly difficult, probably the most challenging of all the western European countries besides Spain".

He added that a merger between Channel 4 and Five is RTL's preferred route for consolidation: "We think that a possible Channel 4 and Five combination has industrial logic: both channels are public service broadcasters, both channels have similar business models and in most parts of the day similar programmes and it would be a sustainable long-term solution."