Good day, ladies and gentlemen, and welcome to the 9 Months 2017 Results Conference Call of RTL Group. Today's conference is being recorded. And at this time, I'd like to turn the floor over to Andrew Buckhurst. Please go ahead, sir.
Thank you very much, and good afternoon, everyone. Thank you for joining us on this conference call for RTL Group's results covering the 1st 9 months of 2017. Today's speaker is our CFO, Elmer Hagen, 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 the year, RTL Group has continued to deliver good financial results. Group revenue increased by 2.8% to €4,350,000,000 with EBITDA coming in at €889,000,000 This results in a group EBITDA margin of 20.4%. The reported net profit for our Tel Group shareholders came in at €434,000,000 This is just down €9,000,000 year on year, despite the fact that we had a significant positive benefit from Group MCs last year. Moving to the financial overview on Page number 5.
Page 5 shows the summarized results for the 3 months ending 30th September. The results in the Q3 were strong with all of our KPIs reporting a positive development. 3rd quarter revenue rose 1.5 percent to EUR 1,375,000,000 with our larger business units of Medellin Group, RTL Deutschland and Group MCs reporting growth of 7.8% and 4.2%, respectively. Fremantle Media reported a slight quarter on quarter revenue decline, primarily due to a negative swing in ForEx and some non renewal of shows. In our other markets, other TV markets, RT and Netherland remained weak, while there was a slight improvement in Belgium, although the market was still down.
Reported EBITDA in the 3rd quarter came in at €263,000,000 an improvement of 17.4% year on year. The main drivers for this increase were our German TV operations, which were up EUR 26,000,000 or 24 percent during the quarter and Group MCs, which reported an absolute improvement of EUR 23,000,000 This equates to growth of 36.5%. Let's now move on to Page 6, the 9 month results. Reported group revenue for the 1st 9 months was up 2.8 percent to EUR 4,350,000,000. Underlying revenue, which is, as you know, at constant scope and exchange rates, grew by 2.1%.
Group operating expenses grew by 2.5% compared to 1 year ago, reflecting investments in new businesses and increases in program costs. This results in a reported EBITDA of €889,000,000 with a margin of 20.4%. Adjusted for the positive one off effect at GroupMcyst in 2016, the group's EBITDA rose 3.4% year on year. The group's net debt at the end of the period was EUR 1,097,000,000 slightly higher than last year. This reflects the weaker cash conversion, which I will come to shortly.
The net profit attributable to RTL Group shareholders for the period was only very slightly down by €9,000,000 at €434,000,000 This is largely due to the lower EBITDA offset to a certain extent by a non cash gain on re measurement and gains on disposal amounting to €21,000,000 in total. The group's net result translates into earnings per share of €2.83 Turning now to Page 8 for the cash flow. For the 1st 9 months, net cash flow from operating activities amounted to €387,000,000 Our cash conversion came in at 76%, largely as a result of a buildup of long term receivables at Fremantle, as already explained around the half year results and an increase in working capital driven by higher inventory at our German TB operations. In terms of acquisition of subsidiaries, the group has spent a net EUR 42,000,000 so far in 2017. Moving now to the business review, starting with Meeting Group RTL Deutschland on Page 10.
Our German channels achieved a combined audience share of 28.8% in the target group 14% to 59%. During the 1st 9 months of this year, Meeting Group, RTL Deutschland's family of channels increased the lead over the main commercial competitor to 4.6 percentage points, up 1.6 points from last year. RTL Television remains the clear market leader with an audience share of 11.5%, while our second channel, VOXX, continued its strong growth trajectory with an increase of 0.2 points year on year. In terms of the financial result, the net TV advertising market is estimated to be still down year on year by between 2% 3% with Millingoper RCL Deutschland clearly outperforming the market as their advertising revenue increased by approximately 1%. Overall, revenue increased to €1573,000,000 an increase of 4.8%.
EBITDA is also up by 4.8 percent to €500,000,000 resulting in a stable high margin across the 1st 9 months of 2017 of 31.8%. Moving now to emphasis on Page 11. Audiences remained solid following a very strong performance this year. The main channel MCs reported a slight decrease in audience share to 15.7%, which is not surprising given the record audiences generated by the Euro 2016 last year. Distair and W9 continue to perform well and the family of free to air channels achieved the combined audience share of 22.4%, 4.1 percentage points up when compared to the same period last year.
For the 1st 9 months of this year, the French TV advertising market was estimated to be stable, but Coop MC slightly outperforming significantly outperforming the market. Revenue increased to €937,000,000 largely as a result of the outperformance when it comes to advertising. Reported EBITDA was €258,000,000 down from the reported €270,000,000 last year. However, the 2016 results, as we mentioned earlier, includes a positive one off amounting to €43,000,000 Adjusting for this effect, EBITDA growth would have been 13.7% year on year. Now turn to RTL Netherlands on Page number 12.
Audiences continue to be satisfactory with a family of channels reporting a combined share of 30.4%, slightly down on the same period last year. Overall, for the period January to September, we estimate the net TV advertising market to be down just over 6%. Within this overall market environment, our advertising revenue was down 9%. Accordingly, revenue decreased 4.9 percent to €330,000,000 for the 1st 9 months period for the 9 months period. Reported EBITDA came in at EUR 46,000,000 as a result of weaker revenue and continued investments in programming and our local headroom business, VideoLAN.
Turning now to Free Mental Media on Page 13. For the 1st 9 months of this year, reported revenue was up 2.2 percent at €983,000,000 with the revenue bridge on the right hand side of the slide, where we break out for additional details. As you will note, ForEx has turned negative, resulting in a swing of EUR 14,000,000 in the quarter. In addition, in Q3, a number of shows in the UK, including Keith Lemon and the Bank On the Money were not renewed. EBITDA on a year to date basis was stable at €60,000,000 when compared to last year.
This includes almost €5,000,000 of start up losses that primarily relate to the MPN Divi Move. Let's now turn 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 production and revenue recognition windows. During the course of 2018, we'll provide updates on this, so that you can track changes and follow how this impacts Fremantle in terms of revenue development. Coming back to this year.
The 2017 revenue guidance for Fremantle has now been updated. The reasons for this are twofold. Firstly, the prudent view on the likely ForEx impact on the revenue given the Q3 results and secondly, timing effects from 2 shows, Hard Sun and Picnic at Hanging Rock. In terms of the 2 dramas mentioned, we have slightly different effects happening. In case of Heart Sun, Free Mental Media is expecting to record delivery to the BBC and hence the revenue from the show in Q4.
However, the international exploitation and the sale to Hulu has moved into early 2018. For Picnic and Heming Rock, the whole revenue recognition window has slipped into the Q1 2018 from an expected delivery of Q4 2017. These effects result in a lower revenue guidance for this year. Turning now to digital on Page 15. We continue to benefit from dynamic growth in digital revenue For the same for the period to 30 September 2017, digital revenue grew 30% to €560,000,000 However, revenue growth slowed in the Q3 across our MPN activities and our ad tech businesses.
Our MPN businesses were impacted by lower indirect monetization and ad fill rates impacting RPMs and a slower than expected ramp up in direct ad sales and branded entertainment. And in the case of SportX, a number of factors came into play in the quarter. Firstly, when safety was clearly a much talked about issue over the summer and this led to a call for more transparency and quality. In response to these concerns, Sportex has, like Google, introduced an authorized reseller program that requires a wide list of partners. Not all platforms have been so rigorous in their approach, however, and this has hindered Spodex growth in the Q3.
In the medium to long run, we believe this strategy is the right one to follow as quality and verification become key. Sportex has been very active in closing fraudulent sites and URLs in order to provide clean data to clients. Secondly, the market was slower as U. S. Political spend around the presidential elections last year was a clear one off.
And lastly, Spotex has to manage the shift from its business model from managed services to programmatic and a shift from open marketplaces to private ones. Despite these short term issues, we strongly believe that SPOTEX is well positioned for future growth with a clear focus on quality accounts, particularly OTT inventory owners such as MVPDs, broadcasters and networks, OTT platforms and device manufacturers. The platforms aims to provide message supplies that is fraud free, high quality and close possible to addressable TV. As we announced at the end of August, we are accelerating the execution of our total video strategy with an ambitious growth plan for our ad tech businesses. In October, we took the decision to combine both SPOTEX and SmartPip into 1 integrated ad tech company.
This will be achieved by the end of 2018. The combined entity will focus on ad server development and addressable TV, while bringing dynamic ad insertion capabilities in heart. The close collaboration between the group's minority shareholders, video amp and clips will also continue. Let's now move to Page number 17, the outlook. We confirm our outlook of moderate revenue growth, provided that there is no substantial negative effect from foreign exchange movements and no major changes in the economic climate across RTI Group's markets.
We are, however, revising upwards our guidance for EBITDA for the full year 2017. This has now been increased to slightly up, I. E, between 1% and 2.5% growth of the reported number last year. This brings us to the end of the formal presentation. Andrew and I are now available for all sorts of questions you might have.
What do you see specifically for the FMCGs in Q4? And then also if you could comment on Belgium, you've said that you've seen an improvement in Q3, which coincides with TF1 also launching in Belgium. So if you could give us just a comment on what you're seeing, that would be great. Thank you.
Okay. I think I'll try to start. Let's maybe go market by market and start with the biggest market in which we operate, which is the German market. In Q4, our TV advertising revenue will be fully in line with our expectations, which is overall a flat development compared to Q4 2016. Please keep in mind that we had very aggressive comps because last year, the 4th quarter was particularly strong, even more so in December, sorry.
So we are comparing against very ambitious targets in that respect, but we believe that we should be pretty flat for the Q4, which basically means
So what would be the add on assumption in this kind of Q4 advertising assumption for Germany? Does that assume a very strong add on period or not at all?
I mean, relatively modest, to be honest, Henrik, because December, as Elmer mentioned, was up so strongly last year. We clearly don't believe that we're going to have such a record amount this year and we can hope. But at the moment, given the very low visibility, we can't see December at full, but we don't anticipate we are not anticipating in our guidance a strong add on booking.
Yes. So we believe that overall, Medellin Group for the Q4 should be pretty flat compared to the Q4 of 2016. When we look into France, we had a solid start into the Q4 and also MCs communicated recently that they are satisfied with what they have seen in October and they remain confident that also November, December should be a good market. The other markets, talking about they continue to be soft. So overall, we see a continuation of the trends that we have reported for January to September when we talk about the other markets.
And your second question was on Belgium.
Yes. And also just on the advertising categories, I mean, the type of advertisers, I meant by that. So what do you see, for instance, do you see the FMCG company spending more with you again? Or are they still withholding their spend? If you can just comment on the different type of advertisers as well.
To be honest, Danica, I don't have that detail here at the moment, not across all the various territories. But we haven't heard anything when I've been speaking to the sales teams saying there's been a comeback from any one particular type of category or another.
Okay, great. And then the last one, yes, was in Belgium.
On Belgium. So, yes, I mean, Emma mentioned on the call or during the scripts that Belgium improved slightly, I. E. The rate of decline slowed in Q3, but it's still overall negative. What we're seeing in Q4 is perhaps a slightly better picture as well.
So the rate of decline again is decreasing. And to be honest, the impact of TF1 in the advertising market in Belgium at the moment has been, should we say, very limited?
For this year, yes.
Okay. Thank you.
Moving on, our next question will come from Lisa Yang with Goldman Sachs.
Hi. I have a follow-up question on the TV advertising market. Could you maybe give us a sense of how October has trended for RTL in Germany? I understand that December comps are very difficult and that's why you have a more cautious year on the quarter. But obviously, you heard proceed been saying mid single digit growth.
So just wondering if you've seen some of the trends or you lost market share? Secondly is on your AdTech businesses. I'm just wondering how you think about the impact of GDPR who's going to basically being placed in May next year? And the third question is on the other revenue. Just wondering why it was so weak in the quarter and how should what drove that?
How should
we think about Q4? Thanks.
Okay. Maybe I'll start with the German ad market for the Q4. October, November, 2 months together, we believe we will be pretty flat compared to prior year. And as Andrew pointed out, even though we don't have a very strong evidence at this point in time, we are rather kind of confident to be able to be operating a similar amount of business for December. And that was particularly a strong month last year, but still when we talk to our colleagues, they are confident that overall for the Q4, meeting open and I'm not talking about the market, but meeting Opel should be flat.
I cannot really give you any kind of reliable guidance for the market, but provided that and ProSieben will be able to live up to their expectation, the market might be slightly up with them gaining share in the Q4. But still for the full of 2017, MediBook will outperform the market because we believe we will see in a market that is going to be down minus 1 to maybe a bit less. But clearly, Meeting Group is expected to gain share.
Your second question was on GDPR, I think, Lisa. Yes. Clearly, this is a there is a massive amount of work that's ongoing at the moment across all of our business units, not just our digital business, but even our broadcasting operations where we've got obviously outward facing websites. And obviously, the whole idea of consentment is a massive consequence of GDPR. It's as I said, there's a lot of internal work going on.
There's not a lot of compliance work going on, but also a lot of development work going on in terms of new IT software being created. We're in a massive data mapping risk assessment process, and there's a lot of obviously exchange of information. We've got a software tool that's also been put in place to help us progress through the GDPR questions. There's a big questionnaire, which I've also had to fill in 4 times with 63 different types of questions. So what we can say, I think, yes, it's going to be a massive amount of additional compliance work.
We can't give you a number as to what that might mean because a lot of that's internal development. And we can't tell you at this stage what it might mean in terms of our businesses, so to say, post May, June 2018 when GDPR becomes live. But you can rest assured that we are taking this incredibly seriously and there's a lot of work that's ongoing. Your third question, Lisa, I didn't quite catch that.
It's the other revenue, which I thought was quite weak in Q3. Just wondering what happened there. I think it was down 1%.
It is down 1.4%, but that's just a picture for the Q3. If you take the year to date figures, actually other revenue is up 12.7%.
And it comes back down to the slowdown effectively in our digital activities, which Irma talked about. So, obviously, in terms of our ad tech businesses, in particular, SpottEx, issues around brand safety, migrating business models, so one off political spend in 2016, which obviously didn't happen in 2017 around the U. S. Elections. And then on the MPNs, so the old MCNs, clearly YouTube was a much talked about brand safety concern through the summer with brands being maybe not so happy having some of their adverts next to certain types of videos.
And that had an impact on what we call RPMs, so the equivalents in the digital world of the CPMs, the cost per 1000, cost per muse on YouTube. So, they're very specific set of scenario around digital.
Yes. But there's no reason why that should get better in Q4?
No, in all honesty.
Okay.
But obviously, we work through these problems, and we would anticipate that 2018, again, we should be on a good growth path.
Okay. Thank you.
Next from Deutsche Bank, we'll hear from Laurie Davison.
Hi, there. First question, Proceiving came out today and said they are reinvesting €20,000,000 €30,000,000 in programming in 4th quarter. They're not ruling out more reinvestment over 2018. Does this potentially make you rethink margins for the German TV business? Is there a risk that margins go down next year?
That's the first question. Second question was, you just mentioned some non renewals on Fremantle as well as the phasing impacts. Can you just explain what those were? Thank you.
First question, Laurie, we've been very consistent in around our programming spend in Germany, and it's always been up around inflation, so 2% to 3% per annum. There obviously may be different phases during the phasings in terms of the how that is spent. But across a year, we would expect our programming budget to increase by 2% to 3%. We see no change in that going forward at the level of medium group RTL Deutschland. So we don't feel as though we need to make a sudden, sorry, aggressive investments in new programming.
We have a very good programming grid, which we renew regularly and update as and when we see fit, but it's not about throwing a check at it. As I said, 2% to 3% is a good estimate for program cost increases next year. So the margins in Germany should be maintained. In the Fremantle question on terms of the non renewals, so the non renewals in the UK were I mean, there were several shows, but in particular, it was, as Elmer mentioned The Lemon and the Pink. Yes, the Pete Lemon show and a show called Bang on the Money.
Those were the biggest show, shall we say, in the UK that were not renewed. There were several other smaller ones. And then the slippage effects were on the Slide 14. So in terms of why the revenue guidance has been changed for Fremantle. So effectively, the international exploitation and the sale to Hulu of Hard Sun, even though the sale to the BBC will be recorded in this quarter.
The show actually won't be on air until 2018 on the BBC. And then the other effect effectively was Picnic at Hanging Rock, where the whole revenue recognition window slipped out of 2017 into 2018 in terms of both the delivery and also the international exploitation. And if you think about the so I suppose the guidance change from where we were in August to where we are now, we're looking at a 2 or 3 percentage point move. It's effectively split fifty-fifty between FX and this slippage in terms of the dramas.
But that should also mean that next year, revenue of Fremantle should be up significantly because we also will have ILO, which we didn't have in 2017. And the slippage will obviously also be helpful for 2018.
And sorry, just a quick one back on that. In terms of the cash impact of that, presumably that's quite negative in terms of the working capital shift this year as well in terms of cash conversion. So we should be thinking, in terms of cash conversion, again, sort of a lower year than the 100% you've done historically?
It will clearly be below 100% because we are about to transform transform also the portfolio of Fremantle in a way that we have a stronger contribution coming from the drama and from the scripted business and as you know comes with a different cash start up. So I continue to believe that for the full year, the 76% that we have reported on the 30th September will be higher for the full year. So I think that the Q4 will help us to correct the average for 2017 to a higher figure. So 85% plus. Yet, I believe that the fact that we build a number of receivables at the level of Fremantle and that is basically linked to the business that we conduct with the various Airbus platforms that will probably continue to also be a subject for 2018 2019.
Okay. That's very clear. Thanks.
Our next question comes from Charles Badu with Exane.
Most of the question has been answered, but I just want to follow-up the AdTech and the digital video revenues because, I mean, there are slightly different issues, but today clearly your digital revenues are slowing considerably. I calculate only 3% in Q3. And we've seen that Oziban has also been much more cautious on its overall outlook for the digital video portfolio. And I know the mixes are slightly different. So what does that tell you maybe when you think about next year, both in terms of revenues and profitability?
Do you think it's a hiccup and if you go back to strong growth and then pass to profitability? Or do you change your outlook maybe for some of your assets in that part of the portfolio?
Yes, Charles. You're right that the 3rd quarter has shown a significant slowdown in revenue development. Yet, if you look at the bigger tickets that we run-in this digital bucket, so broadband, for example, if you take the growth rate January to September, it's still up 60%. If you take Stylehold, it's still up from January to September 27%. And it's basically the kind of necessary brand safety measures that we had to introduce at the level of the spot and the fact that we didn't benefit from presidential elections in 2017 that basically generated a level of Sportex minus 10.
We continue to believe that this is going to normalize. And I believe that we should see stronger growth rates growth rates that we were used to in the recent past also for 2018. So we continue to believe that we will grow double digit and that the fact that we had to introduce some brand safety measure is not going to in the mid to long run decrease our revenue expectations.
Okay. That's very clear. Thank you very much.
Our next question comes from Conor O'Shea with Kepler Cheuvreux.
Yes. Thank you for taking my questions. First question is on Fremantle. I just wonder if you could just precise again the what now is the full year guidance for revenues and margins. I'm just not clear from the release what exactly you're guiding now.
2nd question on the German TV advertising, I think you said, Elmer, plus 1% through 9 months. Can you just remind us what it was in the first half or give us directly the Q3 number. And then the third question just on the digital side, your disposals minus 10% through 9 months. Can you give us a number in the first half, if that's possible? And also any update on the broadband TV sales?
Thank you.
I'll take the first one, Conor, on Fremantle. Revenue guidance is now to be broadly stable. So that in our official language means plus 1, minus 1 on the reported revenue, so there's a 1 point $5,000,000,000 reported last year. And then the EBITDA will be higher than last year, which will mean obviously that the margin will be improving.
Okay. Briefly on your question on the German ad market for the Q3. So Mailingbrook generated an additional advertising revenue of 3.4%, which is a bit even better than what we guided because I think that we mentioned that we expect Q3 for meeting robo in terms of advertising revenue to be up 3%. The final figure was, as I mentioned, 3.4%. And we believe that the market in Q3 did minus 1.5% to minus 2%.
Okay. Great. And on Spodex, do you have a revenue number for the
first half? 6 months was positive 2.5%.
Okay. Positive 2.5%. Okay, great. Thank you very much.
Moving on from Barclays, we have Julien Roche.
Yes. Hi, there. My first question is on the working capital weakness. Can you explain more, because you mentioned inventory in Germany, I didn't really understand. That's my first question.
The second question is the relative weakness in spot tax because of brand safety, MCN because of monetization on YouTube impacting RPM. What about online advertising in Germany, which must be your highest market? Because ProSieben also mentioned that as a cause for their weakness and you both have a large presence in online advertising in Germany. So I wanted to know what was your performance in Q3 there versus the first half? And then the last question is your friend in Unterfering said one of the reason why they're weaker than you is they put internal revenue or kind of media for revenue in venture in the venture line where you put it in advertising.
So can you tell us by how much advertising was boosted year to date by kind of you helping digital companies?
Okay. Let me start, Julien, with the last question. You know that we do not do that much media fact that we do far less than what you call them our friends in Unterfuhring. They do it, I think, much more than we do. I can honestly not give you a very precise figure as we speak.
We can look it up, but it's tiny. It's very small. So I think that there is almost no different cost by us including this. And I'm not simply because I'm not even sure what we have done in the Q3, if any. So I cannot tell you.
In terms of working capital, yes, we have this is it's not that we do a jump from 1 quarter to the other, but we continue to slightly build up the inventory of millingroup, specifically because we were at a kind of almost all time low in the recent past. And here, when we talk about building up the inventories, mainly around football. We know that we own the rights of the friendly matches of the German national soccer team. And it obviously has led to the fact that we had to pay for rights that we haven't been able to broadcast for
the time being. They were effectively rides held at the end of September, so you have to match in the first 10 or 11 days of October. There were a couple of matches, I think, on the 8th and then 11th in terms of the qualifying matches for Germany for the Euro twenty 18. And so there was just a temporary, shall we say, buildup in inventory, which had been paid for, which obviously now reverses in October as we use the stock.
Okay.
And online advertising in Germany in Q3?
Can we go into definitions? Are we in page, in stream?
Overall, everything that's online, whether there is a change in trend versus the 1st 6 months?
I've got the Q3 numbers. In Germany, they were up sort of mid to high single digits in terms of advertising of digital advertising.
And were they up far more in the first half or?
I don't have those numbers with me, Junior.
Okay. One for later then.
Exactly.
Okay. Thank you.
No problem. Thank you.
Moving on, we'll hear from Sonia Rouboussier with Commerzbank.
Yes, good afternoon. 1st, congratulations on the good results. 3 questions from my side. 1st, on Fremantle, maybe you just said stable for Q4. What should we expect now for 2018 because of the slippage on the growth and EBITDA margin?
2nd point, just to come back to your guidance for digital revenues, you just said that they will accelerate double digit growth in 2018. What about Q4? And last but not least, maybe a misinformation, but what about the strategic review on broadband TV? Thank you.
In terms of Fremantle, Sonia, the revenue guidance for 2018 will be a very strong moderate growth. So the moderate means 2.5% to 5%. And obviously, we are very confident it's going to be at the upper end, if not slightly above that moderate guidance range for 2018.
And EBITDA?
EBITDA will be an improvement again.
Okay.
Digital revenue for Q4, my guess is it will probably be slightly better than Q3, but we won't see it getting back to the growth rates that we experienced probably at the beginning of this year. So I think we've seen a dip in Q3 and we'd expect a slight improvement in Q4, but it won't be massive.
Okay.
It takes a bit of time to get things back to normal.
And then an update on broadband. We're still currently working through the strategic options for the company with all of the shareholders. No decision has been made as of yet, and it's likely that this discussion will continue through into 2018. As you can imagine, it's a pretty complex exercise. And given the recent events, and we've just talked about a few of them, the world publicized brand safety concerns on YouTube, for example, we have, along with our minority shareholders, decided to take our time and find the optimal solution, and that means that it will expand in terms of the process into 2018.
Okay. Thank you.
Our next question comes from Richard Eiry with UBS.
Yes, many thanks. A number of questions have been answered, but just some clarity actually if you could. Reading through the big report and correct me if I'm wrong, it's indicating that the gain from the Paris property sale is $86,000,000 Is that correct? And that's the number that we're going to get booked in the Q4 that's driving some of the EBITDA upgrade. Is that correct?
It won't be less. Yes, it's correct.
So if I just look at the $86,000,000 addition this year onto the EBITDA that you delivered last year $1.4 $1.8 that suggests a 6% increase year on year, which suggests obviously the business is down year on year ex property. Is that correct? Is that how we should read the new guidance or if I missed something?
Not really because you know that our Belgium management team also announced that they are in the process to transform their company and there will be a necessity to book a provision for restructuring in the Q4. Hopefully, that is something that when we do outlook statements, we always do them on a reported basis or report against reported. And there will be the necessity to book provision. I can't tell you how much this would be as we speak. We are looking into it.
But there will be some known negative one offs that you need to basically also take into consideration and that would bring down the 6% to a lower percentage increase.
And remember, essentially the starting point, Richard, as well, last year's reported, obviously, included the very positive impact from M6 on the mobile M6 mobile contractual settlement.
No, no, no. I was aware of that. I was just looking at that when you actually upgraded the guidance, if it now includes the property, the property number seems to be a big number.
So I
was just wondering whether I was missing something.
Yes. But it also includes, as Elmer mentioned, the an estimate, internal estimate that we've got in terms of the potential restructuring charge at the level of Belgium.
Okay. Okay. And I presume just doing some quick math, that's in the tune of circa $50,000,000 Is that right? No. No, no, it will
be less than this, but
It will be a double digit $1,000,000 yes. It's too
early to really give you a good enough figure about it. It's not going to be $50,000,000 Definitely not. Okay.
All right. Moving on, our next question comes from Mark Josephson with Equinet.
Yes. Good afternoon, guys. Find that Slide 14 in terms of the schedule of production for the key drama lines of Fremantle extremely useful conceptually. I've listened to your answers to questions in terms of stable sales this year or broadly stable this year and modest increase next year. But to make that diagram more usable for me, which of those bars what are the top 2 important or the most 2 most important bars of those different drama series, please?
For 2018, Mark? Yes.
In terms of what's more important, Hard Sun or picnic at Hanging Rock? Which are the big ones as far as revenue productions for Fremantle? Hard Sun and
Okay. Then obviously, you'd have to say that the 1st season or episodes of the Lena Faranty novels, La Mikael Genial is also a pretty big one. And then Deutschland eighty six, which obviously is with Amazon, is also quite important.
Next, we'll move back to Larry Davidson with Deutsche Bank.
Yes. Sorry, just a quick follow-up on the spot ex option. Given that slowdown in spot ex and your comments that these issues are going to continue, has that changed your view of the valuation or the right valuation for the option on SPOT X? And can you just talk about Likert now of that actually being excised? Thanks.
Not really, Laurie, because we really believe that this is a kind of a one off, so to say. It will take a bit of time until we would have fully recovered from the measures that we had to introduce, but that is not going to put into question the mid to long term prospect of that company. And thus, the resulting implication of valuation is small.
Okay. And then just lastly on the net effects of the provisions, the MCs dropout and the property sale. Is it fair to say that, that would be broadly neutral year on year?
Well, we lose the 43,000,000. We gain the 86,000,000 and then we lose a double digit €1,000,000 in Belgium. So net net, there is going to be an increase in, shall we say, one offs from 2016 through to 2017 or 2017 compared to 2016.
But it won't be massive because we had 1 offs in both years. But if we do a comparison, probably we look at a difference, which is not extremely meaningful.
Okay.
And at this time, it appears we have no further questions from the audience. I'll turn the floor back to Mr. Buckhurst for any additional or closing remarks.
Thank you, everyone, for listening, for joining us. I realize it's been a busy results day at your end. So I appreciate the time you've taken and for your questions and interest in RTL. Obviously, I'm around for any more questions should you have them today, tomorrow, whenever. And we'll be in touch as a management team in March around the full year results.
Thanks once again, and have a good rest of the day.