RTL Earnings Hurt by Hungarian Tax

By Neetha Mahadevan

FRANKFURT--RTL Group SA (RTL.BT) said Thursday that full-year net profit plunged 25% under pressure from a new advertising tax in Hungary, lower sales in France and difficulties with its production business.

The European entertainment network said 2014 net profit fell to 653 million euros ($720.81 million) from EUR870 million a year earlier, primarily due to goodwill impairment charges on its operations in Hungary.

Group revenue fell 0.3% to EUR5.81 billion from EUR5.82 billion, as higher revenue from RTL Deutschland and acquisitions was offset by lower advertising sales in France, the disposal of its French e-commerce service and lower revenue from FremantleMedia and UFA Sports.

Its closely watched earnings before interest, taxes and amortization, or Ebita, was stable at around EUR1.15 billion.

Last October the group lodged a complaint with the European Commission over Hungary's advertising tax, saying it hurt media pluralism. The tax, which was introduced this summer, has progressive tax rates ranging from zero to 40%. According to RTL, it would be the only company subject to the top tax rate, although it only holds an estimated 13.5% share of the Hungarian advertising market. This led to a goodwill impairment charge of EUR77 million.

In the fourth quarter, RTL reported a revenue increase of 2.8% to EUR1.87 billion, while Ebita rose 7.1% to EUR466 million.

"Despite challenging environments in France and Hungary, RTL Group once again delivered a very strong set of financial results," said Co-Chief Executives Anke Schaeferkordt and Guillaume de Posch in a joint statement.

The company, which is majority-owned by German media conglomerate Bertelsmann SE & Co, said its core business, RTL Deutschland, benefited from significantly higher TV advertising revenue in the second half of the year and a growing digital distribution business, reporting a 5% rise in earnings for the year.

The company proposed a dividend of EUR3.50 a share in 2014, comprising an ordinary dividend of EUR2.50 a share and an extraordinary dividend of EUR1 a share.

For fiscal 2015, RTL expects revenue and Ebita to remain broadly stable.

-Write to Neetha Mahadevan at [e-mail]

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