And welcome to the 9 Months 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 Bucharest. Please go ahead.
Thank you, and good afternoon, everyone. Thanks for joining us on this conference call for today's results covering the 1st 9 months of 2018. I realize it's a rather busy day for a lot of you, and so we've kept our prepared remarks rather short, so we've got time to Q and A at the end. Today's speaker is our CFO, Herman Haggen, and he will now start the presentation on Page 3. Thank you, Andrew, and good afternoon from me as well.
Over the 1st 9 months of this year, Hartree Group has continued to deliver good revenue growth in line with our guidance for the year. For the 1st 9 months of 2018, group revenue increased by 2.7 percent to €4,470,000,000 with EBITDA coming in at €892,000,000 This results in a group EBITDA margin of 20%. Moving on to a more detailed financial overview starting on Page 5. Page 5 shows the summarized results for the 3 months ending 30th September. Revenue growth in Q3 accelerated compared to the first half of the year, thanks to very solid results from Fremantle, Kodak and 4th MB, with revenue growth of 16.4%, 16.7% and over 30%, respectively.
Accordingly, 3rd quarter revenue growth 3.6% to €142,000,000 The group's performances in its main TV markets were mixed. In Germany, revenue was down, while both Groupe MC and RCN Netherlands reported growth, thanks to digital and other revenue streams compensating lower TV advertising revenue. Reported EBITDA in the Q1 came in at €254,000,000 slightly down from last year. EBITDA was stable, coming in at €198,000,000 compared to €199,000,000 last year. Moving on to Page 6, the 9 months results.
Mentioned earlier, reported revenue for the 1st 9 months was up 2.7 percent to EUR 4,468,000,000. Underlying revenue, which is at constant scope and exchange rate, grew 3.6%. The negative ForEx amounted to €64,000,000 and is the main reason why the underlying growth is higher than the reported rate. Group operating expenses grew by 3.2% compared to a year ago, reflecting This This result in a reported EBITDA of €892,000,000 and a margin of 20%. The group's net debt at the end of the period was €928,000,000 significantly lower than at the end of September last year.
This reflects the better cash conversion, which I will come through first. Moving to Page 7. The net profit attributable to ArcelorMittal for the period was slightly down by €10,000,000 on the same period in 2018. This includes an impairment loss amounting to €8,000,000,000 against the Global Football Club, the sale of which was completed by Buchanjit only 2 days ago. The net result of €424,000,000 translates into earnings per share of €2.76 Turning now to Page 8 for the cash 6 Turning now to Page 8 for the cash flow.
For the 1st 10 months, net cash from operating activities amounted to €422,000,000 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 and A, the group has received a net inflow of €19,000,000 so far in 2018. While the group has made some minor acquisitions such as United Squeeze at the beginning of the year, it has also realized some disposal such as Monogompeteau in France, resulting in a net cash inflow the net inflow has just vanished. Moving on to the business pursuit, starting with Millingropel on Page 10. Our German channel achieved a combined order 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 Texas Grantham and Grantham were solid. In both of these time slots, our family of tenants continues to hold a significant need for our commercial projects. RCS Television remains a clear market leader with an audience share of 10.5%, while our 2nd channel, VOS, has successfully grown its Yanva 14 to 49 audience This has come partly at the expense of the 14 to 59 orders, which came in at 6.6% across the 1st 9 months of the year. In terms of financial results, the net TBS advisory market is estimated to be flat to slightly down year on year, but it's 0% -one percent with minimum per ASK sales order performing in line with the market. Overall, revenue decreased by 1.5 1.4 percent to EUR 1,532,000,000, reflecting both the impact of the Football World Cup and the very strong competitive period from quarter 3 2017.
Our EBITDA is also lower by 2.6 percent coming in at €484,000,000 the business continues to report a high margin across the 1st 9 months of 2018 of 31.6%. Moving now to Google Sheets on Page 11. Audiences remain solid with a family of 3 prepared channels achieving a combined foreign share of 21.5%, or 4.9% lower when compared to the same period of last year. For the 1st 9 months of the year, the French TV advertising market was estimated to be up by approximately 2%, the group and seats performing slightly below the market. This is however a strong performance given that M6 did not carry the major portion.
Revenue increased very slightly to 1,000,000,000 and €62,000,000,000 while EBITDA came in at EUR 277,000,000, up 4.9% on last year's €264,000,000 Turning now to Healthcare Netherlands on Page 12. Audiences across a 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 markets to be up by approximately 2.5% with our Canadian advertising revenue growth coming in at +1.5 percent. Total revenue increased 6.3% to €352,000,000 thanks to the better advertising revenue, but more importantly, the improving digital revenue. Reported EBITDA grew strongly coming in at €65,000,000 up 22.2% compared to last year.
Turning now to Fremantle on Page 13. For the 3rd 9 months of this year, reported revenue was up 8.7 percent at €1,054,000,000 The revenue bridge on the right hand side of the page breaks out the details. As you will note, ForEx remains negative, although the cost of free effect was only €2,000,000 while the organic growth rate remains over 10% for the 1st 9 months period. EBITDA on a year to date basis improved slightly to €66,000,000 Turning now to Slide 14. Here we provide you with an overview of some 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 won this Brahma launch in the last quarter of 2018, Madrid and Trent, 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 till 30 September 2018, digital revenue grew 17.9% to €616,000,000 with platform revenue increasing by 7.3 percent to €251,000,000 Digital revenue growth amounted to 38% in the Q3 and was driven mainly by our MPNs, the group's ad tech businesses and the sale of the right multifamily media of Torchland 886 to Amazon Prime Video. The group's strategic priorities are firmly set on growing its direct to consumer offer. The group's 2 main on demand platforms, the VideoLAN and KFOR NAND, continues to grow at a fast rate even ahead of the major relaunch of TV Now planned for this winter. The number of base subscribers for video land and before plus and see for now, plus grew by 119% 40% year on year, respectively, with the viewing time spent on these platforms outstripping these high growth rates.
Moving on to Page 17, the outlook. Despite challenging market conditions, RK 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. And this, in turn, is reflected in the group's cash conversion, which remains higher. In terms of guidance, we reconfirmed the outlook given in March, May and most recently, 29th August.
Accordingly, we continue to expect modest 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 We will take our first question from Larry Davidson from Deutsche Bank.
Hi, guys. Thanks for taking the questions. First off, how should we think about 2019 group EBITA and RTL Germany EBITA with the investment you're planning in TV Now and VideoLAN? 2nd question, how would that look with the 1% to 2% ad decline, which ProSieben was talking about today as their normalized assumption for German TV market. The third is just, ProSieben is yet to announce its 7 TV 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 beyond?
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. So we'll give you a full sense of broader picture, so to say, very early last year. And that will include a clear guidance on what we expect 2019 to deliver on CBTAs and on TVP. Second question, our investments in Gylfanor in Germany. I think you know it in a way that we would like to seek early reconfirmation about our business days.
So we will start investing more meaningfully into it next year, as we already explained. And I think then we have seen quite a significant investment in the midterm future. And currently, we don't have any need or we don't see any need to reconsider the overall investment volume that we have associated with our ambition to become a meaningful player in the DoD business. So now I don't think that we will have to accelerate those investments in the Neuro Flutron.
Okay. Just to come back on that. Just do you think you can grow EBITA next year if the ad market is down, the 1% to 2% and given your investments?
No. I mean if the underwriting market will be down, then obviously, it will be not possible to grow the absolute EBITDA if at the same time we would start obtaining more meaningful investments. Okay. Our TV businesses globally are going to be down because of that starting market. 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. 4th quarter, what's your assumption here for advertising within your guidance?
It depends obviously. Yes, I mean, there I can tell you that October was rather soft. When I look currently into the booking situation for November and for December, it's still early days and we have really limited visibility, but it will continue to be rather soft. So we don't have very high hopes on the Q4. Yet 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 Anik Mas from Exane. Please go ahead. My first question is just if you could also give us the advertising indication 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 Lagardere? And the third one would be, what do you think would need to happen to the top line for you to reconsider your dividend payout ratio and you actually think you will need to reinvest more in your own business?
Thank you.
Okay. Maybe we'll start with the second question, Lagardere. I mean, 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. So we will have a look at it as probably most of our competitors would. And we'll have to cross the bridge when we come through 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.
So overall, even if we were to conclude that we'll have some traces in operational profitability due to the fact that we or we'll invest stronger into the Video on Demand platform, I think that we'll be able to compensate by probably having less spend on step ups, I. E, also on M and A. And 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 5 years. So currently, I don't see any kind of impact it could have on positive and positive. And on Q4 advertising, we've 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 close to the visit. And currently, we believe that the Q4 should be okay. Belgium is down.
That was not an easy market to operate in October. But as you know, it has limited impact on our consolidated accounts. And France, indeed, just disclosed their Q3 earnings 2 days ago. So you also learned that they were okay in October with limited visibility on the 2 months to come, but again, rather a kind of positive development. So it's a middle picture with Germany being clearly this time not amongst the most affected ones.
One. We will now move to Edlain de Santander from Bank of America.
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? Come down come down this year. Do you think that opens up perhaps some interesting opportunities for M and A?
First question, do we see similar trends in Germany than 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 market, partly even Holland, they have been far more meaningful.
So the decrease in 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. So 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 got to do with a number of other factors, but it's not down to the TV consumption only. In terms of valuation, I mean, you've seen that even though we have maintained our full year guidance, we expect 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 has been done by our competitor or even may have led to some very severe reactions that stopped on top markets, probably overreactions, if you ask me, because again nothing has changed when I look at the overall profitability expectations for 2018. So I believe that there's quite a bit of an overreaction probably also that would raise during the trading hours.
And then, Eduardo, two follow ups on that. My question was does that make M and A more attractive in broadcasting, I. E, I mean, given the fall in the share price, could you be more interested in doing the M and A in broadcasting? And the second thing, you raised my interest saying that there were other factors behind the German slowdown. So do you mind explaining a bit what the other factors are?
Yes. 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 additional channels because of antitrust reasons. So and we also said repeatedly in the past that our focus when it comes to M and A is clearly on digital and on content, 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 will fail to identify opportunities.
So if we would be offered an opportunity to invest in a quality asset at ZARNOs, I think we will be up and have a very close look at that. But we currently do not intend to acquire other European door glasshouses outside of our existing footprint. And within the footprint, I think there we will continue to explore opportunities to launch additional offers to compete potentially our family of channels. So it's not M and A driven. It's probably more driven by assessing whether there's additional demand in the various markets for more tailor made channels to cater audiences that we feel unable to capture otherwise.
And 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. But clearly, if you look at the German market over the last couple of years, we see that there was a reduction in advertising intensity. And I think that TV has been doing better than most of the other media. But still, I think that currently there's no obvious explanation why we kind of 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 enough answer. I think there are some sectors for example like Auto Adrian. I think there obviously on the back of season take last year, there was probably incremental spend to try and get 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 or so.
They had a disaster with their one of the launches of their phones, so it's still overheating. So I think we've got some specifics. I think we still got a very mixed bag in terms of some of the FMCG customers per se. And then I think on top of that, I mean, you'll know that advertising markets generally don't like uncertainty. And obviously, Melco has announced what those teams are going to be, which has also had some tough times in terms of regional elections.
We've still got, obviously, full wrap around Brexit, whatever that might mean. We've obviously got continued fallout around Italy in our budget. So Europe at the moment, from a wider perspective, is a little fragile. And as I said, advertisers don't like this uncertainty. And I think that's been reflected in a lot of our advertising markets at the moment.
Thanks very much.
We will take our next question from Chris Jollin 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 Q3 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 it to continue in the Q4 and next year? That's my first question.
Chris, it's Andrew. Arthur, on broadband TV, we mentioned over 30% across the 9 months. I can confirm that in Q3, it was over 30%. So across the 9 months, we've got this all going very nicely. We're very happy with the performance of broadband TV.
Firewall, so as you know, had 2 weak quarters, Q1 and Q2, but you can report even with the FX from FX. It's flat growth at our levels in euro terms in quarter 3. It's still down on a year to date basis, but Q3 was flat. And shall we say the spot ex business, the old spot ex business, they're more of the U. S.
Business, was up significantly. Together with the Smartlip business, they were up almost 17% in Q3, but the SpottEx business was up over 30% in Q3, thanks largely to the very successful repositioning that has been advertising 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'd be able to report that with such strong growth rate. So we'd expect also Q4 for our ad tech business to be also at significant positive growth rate.
Okay. And nothing that should in terms of comp for the 4th quarter, and it should make us more cautious on that, I take it?
Not in terms of OpEx in our business.
Okay. Then second question, in terms of the release from ProSida and their step up in local content, do you think there's any read across to be had for you guys? Or is that basically does it change anything in from your kind of perspective? Does it maybe even help the market? Or is it net 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 TV channels, and this trend will increase over the next 3 years. Just looking into Germany, in particular, our main channel already has more than 90% of its program grids produced locally with more than 40 new formats launched this in the season across all channels of milli motor. I really believe that we are very well served in that sense. Would there be more competition? Yes, we expect this.
But there, I have to say, in our modesty that we have years of experience in the Des Moines and we have established by now deep relationships with our content providers. So 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, competitors even. But this is the case for years.
So there's no need to kind of change that positioning. But the opposite, we'll 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 Holland.
And does their investment in more content that they fully own actually increase the probability that we will see like
a German Hulu or Salto or
however you want to call it? I think among the things being discussed is the sort of setup of a potential offering and who owns what. And do
you think that the investment in
the more local stuff makes it actually more attractive for you guys to consider doing something together? Hi.
The future will tell. I think it's too early. We will currently continue to have all our focus pointed for now. And then we have to see what kind of opportunities the future might produce. But I think it won't change our general approach to how we intend to build for the on demand offers.
And then it will be to a certain extent, obviously, to turn yes, I think It's too early to speculate on that, Christie.
Okay. But that doesn't sound like we should expect anything in the next 6 plus months, right? No. Okay. Thanks, guys.
We will now move to Julian Roche from Barclays. Please go ahead.
Yes, my first question is on M6. You reported €59,000,000 of operating profit in Q3 and you've actually reported €46,000,000 So if you could explain the difference? That's my first question. And 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 to deal with the football cost we are talking about, whereas they have shown the football cost as a discontinued operation. We have shown it under asset sales approach. Hence, we have basically slightly different accounting equipment and different figures that show. And on digital content, since no, you should not expect any meaningful changes.
It would be, to a certain extent, a bit more of the same, so to say. We don't 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.
Yes. Many thanks. Just two questions. Just first of all, with regard to obviously the performance in Germany in the Q4, 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 so we can get a view of the OpEx numbers and therefore the margin outlook for the Q4? And the second thing is just to come back to your presentation earlier about Fremantle and the fact that we're now basically running into a number of second seasons on the scripted drama that you released last year.
And as a consequence, the help actually improve profitability. Could you just expand on that, his comments and how we should think about EBITDA progression into 2019 2020 as we leverage the success of those series that have been launched?
Yes. Thank you, Richard. We'll do that. On Q4, Germany, how we can mitigate on the cost side. I think there we really benefit from our very strict accounting policies and the fact that we depreciate the program growth only over 2 runs, I.
E. For the first broadcast typically comes with an amortization of 67% and the remaining 32% are spread over the 2nd forecast. So there's some flexibility, so to say, in the program as scheduled 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, and we mitigate by potentially increasing reruns to make sure that we are not hit by too many amortization charges to hit our of the profitability in the short run. It has its limits, specifically because eventually the conflict that you have to grow as a broad comes with a limited process window. So it needs to be broad at some point in time.
But in the short term, we have funded 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. And we expect this also to be the same in the years to come. But on the other side, we already reported for 2018 a significant revenue increase.
So we believe that the margin will also benefit this year but also next year. But it has its limit. Because the reason why the second season is easier for us is typically we are prudent and tend to amortize the development costs over the 1st run because you do not grow upfront whether you will get re commissioned. And once that you start rolling out internationally and tap into additional markets, the underlying efficiency increase. So yes, we expect EBITDA for 3 Vendor to continue to improve.
And 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 the years to come. And we feel that we are currently striving slowly but surely into that direction. For 2019, we expect it to be a year of slight margin improvement.
Can I just ask a follow-up question? I'm not sure whether you sort of mentioned it earlier. It's just that on the investments in Germany around TV Now and VideoLAN, what is the magnitude of the cost that we should expect in 2018 2019 to do those launches?
Yes. I mean in 2018, it's not very meaningful. We will accelerate investments as of 2019. And as I said earlier, we'd like to give a more detailed disclosure on that when we present 2018 full year figures, I think, in March. We're still working on fine tuning our plans.
But for 2018, it's not extremely material. But for 2019, it will become more significant. But 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, good afternoon, everybody. A few questions from my side as well. Just a follow-up first on Fremantle, just if you can have a little bit color on the pipeline in terms of revenue growth for Q4 and early year 2019, just see if anything has moved around there in the last 3 months or so? That's the first question. 2nd question on RTL Netherlands.
Obviously, good EBITDA growth to 9 months, but in the 3rd quarter, contribution actually fell year on year despite an acceleration in revenue growth. And I think you called out that revenue growth is mainly non advertising driven. But just wondering how we think about the operating leverage there. Was there some sort of the cost phasing on maybe the FDOD business in Q2, in Q3 that doesn't repeat in Q4? Or how should we think about the drop through from that good growth in the Netherlands business?
And then finally, just on the German market, just to come back to that, I think given the your new estimates of the 9 months market overall in Germany, I think it implies about a 3% or 4 percent decline in Q3. You mentioned that the October and the weather was also soft. Is that the kind of level of growth decline that you're seeing at the moment? Or was did that decline sort of peak in Q3 for whatever reason?
Okay. Connor, let me start with the cash question. Obviously, the Q3 is less meaningful than the other quarter typically in the year. I wouldn't draw your attention to any particular point here, but it's just that public broadcasters were benefiting from big sports event, which you know that it does broadcast fully advertising contrary to most of the other European countries. So that was basically the reason why the commercial broadcast is not just our play by the way, to a certain extent, it suffered and did not participate in the overall strong market performance.
So I would really link this to the fact that they hadn't had any rights, I mean, to be responsive. On Germany, your question was on the So you basically kind of extrapolated Q3, which you think the market's down. Is that the market's down? It's not the market's down. Q4, Yes.
So far, I mean, the numbers are up for us. So while we think the market in Germany was down around 4% in Q3, And that's the only thing that's been driven by basically 1 month, I. E, July. For the quarter, we think the market's down around 4%. And that's easy for us, not for the market, but for us for October is where we are coming out in terms of advertising revenue.
Okay. Even though July was kind of a one off?
Yes. July was clearly impacted by I mean, fantastic weather impact over the most important year for July August in terms of viewing time, obviously.
September was better, but October has gone back down
again. September for us was flat, and October for us is down at a similar rate to where the market was leasing the market was for Q3. In terms of free analysis of pipeline, your first question. Can I refer you to Page 14 of the presentation, Thomas?
Sure.
Clearly, for the last quarter of 'eighteen, we've got one very big drama launch, which is the 1st season of the Lena Surankee novels, Michael Ian Flynn, which, as Irma mentioned in his comments, has already been sold into 56 territories. And if I believe the sales guide of Fremantle, we see the expanding ovation of the Venezuelan vessels when they were pre used. So we're very optimistic about that. We're very hopeful it's going to be a big success. Obviously, as well, Q4 is driven to a large extent by few numbers to a lot of its distribution businesses, some of its merchandising businesses.
And those are incredibly difficult to predict because they are basically in the run up to Christmas. All in all, we would expect those to be have a good quarter, whether it's going to be the same level as Q3 for 3 months, honestly, I doubt. But it's certainly not going to threaten the full year guidance, which we mentioned in June of 4% to 7% organic. We're above 10% now organic for 3 months or so. Clearly, we're going to be that guidance range is probably quite conservative for 'eighteen.
And in 'nineteen, we expect another 4% organic growth for Fremantle on the back of that pipeline. Obviously, the first of that pipeline that is going out. The next, we assured we are in terms of the deliveries. So 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 that they will disappear.
It just means it slips from 'nineteen into 'twenty. But based on the current schedule of the pipeline, 4% to 7% organic growth for Fremantle in 2019 is definitely possible.
Great. That is very helpful. Thanks.
We'll take our next question from Catherine 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 1 of the players was. And was that included in your EBITDA you thought of the group?
And if so, is that being stripped out into 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 ProSieben or other operators in the market in Germany? And finally, on addressable TV, sorry to harp on about Proceben, but they put out some fairly punchy expectations in terms of addressable TV getting to 25% of advertising in Germany in 5 years. It's something you've been less focused about.
So 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, Catherine. Thank you very much. I'll take the first question and then I'll leave the German questions for Andrew, the time. On NSP, yes, our figure includes the sale of players because we always have noticed this over the last year. But you need to understand or you will understand that this is a separately listed entity in France.
And I wouldn't want to make any additional disclosures at this point. I think I would like to ask that question to anticipate this. We shouldn't start disclosing more than what NCIB has done today. Can I just chip in, Catherine, here? Yes, obviously, it's part of the trading business of the football club to buy and sell players.
But also, you have to remember that at the beginning of this year, N6 took a lot of restructuring charges when it's basically Stack the Coach and restructured a lot of the training staff, which effectively offset to a large extent the gains on the disposals of the players. We're still on a net positive, but we had a bad news at the beginning of the year. We had better news effectively in Q3 following the trading season. And they are, as they have been in previous years, within the operating profits of incentive and RPL. Then the other questions were on the SVOD, Germany, what are the hurdles, etcetera, etcetera.
I think we can break it up into smaller or into simple buckets. I think we've got the Car Sale Authority. We've had previous experience when we as both groups have stormed through the car sale authorities and discussed similar ideas around digital activities and platforms and have been repossed quite abruptly. So I think that is a hurdle which we will be facing. Is it insurmountable?
No. But will it take time? Almost definitely. And so in that perspective as well, it makes sense for us to launch or re launch TV now 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 that are contributing assets, you can have an interesting discussion around respective valuations.
Linked to respective valuations, I think you're going to have a discussion around corporate governance. And that you will need somebody at some point in time making a decision about what type of right to invest in, which direction to go in, etcetera. And we'd say at least 2, if not 3 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. And I think the last one last point, and I think it's more of 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 general market by a very clear focus on local content.
Some of that's going to be exclusive, some of it's going to be a non ticket basis. So if you imagine that's, for example, sub licensing rights in the public channels to make sure we've got a very broad, very deep content library from kickoff. That content proposition, therefore, is very clear in terms of the market position versus other offers in the marketplace today. If we were to expose that into 7 TV, is that a better or worse position from our perspective? I think it remains to be discussed, obviously, in terms of it's more of an issue for us than in terms of the market offering and the segmentation within the private marketplace.
I think in terms of addressable TV, we are much more prudent. Just to give you an overview of what we did in terms of addressable TV in 2017, there was just over 200 campaigns in Germany with just around about 100 clients. 61% of those were with interactive features. So we're talking a relatively small number of campaigns across a small number of clients. Yes, it's developing nicely.
It's developing fast. But when you compare it to the 32nd spot advertising revenue that we get, it's a drop in the ocean. Where it will go, I. E, both proceeds in saplings are correct.
We will take our next call from Patrick Schmidt from Warburg Research. Please go ahead.
Yes. Hi. Thanks for taking my question.
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 financial and when your financials will be impacted. So 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. Yes, just for clarity for everyone. We've got 2 different accounting treatments at both M6 level and at RPL Group level. At M6 level, they treated as a discontinued operation. So they've effectively stripped it out to both '17 and 'eighteen from revenue all the way down slightly to net profit and will have a one line impact in terms of the M6 reporting for the football club.
From an RC and ARPU perspective, we're facing this. And we have a different view because it's not a significant business line at the level of our sales group. So we have all of the revenues, losses and costs, etcetera, all the way down the profit or the income statement in both 'seventeen and 'eighteen. The impact to date on our sales group, obviously, we took all of our 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 put a very small gain on disposal in Q4. With the 'eighteen level of RPLs, we will have the full impact of Borrgo, effectively unconsolidated disposal for the first 10 months of the year in terms of revenues and costs. At the level of N6 and their reporting, we will not see it because it effectively reversed it and put it all in one line as discontinued operation.
Okay. Thank you.
Does that answer your question? Yes. Thanks.
We will take our next question from Larry Davidson from Deutsche Bank. Please go ahead.
Hi, there. Sorry, just a follow-up. If you are including the MCS player game in your guidance. We didn't know you didn't know about that at the first half presumably. So the guidance is unchanged.
That now includes an MCs gain on disposal plus
the
benefit of the player sales in the 3rd quarter. So 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 took the full year guidance, I. E, plus 1, minus 1, on the 1.3.70. And that obviously, in the first half of the year, we were impacted by heavy restructuring charges at the level of football club, which has been offset by football players. So actually, we should have it's rather small than the big RPL group
number. Yes,
because we said the guidance has been 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, and we're still maintaining the guidance. And net net is, yes, rather small.
Yes. But first half, you didn't know about the restructuring, but you didn't know about the player sales. So implicitly, there has been an underlying slight downgrade here. Although I'll tell your point, it is quite small.
But we also had player transfers in 2017, and we knew that once the Mercado was to open, then 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'd rate as of when, but you know that once the Maraca opens, you start to restart with the team and you'll eventually start selling off there.
Understood. All right. Thank you.
It appears there are no further questions at this time. Mr. Brookhurst, 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. And as our management team, obviously, we look forward to speaking to you over at conferences through the rest of this year and obviously more formally around the full year 2018 numbers beginning in March. And as Elmer's comments, we will open up and become a lot more transparent around our DoD 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.