RTL NL and Talpa Netwerk to merge

RTL NL to merge with Talpa Netwerk

• Employees: RTL NL 700, Talpa Netwerk (= John de Mol) 960
• Talpa to contribute TV, radio, print, digital, e-commerce, other; not included: content units Talpa Concepts, Talpa Entertainment Producties
• Format creation deal with Talpa Concepts, Talpa Entertainment Producties
• RTL to own 70%, Talpa 30% (i.e. RTL is valued more than 2x Talpa)
• Sven Sauvé remains CEO, Pim Schmitz (CEO Talpa) to Supervisory Board, Elmar Heggen (COO RTL Group) Chair
• 2020 pro forma: rev EUR 909m, EBITA 84m, annuel content spend >400m, annuel synergies 100-120m (EBITA run-rate from 2025)
• RTL NL: rev 476m, EBITA 58m (margin 12.2%)
• Implying for Talpa: rev 433m, EBITA 26m (margin 6.0%)
• To close 22H1
• Quotes:
• RTL: "The new cross-media group will have the size, resources and creativity to compete with global tech platforms in the Netherlands when it comes to investing in premium content, offering the most advanced addressable advertising opportunities, and expanding Videoland (...) gives us the possibility to ramp up investments in content, technology and data to create a competitive and distinguished alternative to global tech players"
• John de Mol: "... able to take on the American and Chinese tech players. On top of that, it allows me to fully focus once again on what I like best: the creation and development of new innovative content"

Observations

• Resembles Liberty Global/Vodafone deals across Europe, creating stronger national competitors. RTL Group may hold a portfolio of joint ventures (Spain, France, Netherlands, Belgium, ...). Unclear whether this is an exit strategy (to focus on Germany) or an operation to create a larger pan-European group.
• Contenders could still take aim at the new company (DPG Media, VodafoneZiggo). Or at either, if the deal fails to materialise.
• Unclear whether synergies from revenues or costs - probably both (from costs alone would imply cutting the workforce in half), more form costs than from revenues.
• Unclear whether some of the linear channels will (longer term) be closed. Considerable overlap exists:
• General: RTL 4, SBS 6
• Female: RTL 5, Net 5
• Male: RTL 7, Veronica
• Reruns (series and movies): RTL 8, SBS 9
• Business: RTL Z
• Cutting linear channels would:
• Save costs
• Reduce ad inventory
• Raise the quality of what remains
• Shift content to Videoland
• Allow linear channels to focus on:
• News, politics, talk shows
• Entertainment, reality, talent shows
• Live sports
• Revenue synergies could arise from an enlarged Videoland (funded by cost savings). Likely Videoland will increase its budget for originals, licensed content and possibly sports (although it may make more sense to keep sports on the linear channels).
• Scrutiny by ACM and EC could be severe (50% of TV ads market).