Dear ladies and gentlemen, welcome to the analyst conference call of RTL Group regarding the presentation of the full year 2019 results. At our customers request, this conference will be recorded. As a reminder, all participants will be in a listen-only mode. After the presentation, there will be an opportunity to ask questions. If any participant has difficulties hearing the conference, please press star key followed by zero on your telephone for operator assistance. May now hand you over to Andrew, who will lead you through this conference. Please go ahead, sir.
Thank you very much and good morning, everyone. Thank you for joining us for our analyst meeting, covering the results for the full year 2019. The speaker or the speakers for today's presentation are Thomas Rabe, the Group CEO, Elmar Heggen, our COO, and Björn Bauer, our CFO. Looking at the agenda on slide two, this covers the areas that will be covered today by the management team. With that, I now hand over to Thomas.
Yes, thank you, Andrew, and good morning from me as well. Slide three highlights the strategic progress made in 2019. In the group's two main TV markets of Germany and France, we have gained in both audience and advertising market shares. Both Fremantle and our streaming platforms have reported strong revenue growth, giving us confidence that the next phase of investment in these businesses. Finally, we have continued to pursue new alliances and partnerships in technology, content development, and advertising sales. The progress made across these three strategic priorities has contributed to another strong financial year, as you can see on slide three. The group is in a good shape, profitability is strong, we have low financial leverage and a clear set of growth opportunities. Revenue came in at EUR 6.65 billion, up 2.2%, with underlying revenue up 3.2%.
EBITDA pre-restructuring was above our market guidance at EUR 1.16 billion, resulting in a margin of 17.4%. The group's profit for the year rose 10% to EUR 864 million. On the next slide, we show what this means for the ordinary dividend payout. There are no adjustments to the reported net result, meaning that the proposed dividend of EUR 4 per share results in a dividend payout of 81%, which is in line with the new dividend policy. Based on the average share price for 2019, this translates into a dividend yield of 8.7%. I will now hand over to Björn, who will take you through the group's financials.
Thank you, Thomas, good morning, everyone. I'll start on slide seven. Group revenue on a full year basis was up by 2.2% at EUR 6.65 billion, thanks to higher revenue from Fremantle and our digital activities. Organic revenue, which is a constant exchange rate scope and adjusted for the wind down of StyleHaul, was up by 3.2%. The positive foreign exchange impact amounted to EUR 49 million in 2019. The group's operating cost base rose 2.9% year-on-year, mainly as a result of higher program and streaming investments. The group's net debt at the end of 2019 was EUR 384 million, resulting in a net debt to EBITDA ratio of 0.27 x. Looking now at the items below EBITA, down to the net profit on slide eight.
Our net financial expense totals EUR 5 million and is made up of a net interest charge of EUR 32 million and a positive EUR 27 million from financial results other than interest. We've also recognized a non-cash impairment against our associate, Atresmedia, of EUR 50 million. The weak local advertising market was reflected in the share price development. The group's tax charge came in at EUR 292 million, 5% higher than last year. The group's profit attributable to RTL Group shareholders increased by 12.9% or EUR 86 million to EUR 754 million, thanks to higher gains on disposals and a lower overall impairment charge. Earnings per share were EUR 4.91. Looking now at slide nine, the cash flow statement. The group's EBITA to free cash flow was strong, reaching 105% in 2019. The acquisitions of subsidiaries reflect the Lagardère's TV assets and Yospace.
This has partially been offset by the disposals of Universum Film, Clypd, and the final payment received following the sale of the football club, Girondins de Bordeaux. The higher cash conversion rate in 2019 is mainly due to the delivery of some large drama productions, which had negatively impacted the cash conversion in 2018. I will now hand over to Elmar for the business review, which starts with Mediengruppe RTL Deutschland.
Thank you, Björn. I start on slide 11. As mentioned by Thomas, in 2019, Mediengruppe RTL Deutschland outperformed the TV advertising market and grew its audience share. Part of RTL Deutschland's outperformance of the market is due to Ad Alliance. This sales grouping allows advertisers access to cross-media campaigns at scale and with clear performance targets. Overall, reported revenue came in 1.8% lower than last year. On an organic basis, however, once the sale of Universum Film has been considered, revenue was stable year-on-year. With investments into both the program grid and TVNOW, our German streaming service, EBITDA came in at EUR 663 million, resulting in a margin of 29%.
In terms of audiences, our family of channels reported a combined audience share of 28.1% in our target group, 14-59. This is an increase of 4.6 percentage points compared to last year, and has come mainly from our main channel, RTL. This is the first time since 2011 that the RTL channel has increased its full-year audience share. We are hopeful that this positive trend we have seen will continue into 2020, even against the sports-heavy summer schedule of the public TV broadcast channels. Looking ahead, the main focus of management will be the boosting of growth of TVNOW. German fiction will form an important part of the offer, with 11 series planned for the service. The Europa League will also be a key program element for three seasons from 2021. Moving to Groupe M6 on the next slide.
The main highlight of the year was the acquisition of Lagardère TV asset, Gulli TV. This has significantly strengthened our French family of channels and digital services and offers a significant upside through synergies. The total audience share, including Gulli, amounted to 22.8%, with the historic channels stable overall year-on-year. The net advertising market in France was estimated to be down 1.5% in 2019, as the strikes at the end of the year resulted in a weak last fourth quarter. Reported revenue for Groupe M6 was slightly down by 1.8% to EUR 1.46 billion, while organic revenue was stable. EBITA came in at EUR 287 million, up 4.4% year-on-year. The group's priorities for 2020 include the successful launch, along with its partners, of the streaming service, Salto, and the full integration of Gulli. Let's now turn to RTL on page number 13, slide 13.
In a TV advertising market that we estimate to be slightly up year-on-year, RTL lost market share. The combined Dutch family of channels delivered an audience share of 29.8%, down compared to 2018. Subscriber growth of 29% at Videoland and slightly higher platform fees helped to offset the lower TV advertising revenue. Overall, RTL finished the year with revenue down 1.6% at EUR 496 million. EBITA was down almost 24% at EUR 54 million, as the weak advertising revenue performance and the continued investment in streaming impacted the results. Let's now turn to our content businesses, Fremantle, on slide 14. Revenue increased 12.6% to EUR 1.79 billion in 2019, with organic growth at 10.3%, in line with the guidance given. A slightly lower organic growth rate adjusts for the positive exchange rate effect of EUR 37 million. The higher revenue is reflected in an improved EBITA.
This rose 11.8% to EUR 142 million, resulting in an almost stable margin of 7.9%. Looking ahead into 2020, over the course of the full year, we expect another year of improvement in both revenue and EBITA. This is on the back of a strong drama pipeline led by shows such as "American Gods," Season 3, a two-part miniseries for BBC Two, a four-part series for ITV, and new dramas from Wildside. As a further demonstration that European content can travel, Fremantle have just sold their six-part French drama, "The Long Wait," to the BBC, ZDF, and Arte Media for linear and streaming audiences. This follows a deal with Starzplay, a Starz-branded OTT service, for three high-end dramas exclusively across 20 countries. Just last month, one of Fremantle's Italian businesses signed a multi-year development and production partnership with Sky Studios.
This deal will focus on the creation and development of high-end global drama with international talent behind and in front of the camera. Sky Studios will, for their part, provide development funding for a minimum of three shows alongside a commitment to produce. I will now hand you back to Thomas, who will take you through the strategy update before finishing with the outlook statement.
Yeah, many thanks, Elmar. Let's turn to slide 16. Over the next slides, I will set out some key strategic goals and ambitions for the group over the coming years. Starting on slide 16, RTL Group's strategy builds upon three pillars. First, strengthening our core businesses. Secondly, boosting the growth of our streaming service and global content business, Fremantle. Thirdly, fostering alliances and partnerships in the European media industry. Our aim is to maximize consumers' attraction to our broad variety of video content across all devices. Our national streaming champions are designed to complement our leading families of channels, making our content available wherever and whenever the consumer wants, while attracting new and younger audiences. We want, obviously, better monetization for advertising and content via personalization. Looking at core in a bit more detail on slide 17.
We'll continue to strengthen our family of TV channels to address the increased audience fragmentation. In recent years, RTL Group's families of channels have been enhanced by the addition of digital channels with clearly defined profiles, including Nitro, RTL+, VOXup, 6ter, and RTL Z. In 2019, our Groupe M6 acquired Lagardère's TV business to complement its offering for families and to strengthen its overall position in the French media market, both in TV advertising and in digital. To finance the growth initiatives that I will come to shortly, we've started a wide-ranging review to reallocate resources. This review will include continued portfolio management and cost reductions. The group is committed to an ongoing investment in content, as demonstrated by the more than EUR 3.5 billion invested each year, and is continually looking at ways to develop and own new hit formats or to invest in premium content.
Outside of Fremantle, we have created the Format Creation Group, FC Group, to develop non-scripted formats exclusively for our broadcasters and streaming services. FC Group is jointly financed by RTL Deutschland, Groupe M6, and RTL Nederland, and will focus on the development of factual entertainment formats and reality shows with the IP owned by RTL Group. Moving on to growth, slide 18. RTL Group will continue to focus on building national streaming champions in the European countries, which has leading families of TV channels. These streaming services are positioned as complementary to global services such as Netflix, Amazon Prime, and Disney+, while leveraging the group's competitive advantage in local programming. This strategy is being rolled out either through standalone services as TVNOW in Germany and Videoland in the Netherlands, or via national partnerships such as Salto in France.
These standalone services will adopt a hybrid business model, combining a free advertising-funded offer with a premium pay content bundle that offers RTL Group's TV programs, both live and on-demand, with licensed content from third parties and exclusive originals. Our ambitions in the non-linear world are high, as demonstrated by the new set of targets which we set out here. These targets are only for the group's Dutch and German streaming services and cover the period to 2025. In terms of subscribers, the group now expects to have between 5 million and 7 million paying subscribers by the end of 2025. Accordingly, streaming revenue is expected to reach at least EUR 500 million by 2025. The subscriber growth is being driven by a significant boost in content spend.
Compared to the actual amount in 2019, we aim to grow this by more than 4x to reach approximately EUR 350 million in 2025. Given the need to front-load content marketing and tech spend, the group expects EBITDA breakeven and slight full-year profitability in 2025. This is an ambitious, but we believe achievable, objective given our leading market positions and firm focus on local content. Moving on to the next slide, 19. In terms of advertising technology, our smartclip technology serves commercials in the right internet-enabled television, smartphones, tablets, or computers at the right time. They combine conventional direct advertising campaigns with what is known as programmatic advertising. With smartclip, we are creating an open ad tech platform tailored for the needs of European broadcasters and streaming services. RTL Group's tech platform for its streaming service is currently being built by Groupe M6 and its tech unit, Bedrock.
Bedrock will initially serve the French subscription service, Salto, the partnership of TF1, M6, and France Télévisions, due to be launched in 2020, and Videoland in the Netherlands. As announced this morning, RTL Group has agreed to become a 60% shareholder of Bedrock, which will be a European platform open to third parties. Finally, within the area of data, the open login standard netID was developed by the European netID Foundation, initiated by Mediengruppe RTL Deutschland, ProSiebenSat.1, and United Internet. The standard offers single sign-on, which can be used on numerous German websites by 35 million users. Our targets are very simple. We're aiming for leading positions in both advertising and streaming technologies to use data more extensively. Turning to slide 20. The group's last focus area on the growth is around Fremantle and digital content.
With Fremantle, we aim to further strengthen its abilities in content creation and production by exploring all possible ways to develop and own new hit formats. At the same time, and just as importantly, Fremantle's existing brands are being carefully managed, refreshed, and nurtured to ensure that they remain long-running. We will, of course, carry on investing in high-end drama productions to further develop Fremantle's scripted strategy, which now represents 23% of Fremantle's total revenue. Divimove is the leading digital excuse me, the leading digital studio and home for digital content creators in Europe. They represent more than 1,300 social influencers in eight European countries, currently generate on average 34 billion online video views per month. We have put in place a growth plan to significantly expand Divimove's capabilities in talent management, production of short-form video content, advertising sales, and technology and data.
Now turning to slide 21 on alliances. RTL has been and will remain active with respect to alliances. We believe partnership opportunities based on the philosophy of bonding resources of European broadcasters to establish open and neutral platforms are necessary to compete with the U.S. studios and tech giants. We see partnership opportunities in three areas: advertising technology, streaming technology, and international advertising sales. In technology, wherever they're advertising or streaming, we're exploring multiple forms of partnerships, from software licensing to partial ownership options. In terms of international ad sales, RTL AdConnect already works with several partners, including ITV in the U.K. and RAI in Italy. Thanks to these partnerships, RTL Group is one of the only media companies in Europe that can offer advertisers pan-European TV and digital video campaigns. Another example is Ad Alliance in Germany.
It's the only sales house in Germany that can offer and offers complex campaigns across all media from a single point of contact. RTL Group is also part of Bertelsmann's Content Alliance, which was launched in 2019, along with other Bertelsmann divisions like BMG, Gruner + Jahr, and Random House, to develop content and use the talent within the group across the various media platforms. Within Germany alone, this content alliance invests more than EUR 2 billion annually in original content. I will now take you through the group's outlook statement for 2020, as outlined on Slide 22. RTL Group expects 2020 to be another challenging year for commercial television advertising, especially in the year with major sports events that will mostly be broadcast on public channels. The recent COVID-19 outbreak is also presenting many companies with unexpected challenges.
At RTL Group, we see the first cancellations of advertising bookings and impact on productions, but the first quarter will be broadly stable and in line with our expectations. We're taking all appropriate measures to protect our people and to protect our businesses. We will continue to invest in our businesses. We will not cut into the substance of our businesses, and we will stick to our streaming boost plans as just presented. Importantly, in times of crisis, including COVID-19, television viewing is increasing, as is streaming. The following outlook does not reflect the COVID-19 outbreak, as it is currently too early to quantify the impact on RTL Group's results. On this basis, RTL Group expects organic revenue growth for the fiscal year 2020 of between 2% and 3%. This revenue guidance excludes any impacts on foreign exchange movements and changes in scope.
Within this overall picture, RTL Group plans on stable to slightly down television advertising revenue. Fremantle, the group's content division, will continue to benefit from the growing drama pipeline, and we therefore expect revenue to grow between 4% and 6%, with EBITDA once again progressing. In terms of EBITDA, RTL Group currently expects the group's adjusted EBITDA before additional streaming startup losses to be broadly stable. After these startup losses, adjusted EBITDA is expected to be down by up to 7%, with the group delivering at least EUR 1.075 billion in adjusted EBITDA. This brings us to the end of the presentation. Thanks for your attention, and we will now happily take your questions.
Now we will begin our question and answer session. If you have a question for our speakers, please dial 01 on your telephone keypad now to enter the queue. Once your name has been announced, you can ask the question. If you find your question is answered before it is your turn to speak, you can dial 02 to cancel your question. If you're using speaker equipment today, please lift the handset before making your selection. One moment, please, for the first question. The first question is from Annick Maas of Exane BNP Paribas. Your line is now open.
Good morning. My first question is with regard with your streaming investment plan. If you could please break it up as to how much is going to be coming from Germany and how much is coming from the Netherlands. My second one is with regards to the virus. You mentioned that you've seen some impacts. Could you just maybe give a bit more clarity in which markets has the impact been? Which advertising categories have cut their investment? Thirdly, just a clarification. You mentioned Q1, the ad market is pretty stable. I assume that's with Germany. Thank you.
The first point on the streaming guidance, we're not breaking down the guidance by country, the same way as other companies don't break down the guidance by country. As I said, 5 million to 7 million subscribers for Germany and the Netherlands. We will add the subscriber target for France and Salto when the service launches. On coronavirus, as I said, Q1, limited impact, limited cancellations. Most cancellations in the areas of travel and tourism and live entertainment. Some cancellations in the areas of luxury goods and automotive, but small scale at this stage. In Germany, we expect RTL to be flat in advertising in the first quarter, outperforming the ad market. The same applies to ProSieben, without the due consolidation impact. We have a similar pattern in other countries, like, for example, the Netherlands. Q2 is much harder to read.
Again, all I'm going to tell you today is based on facts and not based on speculation. We don't see significant cancellations for Q2 at this stage, but bear in mind that the advertising booking behavior of our customers has become shorter and shorter term over the last years, and therefore, the reliability of bookings, even four to six weeks out, is limited, in particular in times of crisis. What we believe is happening is that customers are looking at different types of scenarios on the impact of the coronavirus on their business, and will adjust their cost base accordingly. Advertising are important investments, of course, for our customers, but are also soft costs in times of crisis and can be adjusted within limits, of course, because we have contractual agreements and annual agreements and commitments with our customers at relatively short notice.
As I said, based on facts, limited cancellations so far.
Great. Can I just ask one more question?
Yeah.
I think at the nine months, you gave a VOD number, which I couldn't find now for your release. Maybe I couldn't just find. If you could give us that number, that would be great. I think you just give a streaming number now as opposed to VOD, which I assume also includes.
I'm not sure. I'm sorry. You're very difficult to understand. I don't know whether it's your phone or whether it's our phone. It's probably yours. If you could just repeat, I'm not sure I understood what you're looking for.
A VOD number that you gave in the nine months press release, a VOD number, revenue number, which I couldn't find in the full-year release.
Yeah. Well, the VOD revenue in the full year 2019 was EUR 135 million. That's streaming services only, right? That is Videoland and TVNOW . The total number of video, including in-stream video and on different platforms, is EUR 266 million.
Okay. Thank you.
Yeah. Welcome.
The next question.
We actually provide this number in our press release. If you want to look at this, the first page press release, streaming revenue, TVNOW and Videoland, EUR 135 million, up 46.7%. Yeah?
It was just with reference to the one that you gave in the nine months.
Yeah. That's right. We've slightly changed the definition because we want to make sure that the revenue numbers we provide you for streaming correspond to the subscribers, and the number of EUR 135 million fully corresponds to the number of subscribers of 1.44 million for Germany and Netherlands combined at the end of 2019. Okay?
Okay. Thanks.
The next question is Julien Roch of Barclays. Your line is now open.
Yes. Hopefully, you can hear me. I might have a bad line like Annick, because I think everybody's working from home these days. Coming back on COVID-19, some people can't read press release. The answer you gave to Annick on saying that it was limited cancellation, mostly travel and a few tourism luxury, and Q1 flat. I know it's very early days and nobody knows how long it's going to last, and the impact will be different country by country. To try to help us do some scenarios, if you could give us some, I don't know, weekly color on one country. The most impacted country for you, I don't know whether it is France, Netherlands or Germany, but what was the growth before? What's the worst week looking like? We can run some scenarios a bit more color. That would be great. That's the first question.
The second one is on operating profit, down as much as -7%. If you could give us maybe a narrower range, is it -3% to -7%? Explain what drives this range. Is it only the number of subscribers or is there anything else? That's my second question. The last one is, if I look at your strategy priority, one of them is alliances, and there's a couple of slides on that. The most obvious one is with ProSieben and merging TVNOW and Joyn in Germany. Why is this not happening? Thank you.
Okay. Very good. Listen, on COVID, again, what I can tell you to be more precise is that the total volume of cancellations so far across our footprint is EUR 8 million, which is frankly fairly limited given that our total advertising revenue per annum is approximately EUR 3.2 billion. That's what we see. I gave you the sectors, or you call it the sectors, which are most affected. I think they're pretty obvious. Everything beyond that, to be honest, is pure speculation. I don't want to participate in speculation. I communicate the facts I see. Nobody knows how this virus is going to play out. Nobody knows what the lockdown of countries, fully or partly, will mean for advertising spend. What we're seeing is a significant pick-up in TV consumption. We also see a significant pick-up in streaming consumption.
TV consumption, primarily around news and magazines, which is an area of significant strength of, for example, RTL Deutschland, based on old statistics and market reviews available. RTL's credibility in news is at least at par with the public broadcasters. As I said, we see significant pick-up. In terms of fundamentals, COVID-19, i.e. TV viewing and TV consumption, the same applies to streaming. The impact of COVID-19 is positive. The question is how to monetize. On streaming, it's pretty clear monetization is increasingly via subscription. On television, it's primarily via the advertising. We've looked, obviously, at the sectors, composition of our advertising revenue by sector, and have started to make first estimates on which sectors could potentially be most affected.
We also looked at 2009 and what happened in 2009, who canceled and when, and when did we see first signs of recovery. Honestly, I don't think that the financial crisis of 2009 can be compared to the COVID-19 crisis of 2020. Because it's of a completely different nature, secondly, because our business in 2020 is a very different one than in 2009. The competitive landscape is a very different one. Therefore, as I said, everything I tell you today is based on facts and not based on speculation. I'm quite simply not able to give you more precise guidance on the COVID impact. On the 7% EBITDA, to put this into perspective, we provided this in the presentation.
The total start-up losses for our streaming businesses in 2020 will be EUR 90 million, and they were EUR 25 million in 2019, which shows that we are increasing the start-up losses by EUR 65 million. This goes primarily into content. Elmar mentioned before that we've made significant investments in content for streaming already. We have just commissioned 11 originals, which will become available in the course of this year and next year. We have also, very importantly, acquired the exclusive rights to the Europa League, starting in season 2021 for three seasons for both free and pay. That will be a big driver, we believe, of our subscriber base at TVNOW. This also shows, by the way, that A, we're focusing our streaming businesses on local content, as we said all along. Secondly, we don't focus our content strategy on series and films.
The streaming service which we are providing will increasingly look like general interest. They will include films, they will include series, they will include different types of entertainment. They will include sports, as I just said, but they will also, of course, include licensed products from third parties, including American studios. The 7% corresponds approximately to the EUR 65 million of additional investments in form of start-up losses for streaming in 2020 compared to 2019, and will then build up in the subsequent years until we break even in 2025, as we said. On partnerships and alliances. We, as you know, have entered into two partnerships to be more precise, with ProSieben in the last years.
The first one, which we announced last year, is around advertising technology, a project called d-force, which is a joint booking platform of RTL and ProSieben for booking addressable TV campaigns and online video campaigns. The second big partnership and alliance is around data with netID, of which, as I said before, RTL and ProSieben are founding members. We are exploring other ways of cooperating with ProSieben, in particular in the area of advertising technology, as I mentioned in my presentation. We have at least three areas of partnerships which we make available to third parties, ProSieben and others. Advertising technology, VOD technology, and international ad sales. Ad technology is a pretty obvious area for cooperation with ProSieben, but also with many other broadcasters in Europe. We have presented our plans for AdTech and VODtech to European broadcasters in an extensive roadshow in the fourth quarter of last year.
The response is positive. We are in the second round of deep dives to determine exactly in which areas, and which partnership model we're going to operate going forward. As far as streaming services in Germany are concerned, TVNOW, our streaming service, is off to a very good start as I said, and we are significantly ramping up our investments. Joyn, if you look at Joyn, is a slightly different business model than TVNOW. More importantly, we believe that in streaming and building national streaming champions, time is of essence because competition is intensifying. Frankly, a joint venture with ProSieben would take quite a bit of time to negotiate and would take even more time to get approved by the regulators and potentially not be approved by the regulators. That's a risk which we are not prepared to take.
We will continue to invest in TVNOW , as I explained, along the guidance which I provided. Unfortunately, a full cooperation with Joyn, for the reasons I mentioned, is unlikely to be possible at this stage. The last thing I want is to get defocused on the key area of the future of RTL in the years ahead. This position, by the way, is underscored by the fact that I said earlier that despite Corona and the impact of Corona, we will make the investments in streaming as planned. We're not going to cut back on these investments because we believe that now is the time to build a market position of strength to become the leader in local streaming, and we're incredibly well-placed to achieve this objective.
Okay. Thank you very much. That was extremely clear. Thank you.
Super. Thank you.
The next question is from Adrien de Saint Hilaire of Bank of America. Your line is now open.
Yes. Good morning, everyone. I also hope you can hear me well. I've got a few questions for you, please. Thomas, when you mentioned comparison to 2009, how flexible today is your P&L compared to 2009? In 2009, you have been able to protect very well the bottom line and cash flows. Do you think you have the same flexibility today, and that's beyond the investments that you have mentioned in streaming? The second question is, how resilient would you expect TV to be, if there is indeed an economic recession in Europe? One could argue that in 2009, there was still a big buffer because of prints, but maybe that buffer doesn't exist anymore. Thirdly, perhaps following up on your previous observation about potential alliances. You made some comment in the press about regulators should authorize a full-blown merger with ProSieben, for example.
Ultimately, is that your intention? Thank you very much.
Okay. Thank you. On the first question, 2009. In 2009, the television advertising at RTL was down by approximately 10%. That's north of EUR 300 million. We were able to compensate approximately 50% of that by program and marketing cost savings. The world has changed since then. In 2009, RTL's, and also M6's, program schedules include significant U.S. product films and series. One way to reduce program costs was quite simply to reduce the number of first and second runs and increase the number of repeats. Our program schedule now is much less dependent on U.S. product. It's much more local, much more in-house. There is flexibility in our program and spend. We will look at program spend, quite frankly, I believe that coronavirus will have the impact that the number of productions and shows will actually get postponed, which will have an immediate impact on our program costs.
What I said before is our policy in 2020 and beyond. We certainly don't want to come out of this corona crisis weaker than we got into it. We want to come out of it stronger. If anything, our intention is to increase market share and not to lose market share. We will take, as I said before, we will take the necessary measures to protect our business, but also to protect our people. We will work on our cost base, but we are not going to cut into the substance of the business, neither in linear television, nor in non-linear television. On the second point, TV recession, it really relates to what I just said. Recession is one thing. Coronavirus is something quite different. It's a matter of definitions, of course. 2009 financial crisis was not a recession.
It was a crisis, with a significant drop in advertising revenue. A V-shaped recovery, I mean, I remember this exactly. I was pretty close to the business at the time as well. We had a huge drop in advertising revenue in the first quarter of 2009. Continued into the second quarter, but at slightly lower level, and then actually stabilized in the course of the year, and we came out at -10%. No way of telling whether coronavirus will be similar in terms of impact or will be similar in terms of recovery. There are a number of people out there who think that corona could be a crisis and then V-shaped recovery.
If V-shaped recovery would be the same as in 2009, then Q2 would probably be affected, potentially significantly affected at RTL, but we would see signs of recovery in the third, and more importantly, in the very important fourth quarter. The problem which we would then face, but all of this is hypothesis, of course, is that we already have significant load factor, i.e., capacity utilization in Europe, 90%-plus. We'd probably not be able to accommodate all the advertising if a V-shaped recovery would incur. There would potentially be an impact on pricing. That is hard to tell. On alliances, what I said a few weeks ago in an interview with the "Frankfurter Allgemeine Sonntagszeitung" was not a statement that Bertelsmann or RTL want to merge with ProSieben.
What I said was that in time, we will have to, if we want to compete with the U.S. platforms, and the big U.S. media companies like the Disney+ and so on, we have to consolidate the national market and create national champions, which today would not be possible because regulation is such that the market definition, the definition of relevant markets by regulators is incredibly restricted. It doesn't reflect the new reality which we are facing, of more competition, significantly more competition, and many options for advertisers to substitute TV advertising against other forms of advertising, for example, on YouTube, Facebook, and the like. I'm actually preparing the ground for a bigger discussion, which I think will be necessary.
In the meantime, while a fully blown combination creation of national champions is not possible, we will cooperate with broadcasters on a national basis and European basis to the extent possible in the areas which are outlined. I believe that this would be a very good start and could potentially lead to something bigger at some point down the road.
I appreciate the very detailed answer, Thomas. Thank you very much. If I could just ask one follow-up.
Yes.
You've mentioned cancellations. Have you seen any postponements of advertising campaigns, or is that the same thing for you? Just to be very clear.
Yeah. It's probably the same thing. They postpone it sometimes of a few days, to accommodate advertising campaigns, but that is kind of day-to-day business. We've not seen much of this, as a result of COVID-19. What we're seeing is, the usual kind of shifting of advertising slots.
Thank you very much and stay safe.
Yep. You as well.
The next question is from Conor O'Shea of Kepler Cheuvreux. Your line is now open.
Yes. Thank you for taking my questions. Morning to everybody. Just a follow-up, Thomas, on your previous comments on your cost flexibility. Just to be clear, are you suggesting that your cost flexibility is greater now than it was in 2009 with the shift in program type? That's the first question. Second question on the streaming investments, and, the number that you outlined, EUR 90 million for 2020. Do you expect this for it to be the peak of net operating losses for streaming? Do you think that number might go higher in 2021? Related to that, if you could just confirm and maybe a question for Elmar on your accounting policy for Salto, M6, which is being consolidated below the operating profit line at the M6 level. How will you reflect those losses in the RTL accounts? The final question just on consolidation.
Just a broader question. Obviously, the share prices hit hard year-to-date again. Can you maybe say something about the logic of free to air broadcasters still being listed? Are there any reasons, in theory, why Bertelsmann could not buy out the minorities of RTL? Are there public service channel requirements that require the group to be listed? Are there other consolidation opportunities in the industry? You've got Atresmedia, which you have a stake, that it's on a ridiculously low market capitalization. Can you maybe talk around that a little bit more? Thank you.
Yep, awesome. On cost flexibility, good you're asking. I actually think that our flexibility is a bit lower than it was in 2009.
Okay.
Because a significantly higher proportion of local programming. On the streaming, it will be -EUR 90 in 2020. We will peak in 2021, 2022. The number will be above EUR 100 million. We've got every intention, Coronavirus set aside, to maintain our level of profitability at the current level. Which means that, just to take you through the logic, right? First of all, we're obviously looking at ways of reducing our cost base across the board, and we're making progress. We have made a significant cost reduction in administrative costs in the corporate center of RTL, significant and fully implemented. We will significantly reduce the losses coming from the MPN businesses, next year and in the following years. We expect Fremantle to continue to contribute profitability and growing profitability. A mix of all of this in normal market conditions, I should say.
Even if advertising markets would continue to slightly decline for linear television, we're very confident to be able to maintain our current level of profitability despite the high investment in streaming. That's our firm commitment. We want to maintain profitability while investing. This would allow us to build a future for the company, at the same time, pay attractive dividends to our shareholders. On the accounting of Salto. Salto is a joint venture, one-third, one-third , M6, France Télévisions, and TF1. RTL will account for this at equity. The equity pickup will be included in our operating results and not below the line.
Okay.
On Bedrock, which is the streaming platform, the technical platform, which Salto is using, we're going to fully consolidate, and there will be some startup losses related to the building of Bedrock. On the listed free-to-air broadcasters, I agree with you that the share prices are ridiculous. In particular, in light of what I just said. Frankly, everybody kind of have a view on this, but we believe that we have fantastic opportunities to transform our business. We have outperformed the French and German markets last year. We've got every intention to continue to do that. As I said, we're addressing our cost base in linear television. We're investing in data and technology to personalize advertising, which will drive CPM. We are building streaming services with significant investments upfront, but profitability down the road. We're addressing weaknesses in our portfolio by divesting non-core businesses and loss-making businesses.
As I said, normal kind of economic times, I'm actually quite optimistic about our business and its ability to grow profitably and to transform. That is clearly not reflected in the current share price. Current share price includes all the downsides, but none of the upside. That's my view. Bertelsmann, this is an RTL call, not a Bertelsmann call, but Bertelsmann's position is as follows. We consider RTL to be undervalued. We have therefore, I've said this a few weeks ago in an interview, and bought RTL shares in the market. We have no intention to make an offer and to take RTL private. RTL will continue to be a listed company in the future.
Okay. Many thanks.
The next question is from Christof Nuyens from Value Square. Your line is now open.
Hi. Good morning. Thank you for taking my questions. I've got three, maybe small questions. The first one would be, could you break out the part in advertising revenue that comes from the sectors that will be harder hit, like you mentioned, tourism and others? The second question would be, it's not always easy. You have two sort of segmentations in parallel now. You have the segmentations that are in the report, RTL Media Group, according to the channels. Then also, now you have the segmentation in TV, digital, and streaming. I was wondering if you are thinking of making a different segmentation and to putting it more streamlined to this TV, digital, and streaming revenues, because it's not always clear where some of the costs are, in which segment the digital costs come and in which segment the streaming costs come.
Then the third question would be, you mentioned in the presentation when you expect break even for the streaming platforms, but would you also do that for the digital platforms, when you expect to have a break even there? Thank you.
Well, on the sectors currently hardest hit by COVID and on cancellations, which I mentioned, tourism, travel, et cetera, in the broader sense. The exposure of our TV channels differs, but it's in the range of 2% to 4% to 5%. The exposure is not particularly high. Frankly, some of the advertisings have already been placed and booked in the first quarter, which as I said, is stable. In terms of providing more transparency on streaming, we do so on page one of our press release, the streaming revenue for TVNOW and Videoland. We'll continue to do this, we will, of course, provide you with information about the number of subscribers, provide you with information on revenue, and we'll provide you with details on the EBITDA and the startup losses year by year and half year by half year.
We will, in line with the guidance we provided today or the long-term outlook we provided today, give you what you need. It's going to be broadly what you see on page five of the press release. We show the paying subscribers 2019 and the outlook for 2025. In 2020, we show paying subscribers for 2020, we show the streaming revenue, and we show the content spend per annum, which was EUR 85 million in 2019, and which we expect to increase to EUR 350 million in 2025. That is for TVNOW and for Videoland combined. That excludes Bedrock and Salto, with the exception of the development cost for the Bedrock platform. On the other digital platforms, the other digital businesses are in large part profitable. You think about our AdTech business, SpotX, in the U.S. that's growing significantly at high double-digit rates and it's profitable and scaling.
This applies to lesser extent to our, what we call MPN businesses in the past, which we now call digital studio businesses because we have transformed these businesses. These are businesses with significant revenue growth, but low margins in particular, for those businesses which heavily depend on YouTube revenue, where the terms of trade are not particularly favorable and the gross margins are often in the area of 10% or less, which makes it very difficult to earn a living.
Great. Thank you very much.
The next question is from Catherine O'Neill from Citi. Your line is now open.
Thank you. I have a couple of questions. One on Fremantle. In the release you mentioned production delays. I just wondered if you could give us a bit more detail on what you're seeing around delays on the production side and how we should think about that going forward. The other is on AdTech. There's Google's putting through changes and more broadly there's a move away from cookies, which I assume may help your AdTech businesses, because they seem to be less reliant on that. How should we think about the potential benefit or implications for your AdTech businesses from the change to how the AdTech industry is going to be operating?
On Fremantle and the studio business, frankly, it also applies to the broadcasters and their live shows, like "Let's Dance" or what have you. First of all, what we've decided to do and what we've implemented is that these shows take place without live audience. That's the first change. Some of these formats work better and some less well without audience. We'll have to take a view. What we don't know is, of course, what the authorities are going to tell us and what the restrictions they're going to impose on us. Good so far.
It really largely depends on the extent to which the respective countries will be locked down in the next days or weeks, and the measures which we would be taking to protect not only our people, but also, for example, singers in "American Idol" and the jury and the crew members and so on. Frankly, these are people businesses. These are businesses, people coming together. The question is, to what extent this will continue to be possible in the next days and weeks. As I said, no cancellations so far. Some performance and potentially some impact on live shows with audiences, which, as I said, we have cut back significantly already.
On AdTech and the cookies, I think in our mindset, with respect to data, we're getting ready for worlds where consent will be required and where cookies will no longer be available or will not be used. That will, of course, have an impact on advertising and technology and businesses, and ability to personalize advertising. What is necessary is to generate first-party data and to get consent from the users to be able to use the data, and we're working on such solutions.
Thank you. Could I just ask on Fremantle, on the live shows, over the course of the next couple of months, two or three months, what proportion of your big live shows tend to feature?
Listen, I think we've got American Idol, which is ongoing. We've got Got Talent, I believe, for later this year. We've got a number of live shows on German television, French television, and they could be affected in a similar way, depending on the restrictions you apply. The new world of the week of social distancing, and if you want to apply social distancing to live shows, like dance formats and the like, I can imagine what it would look like, and imagine whether this is something which people are prepared to do given the circumstances, and voilà. Frankly, this is very close to as close as you get to the reality of coronavirus and the measures to take. I really don't want to speculate on individual shows and their impact.
We are in a constant and very good dialogue with the broadcasters, with the networks in the U.S. to determine what the right course of action is. I think we all agree that this is a time where television has an important role to play in terms of informing our audiences, but also entertaining our audiences. At the same time, we have a duty to protect our people and to protect the people involved in these shows. That's a fine line, and will be decided on a case-by-case basis between Fremantle and the broadcasters and the networks in the U.S.
Catherine, just from my side, one, a little bit of information. For example, Fremantle used a studio space in Maidstone, and there was a third-party company also working on site, and there was a confirmed COVID-19 outbreak there. Whether that studio is going to be used by Fremantle in the future, to be seen. What shows can be moved to other facilities, to be seen. Clearly there are ongoing impacts within the industry which we need to adjust to, as Thomas has alluded to.
Yeah.
Okay. Thank you.
Thank you.
The next question is from Matthew Baldock of Goldman Sachs. Your line is now open.
Good morning. It's actually Lisa Yang from Goldman. A few questions, please. In Germany, you guys seem to be continuing to take share from ProSieben despite their investment in content and they plan to invest another EUR 50 million in 2020. Is there anything, like any structural reasons that explain that? How do you think about your share in 2020 and beyond? Secondly, in terms of the other investments on the different streaming services, I'm just wondering how much of those investments are actually shared between those platforms. How much are basically local as opposed to what amount of synergies you're actually getting? Could you think of rolling out some of those initiatives in other markets as well? Thirdly, on Fremantle, just wondering, I think you gave a revenue guidance. Could we also have a sort of guidance for margins?
Those margins have been basically flat for four years at around 8%. Just wondering, we should start to see them picking up. The last question relates to sports events. Just wondering if you do get some football games canceled, because I think you're broadcasting some games in Germany and obviously you have the Euros in France. What would be the sort of profit impact? I guess the other question is, do you actually make money on those-
Yeah
sports events? If they get canceled, would it actually be positive? Thank you.
Oh, God. Yeah. Well, on ProSieben and RTL in the German market, as I said, we outperformed the advertising markets quite significantly last year. Advertising market share is up. All of this is based on estimates because there's no official market data, as you know. The outperformance of RTL, both in terms of audience, but also in terms of advertising market share, continued in the first quarter of 2020. In terms of content and content synergies, FC Group, which is the vehicle I mentioned earlier, is jointly owned by the broadcasters. It focuses on entertainment and formats with a view to broadcast them at the broadcasters who are shareholders of FC Group, but also to third parties, of course. We're going to focus on this for the moment.
We see first interesting formats coming out of FC Group, but we are at the beginning of this, and if it works well, we could well decide in the course of this year to extend the partnership. Synergies, maybe another point on content synergies. There's significant content synergies between linear and non-linear, i.e., between linear TV and streaming services. Look, for example, at RTL in Germany. All of the investments we're now going to make in content for TVNOW are investments that also, to some extent, will be used on our linear channels. There's huge synergies by effectively looking at linear and non-linear combined, and looking effectively at one holistic program budget. That's also why it's quite difficult for us to give guidance on content spend on TVNOW , because it's a matter of how you allocate cost between linear and non-linear.
The number we provided is reliable, but the way we look at content investments is really in a combined and holistic manner for linear and non-linear offers. On Fremantle margin is going to stay broadly unchanged in 2020. We see 4%-6% revenue increase and the corresponding increase in profitability. On sports events, the sports which we broadcast in Germany is primarily Europa League and Formula One, and the World Cup and European Championship qualifiers. Qualifiers are done. The two friendly matches, Germany, I believe Spain and Italy in the next 10 days. Right now, the decision is that these matches take place, but with no spectators. As a question mark, if these matches would not take place, we would get reimbursed. Europa League took place yesterday evening, and we broadcast one match.
Generally speaking, on sports, if you look at sports in isolation and not at the entire program grid, if you look at sports in isolation, it is very difficult to earn a margin. Sports are necessary in a general interest program schedule. We therefore look at our profitability holistically. As I said before, RTL Deutschland's EBITA margin last year was close to 30%, which I think speaks for itself. Sports isolated is generally loss-making. If sports events would get canceled or postponed, you can conclude that it is already a positive impact on the program spend.
Great. That's really helpful. Just in terms of the synergies between the different streaming platforms, is it fair to say on the non-content side, could you quantify the level of synergies that you see as well?
Sorry, Lisa, the line was bad. Can you repeat the question?
Sorry, I'm just wondering, you talked about the content synergies between the different streaming services and between linear and non-linear, but if you think about the spend on tech, like user interface, all those things, for the streaming service in particular, could you maybe help us understand what the sort of synergies you might have there as well?
Let's take video-on-demand technology. Until we started to work together at RTL, M6, via Bedrock, RTL Germany, RTL Netherlands, each spent approximately EUR 10 million on building their ad tech platforms and operating them. They effectively build the same stuff. If you would combine these three times EUR 10 million, you actually would get EUR 30 million of benefit. If you invest three times EUR 10 million individually, the value created is probably EUR 10 million-EUR 12 million, because, as I said, you're building the same stuff again. By joining forces and bundling resources at RTL and beyond, we'll actually, without spending significantly more than we do so far, be able to build something which is much more competitive, much more in line with customer requirements, which are largely set by the Netflix experience.
That's why we are, on VOD technology, so keen to build a European standard around Bedrock. As I said, we are in pretty good shape because Bedrock will be used by Starz, it will be used by M6 and M6 Replay, it will be used by Videoland. It's already being used for AVOD services by RTL in Belgium, Hungary, Croatia, and Luxembourg. As I said before, we're talking to a number of European broadcasters to join this effort because it just doesn't make sense for them to build their own streaming platforms. They would spend money without building the value which they could get out of the partnership with us. That's the proposition, and same, to a large extent, applies to advertising technology.
Advertising technology is like building a market infrastructure and a holistic advertising stack with demand-side and supply-side platforms and ad servers and the like. That will allow the broadcasters in time to sell the advertising inventory, linear and non-linear, at more attractive terms. It doesn't make sense. In fact, most of the broadcasters quite simply don't have the resources to build their own ad stack. If they don't want to rely on Google or others, but want to use a neutral European platform, then smartclip is a good answer. Many broadcasters which we met on our roadshow last year, and which was a meeting on the deep dive, fully understand this concept and are very open-minded on joining.
Thank you very much.
Thank you.
The last question is now from Julien Roch of Barclays. Please go ahead.
Yes. Thank you very much for taking my extra question. You were very clear on your streaming target. I guess it's a different model. It's a pay model. Your historical business is an advertising model which you need to adapt, and you mentioned several times targeted advertising. You have very useful disclosure, but you actually don't give us AVOD revenue so we can have an idea of how much of a percentage of TV advertising it is, and the other thing you don't do, which ITV does and ProSieben does, is give us total viewing, i.e., number of minutes, say in Germany, broken down between linear and on-demand. We can have a view on how fast you're transforming your business. Could you give us some color today or maybe include that in future disclosure? That would be great. Thank you.
The number we provide and which we discussed before on the EUR 135 million streaming for TVNOW and Videoland includes some advertising revenue, because as I said before, both models are hybrid models with more or less advertising depending on the subscription fee. It is a hybrid model and will remain a hybrid model, but the subscription component will become much more significant in terms of revenue share going forward. To be honest, I understand your question and I understand why you're interested in this. I'm just not sure whether this would not be a level of disclosure that would be commercially sensitive. We're competing with ProSieben to some extent, of course, in streaming. We're competing with the Netflix's and the Amazon Prime's and the Disney's who hardly provide any detail.
I mean, no detail at all, by the way, on the German market and on the Dutch market. I'm just not sure whether it's in the best interest of the company and the shareholders if we disclose this information, which is potentially commercially sensitive.
Maybe if you do that at the group level rather than by country, then it becomes less-
Okay
commercially sensitive. Also, I'm not sure that the viewing time would be commercially sensitive. ITV does it in the U.K. They're the only broadcaster in Europe at the moment that does break total viewing, linear viewing, and on-demand viewing. ProSieben gives you a total viewing that they don't break down.
Okay. Well, let me give you the number, because you're so convincing. The TV viewing, last year on RTL was -0.2%. That's the equivalent of 44 million hours of viewing. The non-linear viewing was up by 48.9 million hours. That's a plus of 21.2%. We are effectively flat in terms of total viewing, which shows that the substitution between linear and non-linear works. In 2018, the total number of viewing, and total viewing time measured in million hours was 19,066, and in 2019 was 19,071. In reality, we are flat. In total viewing, slightly up. The positive message is that we are able to compensate linear viewing decline in terms of consumption hours by non-linear viewing, and this trend will clearly continue as we invest heavily in our streaming services.
Yeah, this is fantastic. When you say RTL, this is RTL Group in Germany.
No, that's Germany.
not only-
Yep. Yeah. That's Germany.
It's all the channels in Germany, not only-
Yeah, yeah.
RTL channel. Yeah.
I don't know everything.
Okay.
All the IP channels, and that excludes RTL Zwei, because they have their own advertising agency. All IP channels, and all digital offers of RTL. We'll think about a KPI which we could use going forward, but this would be including all of our broadcasters at group level, which is potentially not relevant, right? Let us think about how best to do this. I understand your point, because you want to understand how we're transforming our business and how you can measure this transformation, the success of the transformation. Viewing time, switching linear to non-linear is a key performance indicator. You're absolutely right. Let us think about it and see whether we can come up with something that is meaningful without being commercially too sensitive. Okay?
Yeah. No, that's great. I guess, you just gave Germany. If going forward, you give us Germany, Netherlands, and France, for instance, and then an overall advertising number at the group level.
Yeah
that would be amazing.
Yeah. I'll think about it.
Okay.
Good.
Very clear. Thank you very much for that.
You're welcome. Good. Thank you everyone for your listening in. Thank you for your questions. I'm obviously around for the rest of the day. If you have any further questions, any follow-up, we'll be in touch anyway through hopefully some conferences, less probably through roadshows. Obviously, the next numbers from us will be in early May with the Q1. Thanks once again. Have a good day.
Yeah. See you.