Welcome to the nine-month 2018 results conference call of RTL Group. Today's conference is being recorded. At this time, I would like to turn the conference over to Mr. Andrew Buker. Please go ahead.
Thank you. Good afternoon, everyone. Thanks for joining us on this conference call for our latest results covering the first nine months of 2018. I realize it's a rather busy day for a lot of you, so we've kept our prepared remarks rather short, so we've got time for Q&A at the end. Today's speaker is our CFO, Elmar Heggen, and he will now start the presentation on page three.
Thank you, Andrew. Good afternoon from me as well. Over the first nine months of this year, RTL Group has continued to deliver good revenue growth in line with our guidance for the year. For the first nine months of 2018, group revenue increased by 2.7% to EUR 4.47 billion with EBITDA coming in at EUR 892 million. This results in a group EBITDA margin of 20%. Moving on to a more detailed financial overview starting on page number 5. Page five shows the summarized results for the three months ending 30th of September. Revenue growth in Q3 accelerated compared to the first half of the year, thanks to very solid results from Fremantle, SpotX, and Broadband TV, with revenue growth of 15.4%, 16.7%, and over 30%, respectively. Accordingly, third quarter revenue growth 3.6% to EUR 1,422,000,000. The group's performances in its main TV markets were mixed.
In Germany, revenue was down, while both Groupe M6 and RTL Nederland reported growth thanks to digital and other revenue streams compensating lower TV advertising revenue. Reported EBITDA in the third quarter came in at EUR 254 million, slightly down on last year. EBITDA was stable, coming in at EUR 198 million compared to EUR 199 million last. Moving on to page six, the nine-month results. As mentioned earlier, reported group revenue for the first nine months was up 2.7% to EUR 4,468,000,000. Underlying revenue, which is at constant scope and exchange rate, grew 3.6%. The negative Forex amounted to EUR 64 million and is the main reason why the underlying growth is higher than reported rate. Group operating expenses growth by 3.2% compared to a year ago, reflecting higher program costs and investments into new programs which trigger higher amortization than royalties.
This results in a reported EBITDA of EUR 892 million and a margin of 20%. The group's net debt at the end of the period was EUR 928 million, significantly lower than at the end of September last year. This reflects the better cash conversion, which I will come to shortly. Moving to page number seven. The net profit attributable to RTL Group shareholders for the period was slightly down by EUR 10 million on the same period in 2018. This includes an impairment loss amounting to EUR 8 million against the Bordeaux Football Club, the sale of which was completed by Groupe M6 only two days ago. The net result of EUR 424 million translates into earnings per share of EUR 2.76. Turning now to page eight for the cash flow. For the first nine months, net cash from operating activities amounted to EUR 422 million.
Our cash conversion rate came in at 83% through improvements in working capital in nearly all of the group's business units. In terms of M&A, the Group has received a net inflow of EUR 19 million so far in 2018. While the Group has made some minor acquisitions, such as United Screens at the beginning of the year, it has also realized some disposals, such as monAlbumPhoto in France, resulting in the net cash inflow as just mentioned. Moving on to the business review, starting with Mediengruppe on page number 10. Our German channels achieved a combined audience share of 27.2% in the target group 14 to 59. While the morning and daytime schedules on our main channel, RTL, were quite weak, reflecting the end of the scripted reality series, both Access Primetime and Primetime were solid.
In both of these time slots, our family of channels continues to hold a significant lead over our commercial rivals. RTL Television remains the clear market leader with an audience share of 10.5%, while our second channel, VOX, has successfully grown its younger 14 to 49 audience share. It has come partly at the expense of the 14 to 59 audience, which came in at 6.3% across the first nine months of the year. In terms of financial results, the net TV advertising market is estimated to be flat to slightly down year-on-year by between 0% and -1%, with Mediengruppe RTL Deutschland performing in line with the market. Overall, revenue decreased by 1.4% to EUR 1,532 million, reflecting both the impact of the Football World Cup and the very strong competitive period from quarter three 2017.
While EBITDA is also lower by 2.6%, coming in at EUR 484 million, the business continues to report a high margin across the first nine months of 2018 of 31.6%. Moving now to Groupe M6 on page 11. Audiences remain solid with a family of three prepared channels, achieving a combined audience share of 21.5%, 0.9 percentage points lower when compared to the same period of last year. For the first nine months of the year, the French TV advertising market was estimated to be up by approximately 2% with Groupe M6 performing slightly below the market. This is, however, a strong performance given that M6 did not carry the major sports events. Revenue increased very slightly to EUR 1,062 million, while EBITDA came in at EUR 277 million, up 4.9% on last year's EUR 264 million. Turning now to RTL Nederland on page 12.
Audiences across the family of channels came in at 27%, negatively impacted by the sports events this year. Overall, for the period January to September, we estimate the net TV advertising market to be up by approximately 2.9%, with RTL Nederland advertising revenue growth coming in at +1.5%. Total revenue increased 6.3% to EUR 352 million thanks to the better advertising revenue, but more importantly, the improving digital revenue. Reported EBITDA grew strongly, coming in at EUR 55 million, up 22.2% compared to last year. Turning now to Fremantle on page 13. For the first nine months of this year, reported revenue was up 8.7% at EUR 1,054 million. The revenue bridge on the right-hand side of the page breaks down the details.
As you will note, Forex remains negative, although the cost of free effect was only EUR 2 million, while the organic growth rate remained over 10% for the first nine-month period. EBITDA on a year-to-date basis improved slightly to EUR 66 million. Turning now to slide number 14. Here we provide you with an overview of just some of the drama formats that are in the pipeline and the expected delivery and revenue recognition windows. As you can see, we have one big drama launch in the last quarter of 2018, My Brilliant Friend, which will be aired on HBO next Sunday evening. It has already been sold into 56 territories worldwide. Looking ahead into 2019, you can see that the pipeline is strong with a number of returning dramas. This is very important as it will help to build the catalog and provide margin expansion support. Turning now to page number 15.
We continue to benefit from strong growth in both digital and platform revenue. For the period to 30 September 2018, digital revenue grew 17.9% to EUR 660 million, with platform revenue increasing by 7.3% to EUR 251 million. Digital revenue growth amounted to 38% in the third quarter and was driven mainly by our MPN, the group's asset businesses, and the sale of the rights by Fremantle of Deutschland 86 to Amazon Prime Video. The group's strategic priorities are firmly set on growing its direct-to-consumer offer. The group's two main on-demand platforms, Videoland and TV Now, continue to grow at a fast rate, even ahead of the major relaunch of TV Now planned for this winter. The number of paid subscribers for Videoland and TV Now plus grew by 119% and 40% year-on-year respectively, with the viewing time spent on these platforms outstripping these high growth rates.
Moving on to page number 17, the outlook. Despite challenging market conditions, RTL Group has continued to grow its top line, demonstrating the strength of the group's diversified assets. At the same time, the group continues to generate very healthy EBITDA and associated margin. This in turn is reflected in the group's cash conversion, which remains high. In terms of guidance, we reconfirm the outlook given in March, May, and most recently, 29th of August. Accordingly, we continue to expect moderate revenue growth for the full year and an EBITDA on a normalized basis that is expected to be broadly stable year-on-year. This is the end of our formal presentation. Thank you very much for your attention, and we are now open for any questions. Thank you my friends.
Thank you. If you would like to ask a question, please signal by pressing star one on your telephone keypad. If you are using a speakerphone, please make sure your mute button is turned off to allow your signal to reach our equipment. Again, press star one to ask a question. We will pause for just a moment to allow everyone an opportunity to signal for questions. We will take our first question from Laurie Davison from Deutsche Bank.
Hi, guys. Thanks for taking the questions. First off, how should we think about 2019 Group EBITDA and RTL Deutschland EBITDA with the investment you are planning in TV Now and Videoland? Second question, how would that look with the 1%-2% ad decline which ProSiebenSat.1 was talking about today as their normalized assumption for the German TV market? The third is just, ProSiebenSat.1 is yet to announce its 7TV investment Discovery. Is there scope that the investment you are seeking to make in TV Now will need to step up over the course of 2020 and beyond? Thanks.
Okay. Thank you very much, Laurie. Let me take the first question. We will have more detailed disclosures on 2019 when we present the full year results for 2018, i.e. in March of next year. Currently, we limit our outlook to 2018. We will give you the full and broader picture, so to speak, very early next year, and that will include a clear guidance on what we expect 2019 to deliver on EBITDA and on TV Now. Second question, our investments in TV Now in Germany. I think you know it in a way that we would like to see early reconfirmation about our business base. We will start investing more meaningfully into it next year, as we already explained. I think then we have foreseen quite significant investments in the midterm future.
Currently we do not see any need to reconsider the overall investment volume that we have associated with our ambition to become a meaningful player in the VOD business. No, I do not think that we will have to accelerate those investments in the near future.
Okay. Just to come back on that. Do you think you can grow EBITDA next year if the ad market is down the 1%-2%? Given your investments?
No, if the advertising market will be down, obviously it will be not possible to grow the absolute EBITDA if at the same time we will start entertaining more meaningful investments.
Okay.
[audio distortion]
If our TV businesses globally are going to be down because of advertising markets, that will be a drag on revenue and earnings, which will not be able to be compensated from an earnings perspective by the growth that we expect from both our content and our digital businesses. Understood. Okay, just one last one. Fourth quarter, what's your assumption here for advertising within your guidance?
It depends, obviously.
Sorry
the very market. There, I can tell you that October was rather soft. When I look currently into the booking situation for November and for December, it is still early days and we have really limited visibility, it looks as if it will continue to be rather soft. We don't have very high hopes on the fourth quarter. We also do not foresee any catastrophe, hence we have decided to maintain our full year guidance.
Okay. Thank you.
We will take our next question from Annick Maex from Exane. Please go ahead.
My first question is just if you could also give us the advertising indications for Q4 for your other markets. The second one is, could you be interested in buying more production assets in Europe, such as, for instance, the TV production assets of Lagardère? What do you think would need to happen to the top line for you to reconsider your dividend payout ratio, and do you actually think you will need to reinvest more in your own business? Thank you.
Okay. Maybe we'll start with the second question, Lagardère. Everybody knows that this business is on the market. It's up for sale. I think a lot of companies will have a look into it. To what I know, and it's rather limited, it has quite a strong dependence on one of our commercial rivals in France. We will have a look at it as probably most of our competitors will. We'll have to cross the bridge when we come to it. It's a bit too early to say. In terms of dividends, even though we will have to invest more into our organic growth initiatives, as we already disclosed previously, I think that we will have less step-ups that we will have in front of us compared to what we have entertained over the last couple of years.
Overall, even if we were to conclude that we'll have some traces in our operational profitability due to the fact that we will invest stronger into the video-on-demand platforms, I think that we'll be able to compensate by probably having less to spend on step-ups, i.e., also on M&A. That means that I would expect that the overall cash that we'll be able to generate is similar to what we have generated in prior years. Currently, I don't see any kind of impact it could have on our dividend policy. On Q4 advertising, we mentioned Germany, not an easy market as we currently speak. There have been easier times to be invested in Germany. If you look at the Netherlands, there we see that October was still okay. Market was up last little bit, and currently we believe that fourth quarter should be okay.
Belgium is down. That was not an easy market to operate in in October, but as you know, it has limited impact on our consolidated account. France, they just disclosed their third quarter earnings two days ago. You also learned that they were okay in October with limited visibility on the two months to come, but again, rather a kind of positive development. It's a mixed picture with Germany being clearly this time not amongst the most affected markets.
Okay. Thank you very much.
We will now move to Adrien de Saint Hilaire from Bank of America. Please go ahead.
Yes. Good afternoon, everyone. Thanks for taking the questions. First of all, Elmar, with a bit of insights on the last 12 months in Germany, do you feel like what's going on in Germany is a bit akin to what happened in the Netherlands a few years ago in terms of decline in TV consumption leading to lower ad spending, or is there any other reason? The second question is the valuation of broadcasters in Europe has come down this year. Do you think that opens up perhaps some interesting opportunities for M&A?
First question, do we see similar trends in Germany and what we have seen in the Netherlands? What is true is that TV consumption as such is showing some negative trends, but it's by far not as severe as what we have been noticing in other markets. If you look at markets like the U.S., but also the Scandinavian markets, partly even Holland, there it has been far more meaningful. The decrease in TV consumption plays a role, but it's more limited. The decrease is probably in a far lower percentage than what we have seen in other markets. I think here it would be wrong to blame the decrease in consumption for the entire loss in revenue that we have experienced in recent months. It probably has also to do with a number of other factors, but it's not down to the TV consumption only.
In terms of valuation, you've seen that even though we have maintained our full-year guidance, we have had today a rather meaningful impact on our share price. I think it might have to do also with other things. I think also the announcement that has been done by our competitor, ProSiebenSat.1, may have led to some very severe reactions on stock markets, probably overreaction, if you ask me, because again, nothing has changed when I look at the overall profitability expectations for 2018. I believe that there's quite a bit of an overreaction probably also that took place during today's trading hours.
Elmar, two follow-ups on that. My question was, does that make M&A more attractive in broadcasting, i.e., given the fall in the share price, could you be more interested in doing M&A in broadcasting? The second thing, you raised my interest saying that there were other factors behind the German slowdown. Do you mind explaining a bit what the other factors are?
Yeah. Let me start with the first one. If you look at our current footprint, I think that in Germany, we would not even be allowed to acquire digital channels because of antitrust reasons. We also said repeatedly in the past that our focus when it comes to M&A is clearly on digital and on content, and far less on broadcasting, where if there is an opportunity to round up the portfolio and, for example, to close a bridge between existing assets, i.e., we've said that a number of times that we failed to identify opportunities, if we would be offered an opportunity to invest in a quality asset at
I think we will be up and have a very close look at that. We currently do not intend
To acquire other European broadcast assets outside of our existing footprint. Within the footprint, I think there we will continue to explore the opportunities to launch additional offers to compete, potentially, our family of channels. It's not M&A driven. It's probably more driven by assessing whether there is additional demand in the various markets for more tailored channels to cater audiences that we feel unable to capture otherwise. The second question was for the slowdown in Germany. It's very difficult for us to tell you why we believe that there is a delink between GDP growth and the current advertising market development. Clearly, if you look at the German market over the last couple of years, you see that there was a reduction in advertising intensity.
I think that TV has been doing better than most of the other media. Still, I think that currently there's no obvious explanation why we see in the second half of this year, the decreasing German TV advertising market. Maybe some of the advertisers are rebalancing their portfolio. I cannot really give you a good answer.
I think there are some sectors, for example, like Auto, Adrien, I think they're obviously on the back of Dieselgate last year, there was some probably incremental spend to try and win back some favor on customers, which basically fell out year-on-year. I think you had some spend as well from other clients like Samsung last year. Obviously, they had a disaster with one of the launches of their phones, it was overheating. I think you've got some specifics. I think you've still got a very mixed bag in terms of some of the FMCG customers per se. Then I think on top of that, you know that advertising markets generally don't like uncertainty, and obviously, Merkel's announced what her future is going to be. She's also had some tough times in terms of regional elections.
You still got, obviously, fallout around Brexit, whatever that might mean. You've obviously got continued fallout around Italy and their budget. Europe at the moment, from a wider perspective, is a little fragile. As I said, advertisers don't like this uncertainty, and I think that's being reflected in a lot of our advertising markets at the moment.
Thanks very much.
We will take our next question from Christopher Johnen from HSBC.
Yes. Hi, guys. I'll take them one by one, if that's okay. Maybe you could quickly update us on your performance of the digital assets. They seem to have accelerated in the third quarter over the first half. I would just be interested on the bigger assets, what you're seeing here, whether that has been driven by any sort of one-off thing, or you expect to see something in the fourth quarter and next year? That's my first question.
Hi, Chris, it's Andrew. On BroadbandTV, we mentioned over 30% across the nine months. I can confirm that in Q3 was over 30%. It got to the nine months, in fact, it's still doing very nicely. We're very happy with the performance of BroadbandTV. StyleHaul, as you know, had two weak quarters, Q1 and Q2, but we can report even with the pacing from FX, it's flat growth at our level. In EUR terms in quarter three, it's still down on the year-to-date basis, but Q3 was flat. Shall we say the SpotX business or the old SpotX business, so more of the U.S. business, was up significantly.
Together with the Smartclip business, they were up almost 17% in Q3, but the SpotX business was up over 30% in Q3, thanks largely to the very successful repositioning that has been undertaking over the last year. We said that it would start bearing fruit in the back end of 2019, and we're happy as a team that we've been able to report that with such strong growth rates. We'd expect also Q4 for our ad tech business to be also have significant positive growth rates.
Okay. Nothing that should, in terms of comm for the fourth quarter, that should make us more cautious on that, I take it?
Not that I'm aware, based on our assessment.
Okay. Second question, in terms of the release from ProSiebenSat.1 and their step up in local content, do you think there's any read across to be had for you guys? Is that basically, does it change anything from your kind of perspective? Does it maybe even help the market, or isn't that negative for you? How do you see that?
Chris, you know that we've been steadily increasing the amount of local programming across all of the group's TV channels, and this trend will increase over the next three years. Looking into Germany in particular, our main channel already has more than 90% of its program grid produced locally, with more than 40 new formats launched this new season across all channels of Mediengruppe. I really believe that we are very well served in that sense. Will there be more competition? Yes, we expect it, but there I have to say, in all modesty, that we have years of experience in this domain, and we have established by now deep relationships with our content providers. No, I think that for us, it won't really have that much of an impact. Our channels are traditionally very much focused on local programs.
I think they are fundamentally different in that respect from the positioning, for example, competitive even. This is the case for years, so there's no need to change that positioning. Quite the opposite, we continue to have the focus on local programs and to make sure that we will continue to successfully work with local content producers and still have a big portion of that production in-house.
Does their investment in more content that they fully own actually increase their probability that we will see a German Hulu or Salto or however you want to call it? Because I think, among the things being discussed is the sort of set up of a potential offering and who owns what. Do you think that the investment in the more local stuff makes it actually more attractive also for you guys to consider doing something together?
The future will tell. I think it's too early. We will currently continue to have all our focus on TV Now, then we have to see what kind of opportunities the future might produce. I think it won't change our general approach to how we intend to go for video on-demand offers. Then it will be to a certain extent, opportunity driven. It's too early to speculate on that. Let's see.
Okay. That doesn't sound like we should expect anything in the next six-plus months, right?
No.
Okay. Very okay. Thanks, guys.
We will now move to Julien Roch from Barclays. Please go ahead.
Yes. My first question is on M6. You reported EUR 59 million of operating profit in Q3. They've actually reported EUR 46. If you could explain the difference, that's my first question. The second question is, in terms of investment in digital and content, to reposition the overall business, is 2019 any different from the last few years? i.e., would you invest more or it's just normal investment that you've been doing for a while now?
Okay. On the first question is that we have had slightly different accounting approaches. Here, it is basically the football club we are talking about, where they have shown the football club as a discontinued operation. We have shown it under asset sale approach, hence we have basically slightly different accounting treatments and different figures that show. On digital content, I think no, you should not expect any meaningful changes. It will be to a certain extent, a bit more of the same, so to say. We do not intend, as we speak, to have a different approach to that.
Okay. Thank you.
We will take our next question from Richard Eary from UBS. Please go ahead.
Yeah. Many thanks. Just two questions. Just first of all, with regard to obviously the performance in Germany in the fourth quarter, can you just sort of talk us through in terms of how you can mitigate obviously a weak ad market from a cost point of view and what the programming slate looks like there to get a view of the OpEx numbers and therefore the margin outlook for the fourth quarter? The second thing is just to come back to your presentation earlier about Fremantle and the fact that we are now basically running into a number of second seasons on the scripted drama that you released last year, and as a consequence, how that should improve profitability.
Can you just expand on that, those comments and how we should think about EBITDA progression into 2019 and 2020 as we leverage the success of those series that have been launched?
Thank you, Richard. Will do that. On Q4 Germany, how we can mitigate on the cost side. I think there we benefit from our very strict accounting policies and the fact that we depreciate the program rights only over two runs, i.e., the first broadcast typically comes with an amortization of 67% and the remaining 32% are spread over the second broadcast. There's some flexibility, so to say, in the program schedule, because obviously when we see that we will not be in a position to generate the revenue we are targeting for, we can, on the short term at least, mitigate by potentially increasing reruns to make sure that we are not hit by too many amortization charges to hit our profitability in the short run.
It has its limits, specifically, because eventually the content that you have acquired abroad comes with a limited broadcast window, so it needs to be broadcast at some point in time, but in the short run, we have done it in the past successfully. It will help to mitigate and to protect the short-term earnings. On Fremantle, yes, in principle, once that we start in recommission, it helps to improve the profitability and to increase the margin. We expect this also to be the same in the years to come. On the other side, we already reported for 2018 a significant revenue increase. We believe that the margin will also benefit this year but also next year. It has its limits.
The reason why the second season is easier for us is, typically we are prudent and tend to amortize the development cost over the first run, because you do not know upfront whether you will get recommissioned. Once that you start rolling out internationally and tap into additional markets, the underlying efficiency increase. Yes, we expect EBITDA for the venture to continue to improve. Remember that we gave a mid to long-term guidance in the past, where we said that we would like to grow the margin back closer to the 10% region in years to come. We feel that we are currently striving slowly but surely into that direction. 2019 is expected to be a year of slight margin improvement.
Thank you very much. Can I just ask a follow-up question? I am not sure whether you sort of mentioned it earlier, is just that on the investments in Germany around TV Now and Videoland, what is the magnitude of the cost that we should expect in 2018 and 2019 to do those launches?
Yeah, in 2018, it is not very meaningful. We will accelerate investment into 2019. As I said earlier, we would like to give a more detailed disclosure on that when we present 2018 full year figures in March. We are still working on fine-tuning our plans, but for 2018 it is not extremely material, but for 2019 it will become more significant. We will communicate in depth on that in March.
Okay, thank you very much.
We will now take our next question from Conor O'Shea from Kepler Cheuvreux.
Yes, hello. Good afternoon, everybody. A few questions from my side as well. Just to follow up first on Fremantle, just if you could have a little bit more color on the pipeline in terms of revenue growth for fourth quarter and early 2019, just to see if anything has moved around there in the last three months or so. That's the first question. Second question on RTL Nederland. Obviously good EBITDA growth to nine months, but in the third quarter, contribution actually fell year-on-year despite an acceleration in revenue growth. I think you called out that revenue growth is mainly non-advertising driven, just wondering how you think about the operating leverage there. Was there some sort of a cost phasing on maybe the SVOD business in Q2, in Q3, that doesn't repeat in Q4?
How should we think about the drop through from that good growth in the Netherlands business? Finally, just on the German market, just to come back to that, I think given your new estimates for the nine months market overall in Germany, I think it implies about a 3% or 4% decline in Q3. You mentioned that October and November were also soft. Is that the kind of level of growth decline that you're seeing at the moment, or did that decline sort of peak in Q3 for whatever reason? Thank you.
Okay, Conor, let me start with the first question. Obviously, the third quarter is less meaningful than the other quarters typically in the year. I wouldn't draw your attention to any particular point here, but it's just that the public broadcasters were benefiting from big sports events, which you know that broadcast is fully into advertising, contrary to most of the other European countries. That was basically the reason why the commercial broadcasters, not just RTL, by the way, to a certain extent Starfor, did not participate in the overall strong market performance. I would really link this to the fact that they hadn't had any rights, I mean, to the big sports event. On Germany, your question was on the-
You're basically trying to extrapolate the Q3, which includes the market's down for the overall. Is that the market down into Q4, yeah?
So far, only for the month of October for us. While we think the market in Germany was down around 4% in Q3, that we honestly think has been driven by basically one month, i.e., July.
For the quarter, we think the market was down around 4%, that seems to be for us, not for the market, but for us, that October is where we are coming out in terms of advertising revenue.
Okay. Even though July was very kind of a one-off.
Yeah. July was clearly impacted by, for one, obviously the fantastic weather. In fact, it was the most important year for July and August in terms of viewing time, obviously.
September was better, October has gone back down again.
September for us was flat.
October for us is down at a similar rate to where the market was weak, the market was for Q3.
Okay.
In terms of Fremantle, the pipeline, your first question, can I refer you to page 14 of the presentation, Conor?
Sure.
Clearly, for the last quarter of 2018, we've got one very big drama launch, which is the first season of Elena Ferrante novels, "My Brilliant Friend," which, as Elmar mentioned in his comments, has already been sold into 56 territories. If I believe the sales guys at Fremantle, it received a standing ovation at the Venice Film Festival when it was previewed. We're very optimistic about that, very hopeful it's going to be a big success. Obviously, as well, Q4 is driven to a large extent by Fremantle through a lot of its distribution businesses, some of its merchandising businesses. Those are incredibly difficult to predict because they are basically in the run-up to Christmas. All in all, we would expect those to have a good quarter. Whether it's going to be the same level as Q3 for Fremantle, honestly, I doubt.
It's certainly not going to threaten the full-year guidance, which we mentioned in June, of 4%-7% organic. We're above 10% now organic for Fremantle. Clearly, that guidance range is probably quite conservative for 2018. In 2019, we expect another 4%-7% organic growth for Fremantle on the back of that pipeline. Obviously, the further that pipeline is going out, the less reassured we are in terms of the delivery. We can't promise, for example, that we will deliver "The Young Pope" or the second season of Ferrante in Q4 2019. It doesn't mean to say they will disappear. It just means it slips from 2019 into 2020. Based on the current schedule of the pipeline, 4%-7% organic growth for Fremantle in 2019 is definitely possible.
Great. That's very helpful. Thank you very much.
We will take our next question from Kathryn O'Neill from Citi. Please go ahead.
Hi. I've got three questions. The first one, just wanted to go back to the point on M6, and check what the gain, I think it was gain on sale of one of the players was. Was that included in your EBITDA you thought of the group? If so, is that being stripped out of the guidance for 2018 for EBITDA? My second question is on SVOD. Just wondered what the hurdles and challenges are that you see when thinking about possibly collaborating with ProSiebenSat.1 or other operators in the market in Germany. Finally, on addressable TV, sorry to harp on about ProSiebenSat.1, but they put out some fairly punchy expectations in terms of addressable TV getting to 25% of advertising in Germany in five years. It's something you've been less vocal about.
I just wondered what your view is on addressable at the moment and whether that's consistent with how you think it might develop.
Okay. Kathryn, thank you very much. I'll take the first question, I leave the German questions for Andrew this time. On M6, yes, our figure includes the sale of players, because we always do this over the last years. You will understand that M6 is a separately listed entity in France, I wouldn't want to make any additional disclosures at this point. I think I would like you to ask that question to M6 directly, because we shouldn't start disclosing more than what M6 has done two days ago.
Can I just chip in, Kathryn, here? Yes, obviously, it's part of the trading sort of business of the football club to buy and sell players.
Also, you have to remember that at the beginning of this year, M6 took a lot of restructuring charges when it basically sacked the coach and restructured a lot of the training staff, which effectively offsets to a large extent the gains on the disposal of the players. We're still on the net positive, we had bad news at the beginning of the year. We've had better news successfully in Q3 following the trading season. They are, as they have been in previous years, within the operating profits of M6 and RTL. The other questions were on SVOD Germany, what are the hurdles, et cetera. I think we can break them up into smaller or into simple buckets. I think we've got the cartel authority.
We've had previous experience when we as group platforms through the cartel authorities and discussed similar ideas around digital activities and platforms and have been rebuffed quite abruptly. I think that is a hurdle which we will be facing. Is it insurmountable? No. Will it take time? Almost definitely. From that perspective as well, it makes sense for us to launch or relaunch TVNOW and to get a platform up and running and have these discussions in parallel. I think whenever you're talking about businesses with different companies are contributing assets, you're going to have an interesting discussion around respective valuations. Linked to respective valuations, I think you're going to have a discussion around corporate governance.
You will need somebody at some point in time making a decision about what type of rights to invest in, which direction to go in, et cetera, would say at least two, if not three or more shareholders around the table. Just look at Hulu. Corporate governance can become incredibly complex and not very pleasant and can actually delay the advancing or the moving forward of the platform. I think the last point, and I think it's more a point for us, is that right now we are very sure of the customer proposition and offering that we're going to be taking to the German market, i.e., a very clear focus on local content. Some of that's going to be exclusive, some of it's going to be on a non-exclusive basis.
You can imagine us, for example, sub-licensing rights from the public channels just to make sure we've got a very broad, very deep content library from the kick-off. That content proposition, therefore, is very clear in terms of the market positioning versus other offers in the marketplace today. If we were to fold that into 7TV, is that a better or worse position from our perspective? I think it remains to be discussed, obviously internally. It's more of an issue for us in terms of the market offering and the segmentation within the current marketplace. I think in terms of addressable TV, we are much more prudent. Just to give you an overview, in terms of addressable TV in 2017, there were just over 200 campaigns in Germany with just around about 100 clients. 61% of those were with interactive features.
We're talking a relatively small number of campaigns across a small number of clients. Yes, it's developing nicely. It's developing fast. When you compare it to the 30-second spot advertising revenue that we get, it's a drop in the ocean. Where it will go, I hope ProSiebenSat.1 are correct.
Okay, thank you. We will take our next call from Patrick Schmitz from Warburg Research. Please go ahead.
Yes, I think I'll take more questions. Most of them have already been answered, so just wanted to follow up on the disposal of the football club. Maybe you could give an indication of how your financials and when your financials will be impacted. Will the revenue stay with you for the Q4, or when do they drop out, and how will that affect your EBITDA as well? Thank you.
Hi, Patrick. Just for clarity for everyone, we've got three different accounting treatments at both M6 level and at RTL Group level. At M6 level, they treat it as a discontinued operation. They've effectively stripped it out from both 2017 and 2018 from revenue all the way down effectively to net profit, and we'll have a one-line impact in terms of the M6 reporting for the football club. From an RTL Group perspective, we've taken the hit, and we have a different view because it's not a significant business line at the level of RTL Group. We had all of the revenues, losses, and costs, et cetera, all the way down the profit or the income statement in both 2017 and 2018. The impact to date on RTL Group, obviously, we've still got all of their revenues at the end of September and the costs.
We've also taken a small impairment charge, as you can see, impairment on disposal group, because obviously we're holding it as an asset held for sale in the balance sheet. Obviously, now that the sale has been finalized, we will reverse that situation and book a very small gain on disposal in Q4. For 2018, at the level of RTL Group, we will have the full impact of Bordeaux effectively up until the date of disposal. The first 10 months of the year in terms of revenues and costs. At the level of M6 and their reporting, you will not see it because we've effectively reversed it and put it all in one line as a discontinued operation.
Okay, thank you.
Does that answer your question?
Yes, thanks.
Super.
Once again, if you would like to ask a question, please press star one. If you're using a speakerphone, please make sure your mute function is turned off to allow your signal to reach our equipment. We will take our next question from Laurie Davison from Deutsche Bank. Please go ahead.
Hi there. Sorry, just to follow up, if you are including the M6 player gain in your guidance, you didn't know about that at the first half, presumably. The guidance is unchanged. That now includes an M6 gain on disposal plus the benefit of the player sales in third quarter. Implicitly here, that guidance has been cut, hasn't it?
We didn't know that at the beginning of the year, Laurie, either, when we gave the full-year guidance, i.e., plus one, minus one on the EUR 1,370. That obviously, through the first half of the year, we were impacted by heavy restructuring charges at the level of the football club, which has been offset by of the football players. Actually, we should have It's rather small in the big RTL Group number.
Okay.
We set the guidance being marked ahead of any known restructuring at the level of the football club. That came through. We maintained the guidance. The players sales came through, we're still maintaining the guidance. Net, yeah, rather small.
First half, you did know about the restructuring, but you didn't know about the player sales. Implicitly, there has been an underlying slight downgrade here. Although, I take your point, it is quite small.
We also had player transfers in 2017, and we knew that once the mercado was to open, that we will again trade players as we did in prior year exercises. It has always been the case. You might not know what player you trade as of when, but you know that once the mercado opens, you try to restart with the team, and you eventually start selling off players.
Understood. All right. Thank you.
Please go on.
It appears there are no further questions at this time. Mr. Buker, I'd like to turn the conference back over to you for any additional or closing remarks.
Thank you all for participating. Thank you for your questions. If you have any other follow-up questions, obviously I'm around to be contacted whenever. As a management team, obviously, we look forward to speaking to you over conferences through the rest of this year and obviously more formally around the full year 2018 numbers at the beginning of March. As Elmar has promised, we will open up and become a lot more transparent around our VOD plan. Thanks, and have a good day.
Thank you very much.
That will conclude today's conference call. Thank you for your participation, ladies and gentlemen. You may now disconnect.