Good day, and welcome to the Q1 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 Buckhurst. Please go ahead.
Good morning, everyone, and thank you for joining this conference call for our results for the Q1 of 2018. Our speaker today is Elmer Heggen, the group's Deputy CEO and CFO, and he will now begin the presentation.
Thank you, Andrew, and good morning from me as well. Starting on Slide number 3, the highlights of the Q1 2018. Thanks to growing advertising markets, our main TV businesses in Germany, France and the Netherlands had a good start into the year. Fremantle Media had also a good quarter on an underlying revenue basis, but was hit by negative ForEx movements. The group's digital activities continued to grow despite ongoing concerns of a brand safety and negative ForEx that impacted top line development.
All in all, the group's top line grew just under 1% with EBITDA coming in at €259,000,000 Both the EBITDA and EBITDA were impacted by one off costs at the level of group MCs around the football club, as already explained by MCs, and some negative phasing in terms of programming costs. Overall, the group's cash conversion remained very strong at 112% of EBITDA, while the net profit for our Tel Group shareholders came in at €111,000,000 Let's now turn to the financial review, starting on Slide number 5. Group revenue rose 0.8 percent or €11,000,000 to €1,416,000,000 Underlying revenue was up 2.6 percent after adjusting for consolidation and exchange rate effects. The ForEx effect in the Q1 results was a negative €29,000,000 hence, the almost 2 percentage points difference between reported and the underlying number. Group operating expenses rose by just €12,000,000 or 1% over the period.
Our EBITDA decreased by €5,000,000 to €259,000,000 resulting in an EBITDA margin of 18.3% for the quarter, down 0.5 percentage points on the same period last year. The group's EBITDA came in at €210,000,000 resulting in a margin of 14.8%. The group's net debt position was €365,000,000 at the end of the period, down from €545,000,000 at the end of 2017. The net debt has increased since following the dividend payment amounting to €461,000,000 that was made on the 26th April. Let's now move to the next slide.
With a slightly lower EBITDA and no positive one offs this year, the net profit for the period was €111,000,000 compared to €137,000,000 last year. The tax charge is slightly higher in 2018 due to a lower commission income and to some small one offs relating to prior year adjustments and deferred taxes. Overall, this translates into earnings per share of 0.72 percent per share. Moving on to the cash flow on slide number 7. Our cash conversion ratio remains at a very high level, reaching 112% during the quarter, broadly in line with last year.
Tax pay decreased compared to last year as we have received reimbursement from the French state for the so called dividend tax. Let me now give you a brief overview of our main business units. Before starting, I'd like to point out that a number of internal reorganizations have taken place, resulting in comparative figures for Medellruper RTL Deutschland, Fremantle Media, RTL Netherland and the other division being represented. These three organizations cover the Smart Grid Adtech Business and Divi Move. Starting with Germany on Slide number 9.
The audience share performance for Medellin Group by RTL Deutschland was good during the Q1, in particular, in excess primetime and primetime. In these time slots, the 14 to 59 target group, the lead over its largest commercial rival amounted to 6.3 and 5 percentage points, respectively, an increase of 1.2% and 0.3% over the same period last year. Across the whole day, the gap remains strong and amounts to 4.5 percentage points of audience share. In an advertising market that we believe rose by between 1.5% and 2.5 percent, million group slightly outperformed, resulting in a total revenue growth of 2.9% to €534,000,000 EBITDA rose slightly €269,000,000 resulting in an EBITDA margin of 31.6%. Looking now at Group MCs on Slide number 10.
In the French TV advertising market that was estimated to have grown by around 2%, Group MC outperformed significantly in terms of advertising revenue development. Lower revenue from the film rights business and the football club, Girondins de Bordeaux, meant that revenue overall was stable at €360,000,000 EBITDA came in at €76,000,000 largely due to higher cost at a football club, some of which is linked to one off payments to non playing staff. Moving on to Slide number 11. The TV advertising market in the Netherlands was estimated to be up by just over 7% in the Q1 of 2018, a very welcome return to growth. Revenue was up 4.8% year on year with EBITDA rising to €6,000,000 Let's now move to Fremantle Media on Slide number 12.
On a ForEx adjusted basis, Fremantle Media would have had revenue growth of 7%, at the high end of the full year guidance given in March in March. However, on a reported basis, revenue was stable year on year at €271,000,000 Please also note that the Australian drama Picnic at Hanging Rock slipped from the first to the second quarter and that the number of delivered episodes of American Idol were just 6 in the 1st quarter out of a total of 19. The revenue bridge on the chart shows the details of the various impacts in Q1. EBITDA was slightly lower at €13,000,000 The main business highlight in Q1 was the return of American Idol. The show has so far attracted an average audience of 10,100,000 viewers and a total audience share of 9.6%, over 50% higher than ABC's prime time average.
Last week, ABC announced, obviously to our satisfaction, that they have recommissioned titles for next year. In terms of the full year outlook for 2018, we reconfirm our expectations of growth in revenue and an improved absolute full year EBITDA for Free Mental Media, excluding foreign exchange impacts. Moving to the next slide, digital. 1st quarter revenue growth was 7% year on year, resulting in revenue of €190,000,000 Negative ForEx impacted revenue by €10,000,000 so organic revenue grew by 12.4%. Our ad tech businesses, notably Sportex, had a difficult start into 2018, reflecting many of the same issues at the end of last year.
Major digital advertisers are demanding transparency, brand safety and time spent optimization strategies. In addition to the top line pressures, these demands require higher infrastructure requirements to support quality of service and more resources generally due to additional complexities and customized work. While the Q1 was difficult for Sportex, we remain convinced that the right strategy is in place, I. E. A focus on a more premium OTT model.
In terms of our MTN businesses, broadband TV continues to show both growth in video views with €100,000,000,000 delivered across the Q1 and revenue, which was up 8%. If you move reported a 25% increase in revenue year on year, while Stylehall was disappointing, reporting a 17% decrease, mostly driven by a lower number of direct sales. The number of video views delivered in the Q1 of the year rose to EUR 124,000,000,000 more than doubling since 2 years ago. This concludes the business review, and I will now turn to the outlook on Slide number 15. With European advertising markets currently showing mixed performances, we do not expect Q2 to show any significant growth, given the impact of the World Cup.
Premental Media is expected to have a similar performance in Q2 as in Q1, with revenue growth set to accelerate in the second half of the year on the back of the new drama deliveries. The group's digital revenue should return to higher growth rates towards the end of the year as well, although the Q2 performance is likely to be weak given some particularly tough comparatives as this includes the state of American goods to Amazon in 2017. Despite this short term headwinds, we reconfirm the full year 2018 outlook given in March this year. This is clearly dependent on the growth in the second half of twenty eighteen as the results are expected to be more back end loaded than the prior years. Group full year revenue is expected to grow moderately, largely driven by the group's content and digital activities subject to ForEx, while EBITDA on a normalized basis will be broadly stable.
Thank you, and we are now available to answer any questions that you might have.
Thank you. Our first question today comes from Lisa Yang of Goldman Sachs.
Hi, good morning. My first question is on your outlook. I think you said you expect you to not to show any significant growth. Were you referring about of Germany or any other markets? And is it possible to have any color on maybe April, May for your main three markets, Germany, France and Netherlands?
Second question is about your advertising share that you expect for the year in the same three markets. Any color would be appreciated. And the third question is around your digital revenue. I appreciate you gave some color around SPOTEX and STAYHOLD. What was the performance of your AVOD business given your online video views could be significantly?
Just wondering how that revenue line developed? And the last one is, I think the statement you mentioned you're going to increase investment in video services. So I'm just wondering how much you're planning to invest this year and going forward? Thank you.
Okay. Thanks a lot, Lisa. Let me try to get back to with all the answers. First, on the Q2. The fact that the World Cup will be played in June, July and the fact that we do not have the rights for that event means that we will see a more difficult and challenging Q2 for all of our broadcasting entities.
So it's not just linked to Germany. Even in the Netherlands, where the pubcaster is fully into advertising money, despite the fact that the Dutch team is not qualified, yet we still believe that this is going to be a strong impact on the commercial broadcasters. So hence, we expect June to be down for all our broadcasting habits. With regards to the performance in April, May for the 3 main markets,
Germany, France, Netherlands, yes?
Yes.
April, obviously, you've got the negative impact of Easter. So, for Germany, April for us anyway is down. May is trading positively as we would expect. And obviously, as I must mentioned, given the World Cup starting at the back end of Q2, we would expect a difficult June. So pretty much the same story in all of our markets in many ways, a very volatile Q2 to be expected.
France, similar. Obviously, we can't speak for the market again. We're just looking at M6. Mixed performances at the moment, some ups and downs. And Netherlands, less positive in Q2 than Q1, but currently, it's trading slightly upwards.
And your last question, Lisa, on AVOD. If I look at our in stream advertising, Q1 2018 versus Q1 2017, then we have double digit growth across the group.
And what about your advertising share for the year?
Germany, I think we were still hoping to gain a small market share across the full year given the strength of our audience performances in 2017 and obviously going into 2018, notably around the 2nd channel or the 2nd tier channel box. In France, M6, you've seen in Q1 already gaining market share and fingers crossed that continues through the rest of the year. Holland is more difficult to give you guidance because of the sports events and the fact that the public broadcaster has full access to the advertising market and will therefore take quite substantial share in June, July. So that's a little bit more difficult. I mean, the positive news is that the market's up.
So whether we gain share or not, I think it's difficult to give you full year guidance at the moment on SLEISA, But at least it's
a positive environment. But it will be difficult to gain share in an even year given the sports events on the public broadcaster. So I think that it will be a challenge to be in share in 2018. It's easier than an uneven year.
Great. Thank you. And the investment in the Vod services, the ad Vod services?
The hybrid SVOD model?
Yes. That's
really going to start kicking in towards the end of this year with probably a higher impact through 2019 and then 2020 as the services effectively come online as we start investing more in the programming, etcetera, etcetera. So at the moment, there's a lot of internal development work going on and planning and discussions. And then the services, as I said, will ramp up towards the end of this year with more financial impacts in 2019.
Okay. Thank you.
Our next question today comes from Charles Biedouell of Exane. Please go ahead.
Hi, good morning. Actually, I had quite a few questions that Liz already asked, but maybe just a quick follow-up. ProSieben talked about strong commitments, which make them confident for the rest of the year. I just wanted to know if you could share any similar confidence or not on the commitments for clients on a full year basis? That's my first question.
And my second question is, if we start if we try to think about your digital business, which is not quite large, and we try to think about the businesses which are not directly tied to TV. So either on the ad tech side or on the video side, can you give us an idea of how the revenue is developing, the margin is developing and where you have the most or I would say less confidence for the future? And also kind of follow-up also on the digital revenues. We've seen ProSiben with disappointing digital revenues. We've seen Criteo guiding more cautiously in Q2.
Would you link what's happening to in your business with the GDPR and maybe some changes in the way advertisers behave? Or do you think it's just RTL specific issues? Thank you.
In terms of the commitments, if we look at the period I mean, the position today compared to the same position last year, and our commitments in Germany are up. So we have a higher level of commitments at the moment compared to the same period 2017, which seems to be in line with what Prosevent told the market as well. In terms of the digital question on Ad Tech, MPNs, etcetera, we've seen the broadband TV, as you mentioned, revenue was up in the Q1. DV Move was up 25%, although it's a much smaller business. Starhall was down largely due to the issues that Elmer mentioned on the call.
Our Ad Tech businesses had a soft start, well, in particular, SpotX. SmartClip was actually up year on year. So we have a very mixed picture. And this probably, in many ways, comes back to your last question, Charles, what's really going on? I think if we look at it from our TV sales out, what they can see is clearly that, so we say, advertisers who have traditionally been or have been spending on digital businesses have been holding back at the beginning of this year, obviously impacted by some of the concerns around brand safety.
At the end of last year, obviously, the Facebook story at the beginning of this year didn't help either. There's been, shall we say, a slight degree of reticence to invest in digital. On top of that, also, I think our sales teams are seeing a degree of reluctance from advertisers to spend ahead of trying to properly assess what the impacts of GDPR are going to be. So, there's also a little bit of a wait and see attitude from advertisers on the digital platforms. And lastly, and this is specifically for us in Germany, is that we also stopped working with Google DoubleClick at the beginning of 2018 in terms of demand side platform.
Basically, that was a decision taken locally. So there's been a number of, so I would say, impacts going on within the business, which is playing a little bit with the slightly slower revenue growth.
Okay. That's very clear. And just a follow-up, if I may, on that. Since GDPR is going to start very soon, we could imagine that this softness actually carries on in Q3, right? I mean, unless the clients decide 5 or 6 weeks after the start of GDPR to completely change their view, Is there a chance that we continue to see mix trends, not just in Q2, but actually in Q3 as well?
I think we would agree with you for Q2. I think it's too early to tell for Q3, but certainly, we're more optimistic that the growth will come back towards the end of the year. Now whether that's in Q3 or when in Q3, we can't tell you at the moment. But I think in this very short term, I. E.
Q2, hence some of the discussion and the guidance in Helmut's speech was really about don't expect much growth in quarter 2 from our digital activities. We see similar trends, I. E, involve a tough marketplace in the short term, but growth, we believe, will come back towards the back end of the year. When that starts, Charles, we can't tell you.
Okay. That's very clear. Thank you very much.
Pleasure.
We'll now take a question from Adrien De Saint Hilaire of Bank of America Merrill Lynch.
Yes. Good morning, everyone. Thanks for taking the questions. First of all, Netherlands, the market was up 7% in Q1 and you're talking about the market being or yourself being up in quarter 2. Do you think the market has reached now a state of equilibrium after a few years of decline?
Secondly, where do we stand on the process of exiting or crystallizing value around broadband TV and some of the other digital assets? And then thirdly, I just wanted to double check if you were reconfirming your outlook for Fremantle for 2018.
Let me quickly start with the outlook of Fremantle. Yes, we reconfirmed the outlook for Fremantle. So we believe that they will be in a position to have both the revenue as well as their EBITDA target. So revenue is expected to be up in the tune of what we mentioned in March. We obviously need to see how Tarex will continue to develop.
As we mentioned earlier, ForEx was an issue for Fremantle in the Q1. Without ForEx, the underlying growth would have been 7%. But on a reported basis, we've been showing flat revenue for the Q1. But we remain confident that they should be well positioned to hit their full year targets. With regards to the Dutch market, admittedly, we were positively surprised to see the Dutch market growing by 7% in the Q1.
I think it's an open secret that we haven't expected that in the second half of twenty seventeen. But it's a bit too early to really tell you whether this is a kind of a structural phenomenon we're now seeing, that the market is eventually flattening out at a lower level or whether this is going to be only a temporary effect. We mentioned earlier that we expect the second half to be much more difficult given the fact that the World Cup is played on the public broadcaster, and they will fully monetize this event in the Netherlands.
BBTV? Yes. Nothing has really changed, Adrian, since Mark's basically. We continue to discuss and explore opportunities with the local management team. It's sort of work in progress.
Okay. Thank you.
Thank you.
We will now move to a question from Julian Roche of Barclays. Please go ahead.
Yes. Good morning, Helman. Good morning, Andrew. My first question is on German tea advertising in Q1. Elmer, you said you thought the market was up 1.5 to 2.5 and you gained share, but presumably been reported or told us that TV advertising was up 2.5.
So how much was your TV advertising up in Q1 in Germany to assess market share? That's my first question. Second question is coming back on online growth, how much was online advertising up in or down, up or down in Q1 in Germany, excluding ad tech, so pure online advertising in Germany in Q1? And then the last one is, Andrew, you said your commitment comparing year to date 2018 to 2017 were up in Germany. Can you give us a bit more color on what it means?
Is it up 2%, 3%, 4%
percent? On the online advertising, so I'll take your second question, Julien. If I look at the advertising revenue for Mediengrouperdeutschland, which includes, I mean, basically in page, in stream, etcetera, etcetera, then we were up a high I mean, in the 15% to 20% range for the Q1. In terms of advertising revenue, I mean, there is obviously, Proseetin talked about 2.5. I don't know whether that was 2.5 for advertising revenue, including their Austrian Austrian and Swiss windows.
And obviously, they would have an impact in terms of the consolidation of ATV. So I'm not sure if we're comparing like with like. If we look at our advertising revenues as based on our 1.5%, 2.5% estimation of the market, then we were above the higher end of that range, so the 2.5% to 3% advertising revenue growth for the Q1. And the last question in terms of commitments. Sadly, I can't give you any more information because I don't have it other than to say that it's above, but I can't tell you whether it is 2%, 3%, 4% or whatever percent.
Otherwise, it is has been confirmed that this is above last year.
Okay, very clear. Thank you.
Thanks, Julian. Thanks.
We will now take a question from Conor O'Shea of Kepler Cheuvreux. Please go ahead.
Yes. Thanks. Good morning, everybody. A couple of questions from my side as well. Just on other revenues, which are down 2.6% in the Q1.
Can you give us a little bit more color on that? Is that some of your digital businesses that are not consolidated within your country lines and or your Eastern European businesses is the weakness there? And related to that, in terms of phasing of costs, I think you referenced the launch of 3 video on demand platforms in the Q1 in Hungary, Croatia and Belgium. Just wondering about cost phasing relating to similar projects for the rest of the year or overall OpEx, the shape of the increase that you might expect for quarter on quarter? And then the third question, just in terms of particularly Fremantle, if exchange rates remain more or less where they are, do you have sort of a rough estimate of the ForEx headwind full year, please?
Okay. Conor, I will start with the other revenue, which, as you mentioned, is down 2.6% in the Q1. The so called other segment is a mix of various activities. But the main components are, for example, our broadcasting businesses in Hungary, and there we've been down in the Q1. And we already mentioned that we had had a rather slow start in our EdTech business in the Q1.
And basically, Hungary and the slow start of the Adtech business explained for us being down 2.6% in the Q1 compared to prior year. We've had some activities that were slightly up. And Andrew mentioned broadband to you earlier. But all in all, Hungary and the Airtech business are the main reasons to blame, so to say, for us being down 2.6% in other revenues in the Q1.
Okay.
In terms of the cost phasing question, there wasn't that much additional cost in terms of the lots of the new the 3 sort of the VOD platforms because effectively, we've M6 is basically or we've used the M6 or the CICE plate back end and front end technology to go into Belgium, Croatia and Hungary. That's basically just exploiting sort of say intergroup knowledge, expertise synergies. The cost phasing that we referred to around the presentation, Ram will refer to in the presentation is effectively some higher programming spend in Hungary. So the overall year is going to be the same. It's just that we front end loaded a little bit of programming spend at the beginning of the year to hopefully drive audience shares.
And certainly, we're seeing a positive effect coming through in Q2 now in terms of advertising revenues. So, it's been that should we say that's been one specific effect in Q1. In terms of the VOD activities, we come back to an earlier question. That largely is going to be in Germany, where we sort of effectively improve the positioning or change the positioning and develop the positioning of RTL now in Germany and turn it into more of a hybrid business model. That's really going to start kicking in probably sort of September, October, so more of a Q4 impact.
And Fremantle in terms of the full year FX impact, that's very difficult because of the most of it is going to be coming from our U. S. Business and that's going to be pretty much the 1st 6 months of the year because obviously we've got idles, which is coming to an end or has ended. We will have America's Got Talent as well through the summer. Beyond that, there is, let's say, less in terms of very big shows in our U.
S. Business. So you it's kind of difficult to give you a picture on that, especially as a lot of the, let's say, the licensing business is also in tends to be in dollars as well. I would hate to give you a number, Conor, honestly.
Okay. Fair enough.
If you assume onethree of Fremantle's business is U. S, then that will give you, if you wanted to work it out, a reasonable base to start with.
Okay. Fair enough. Thanks, guys.
We will now take a question from Laurie Davison of Deutsche Bank. Please go ahead.
Hi, guys. The it's Laurie here from Deutsche. First question, Bertelsmann are looking to sell Avanto. Do you think that they may be more if they do go through that, they might be more relaxed about leverage at group RTL and a higher dividend payout from you? Second question, given the digital woes, we don't seem to be TV we don't seem to be seeing that TV is benefiting significantly in terms of growth.
Numbers for Q1 are they're okay, but they've been benefited by Easter. And obviously, you flagged the weaker second quarter. So where is this digital spend going? And why is it not moving back into TV? And then lastly, just the Fremantle margin development for this year and for next?
Thanks.
Okay, Laurie. Thanks for your questions. Honestly, you need to talk to Bertelsmann on their intentions. I don't believe that portfolio decision at the level of Bertelsmann means a change in our stated dividend policy. We'll continue to pay as ordinary dividend 50% to 75% of the adjusted net profit.
And we'll continue to try to maintain a gearing of 0.5 to 1x net debt to EBITDA. And this is not going to change, I believe, following a potential disposal of Bergelmann when it comes to the CRM business. On the Fremantle margin, we always said that it will take us a bit longer to ramp it up to the target level. I believe that the absolute margin of Fremantle in 2018 will be slightly up compared to 2017. But in terms of margin, we have to see how the final revenue will come in.
It also has to do with products, as we mentioned earlier. But all in all, we expect the revenue to grow, but it will take additional time until we will see the return on sales back to the target level as we also indicated in prior calls.
Your second question on digital, why is the digital spend not coming back to TV? It's a good question, and I wish we knew. I mean, certainly, what we're seeing when I speak to the sales teams is, as I mentioned, reluctance to spend on digital at the moment. It's not yet coming back into the marketplace. Saying that, not in floods anyway, there's a lot more positive conversations going on, especially if you talk about the much maligned FMCG sectors, etcetera.
We've seen a positive development in that sector in Q1. So, there is, I would say, some spend coming back into television, but it's not coming back in floods, we would agree. Maybe advertisers are just sitting on their hands a little bit, as I said, waiting to see what the impact of GDPR will be, how the businesses will develop, etcetera, etcetera, and then they will make a choice. But overall, I'd say there is a more positive attitude in the marketplaces and the discussions with advertisers and agencies. But we'd agree at the moment, we don't see those conversations necessarily turning into a we don't see
those conversations necessarily turning into huge amounts
of money coming back into television. But the mood is definitely more positive across the board.
Okay, that's great. Thanks.
We will now take a question from Richard Eary of UBS. Please go ahead.
Good morning, everyone. Just actually two questions more on clarity. The first question just on the guidance numbers. Obviously, we're expecting a recovery in the H2. Am I right in assuming the sort of major risk to guidance being hit is whether we get a turnaround in the digital businesses rather than the TV assets?
That's first question. The second thing is just going back to the commitment numbers. I can't remember whether you've given numbers before, but if we look at the commitments going back in, let's say, 2017, what were the commitments at the start of the year relative to the total revenues that were actually booked in the year, just so we can get an understanding of how that moves into 2018 as well?
Okay. Let me take the first one, Richard, on guidance. I think here, it's fair to say that when we look at the revenue guidance, we said that we believe that revenue is up for the full year moderately, I. E. Between 2.5% and 5%.
There, you're right, digital assets will play a certain role, quite important role. And especially with the unknown effects coming from ForEx, there's a certain kind of challenge or risk that will materialize throughout the course of the second half. So if we get additional headwinds from ForEx, then if we fail to grow our digital businesses in line with expectations, there's a risk on our revenue guidance. And yes, this is probably more significant than the revenue risk on our free to air businesses.
Or even Fremantle. Yes. Commitments, Richard, we've never disclosed absolute amounts or where we are on what's going on. I think it's very difficult looking at commitments at the start of the year because discussions start in November, December and really finalize through sort of January, February. January is always a very strange month in terms of advertising revenues anyway when you look at the absolute numbers.
So I think it's very difficult to sort of say where we are at the beginning of 2018 compared to the beginning of 2017 because each year is slightly different. And as I said in response to an earlier question, we've seen much more positive discussions coming through from FMCGs, for example, at the beginning of this year. In Germany, we've had increased spend from the likes of L'Oreal, Ferrero and P and G, while Unilever remains down. But that's mainly due to the fact that they've sold some brands. So, the like for like comparison is slightly difficult.
Last year, it was a different picture. We had PNG was up as one of the big FMCGs, but the others were pretty weak. So, every year is slightly different. What we can say and can confirm is based on the position as of today, commitments are up in 2018 versus the same period in 2017.
Can I just ask one sort of follow-up, just get back to the FX issues on the digital assets? What's the percentage of the digital assets that are, let's say, non euro or U. S. Dollar based?
Well, you've effectively got broadband, you've got products, you've got style haul. Let's have a quick look. Yes, you've actually only got Divi Move, United screens, which is still very small. Do I have the numbers in front of me? Let me have a quick look.
Richard, let me get back to you.
Yes, it's fine. Thank you.
But as we mentioned on as Emma mentioned on the call, there was a $10,000,000 impact in terms of FX on our digital activities in the Q1. So that obviously is basically the non euro businesses. So we would have had €200,000,000 instead of the 190,000,000 as reported.
Okay. That's helpful. Thank you.
We will now take a question from Ian Whittaker of Liberum. Please go ahead.
Thanks very much. Two questions, please. First of all, just going back to online VOD, sort of you mentioned double digit sort of growth across the board in those revenues, but it does sound as though that is below the increase you got in views. If that's the case, have you taken the deliberate policy to keep your pricing down in digital VOD to drive traffic to drive sort of to get advertisers to actually sort of take the product and then have the view that you can ramp up prices later? Is there something else that's happening there?
Because if you look at the look at some of the markets, for example, you've now started to see VOD revenue growth start to outstrip audience growth? And then the second question just in terms of Netherlands and going back in terms of the market there. I think before the commentary has been or the view has been that in terms of weakness of the Netherlands, some of it was driven by the impact of Netflix maybe on audience numbers, but a lot was driven by also as well the rival group sort of being very aggressive in terms of their pricing. What do you think has changed with either of those dynamics within the market?
Ian, sorry, can you repeat your second question?
Yes. Sorry, Andrew. Just in terms of the Netherlands, I think the view on the weakness in the market there has been sort of it was part driven maybe by the impact of the asphalt players, but also as well that there was a competitor who has been very aggressive in terms of their pricing within that market. And just wondered sort of what exactly has changed in terms of dynamics that's maybe helping the market? Is it that, that competitor has got less aggressive on their pricing?
Is it that the impact of the SVOD services is maybe starting to weaken?
No to both of those. I think what has changed at the beginning of this year is the sales strategy of the public broadcaster, who have removed sort of volume discounts and agency rebates. And that has helped, shall we say, the other players in the marketplace because we would have fully expected Q1 if you'd asked us even at the end of 2017 where we saw Q1 in Holland, so the commercial broadcasters would have sat down because of the Winter Olympics and the public broadcasters, as we said and as everyone knows, have full access to the advertising market. Now with them broadcasting the Winter Olympics, you would have expected them to suck up all the money. The fact that they changed their sales systems meant effectively advertisers went elsewhere back into the commercial broadcasters.
So, that has helped the fact that the public channels have changed their sales system seems to have helped the commercial broadcasters. The smaller sales point and the sort of the SVOD growth, they still remain, should we say, headwinds in that market.
Thanks very much.
And your
question was on the online VOD pricing. Quite frankly, I don't have an answer for you, but I will get back to you.
Okay. That's great. Thank you.
We will now take a question from Chris Donan of HSBC. Please go ahead.
Yes, good morning. Thanks for taking my questions. First one on the distribution business, maybe you could talk about the performance here and maybe what you expect for the full year mainly in Germany and France? Then a second on your VOD businesses. I've seen you've printed decent relative growth on TV Now, for example, maybe you could help us with a small indication.
I guess you don't want to give a specific number, but where do we stand subscriber wise, maybe a bit of a range so that we have somewhat of an idea.
Okay. Chris, I'll start with the distribution business. So you will have seen because the MTS has made a number of communications on that, that they've been successful in signing agreements with regard to distribution. In France, We also see a continuous rollout of our HD offer in Germany. And that makes us confident to be able to continue to see platform revenue growing also in 2018.
If you look back over the last 3 to 5 years, we've seen growth of between 10% 12% per year. I think this is a good proxy of what we should expect also for 2018. So it is looking promising all in all. Your second question, sorry?
On TV now and maybe video land, so that we have a bit of an idea where we stand subscriber wise on an absolute basis, maybe a range.
A range in terms of what, Chris, sorry?
Absolute subscribers, so that we know whether it's we're talking about 100, 200,000, 500,000.
What we can say for VideoLAN is that they had a very positive Q1. And what was interesting there was that it was actually the subscriber growth was not necessarily driven as we would have expected by local dramas. As you might expect on our VOD platform, it was actually driven by an entertainment format. So it goes to show that
if you get if
you do find the right type of programming for an SVOD platform, which appeals to a younger demographic, it can still drive even SVOD subscriptions, and we've had a very positive start. I think certainly, 4000 to 50,000 positive new subscribers coming in on video land. We won't give you the base, but it's certainly growing. And remember last year, we had, I think, almost 80% growth in subscribers for video land. So it's moving in the right direction.
It's continuing the trends. The churn is still a single digit figure, which is much, much lower than it was at the same period of last year. So that platform, it certainly seems to be at the moment gaining a little bit of traction, which is encouraging for the development of our TV Now, so we say, SVOD hybrid model towards the end of this year. TV Now is also
positively growing.
Again, I won't give you numbers, but it's got what we can say is all the metrics are in the green and is performing in line, if not slightly above expectations following effectively a little bit of a relaunch, but obviously the major relaunch to come towards the end of this year.
Okay, that's great. One more follow-up on the distribution side. What are you guys making of the proposed merger of the cable landscape in Germany with Uniti and Kapl Deutschland?
I think to be honest, we will leave any comments for our German colleagues who are obviously more impacted and are closer to the market. And I think it would be perhaps unwise for us to comment at the level of the group on something which is clearly very national in terms of impact.
Okay. Thank you.
We now have a follow-up question from Charles Ridgewell of Exane. Please go ahead.
Hi. It's a very quick one actually. I was just wondering when you were referring to what your colleagues from the sales house are seeing and reference I think to Lori's question on advertising. Are they able to see what money is going actually to Facebook, Google or to Amazon? Because it seems to me that this is where the money is going, not away from digital into TV, but actually to those guys which have all posted spectacularly good numbers in Q1, not necessarily in Germany because we don't have the disclosure, but globally or even outside the U.
S. So are you guys able to see if there is any shift of money here or not? Just to put the comment on where the money is going into context. Thanks.
And all on the same note?
We don't have this visibility.
Okay. Thanks.
So we assume and based on, as you said, the reported numbers, that's where it's going. But we can't see it through our sales houses other than the fact we don't we can see digital, shall we say, as a pot or the areas that we can see in terms of digital not growing as fast as it expected, but we can't see where that money is going. But you're right, it seems to be going to the large Americans.
Okay. Thank you very much.
We will now take a question from Laurie Davison of Deutsche Bank. Please go
Yes. Sorry, it's just another follow-up. It's just on your comments on distribution revenue staying in the same growth range. Shouldn't we be seeing a large uptick in France this year from the carriage fees that have been negotiated there?
Yes. But it's a question also of mix. Yes, you're right, but the contribution that we should see from France is rather increasing than decreasing. But yes, we'd like to be sufficiently prudent on the guidance for the group. We cannot really predict the uptake in HD subs in Germany.
And that's why we believe that if you take 10% to 12%, this is the growth rate that we've been able to generate in prior years, this is probably a good proxy. We hope it's going to be better, but it's not in our hands at the final end.
Okay. Thanks.
As there are no further questions, I would like to turn the call back to your host today for any additional or closing remarks.
Thank you very much for joining us today. We both look forward to speaking to you again on the 29th August around the half year results.
Thank you, my side. Have a good day. And if you