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RTL is optimistic about 2006 as ad sales rise

RTL Group, Europe's biggest broadcaster, said it's „optimistic” about 2006 as the economic revival in its main markets allows companies to increase advertising spending in most markets, including Germany. „Advertising markets in many European countries are very positive at the moment as companies have money to spend,” CEO Gerhard Zeiler said on a conference call today. Zeiler said he would be „disappointed” if the German TV ad market, where RTL gets about a third of sales, grows „only two percent” as forecast by German rival ProSiebenSat.1 Media AG. RTL, which has interests in 34 TV channels and 34 radio stations in 11 European countries, is benefiting from the economic revival in the region, which allows European companies to spend more on advertising. In the Q2, the euro-area economy expanded at its fastest pace in six years and outpaced the US for the first time since late 2001. The broadcaster remains „cautious but optimistic on the outlook for advertising sales in the second half of the year” as „visibility remains limited,” Zeiler said. RTL is the most profitable unit of Bertelsmann, Europe's biggest media company. RTL’s stock had risen 14% so far this year.

In the H1 of the year, net income fell 5.1% to € 296 million as a year-earlier tax benefit wasn't repeated. Profit before interest, taxes and amortization, or Ebita, gained 27% to a record € 478 million. Sales rose 19% to € 2.85 billion. H1 sales of RTL in Germany rose 11% to € 920 million, while Ebita jumped 40% to € 160 million. The company operates the channels RTL, RTL2, Vox, Super RTL and n-tv in Germany. ProSiebenSat.1 Media AG, Germany's biggest private broadcaster, on Aug. 2 said Q2 profit gained 16% as an improving German economy spurred advertising sales. Europe's largest economy is on course for the fastest pace of expansion since 2000. Consumers are adding to export-driven growth, snapping up big-ticket items to avoid a planned increase next year in value-added taxes. M6-Metropole Television SA, France's No. 2 commercial television company in which RTL has a 48.6% stake, said this week first-half net income rose 15.3% to € 100.5 million and sales gained 21% to € 663.8 million.

The company in July last year got full ownership of the UK's Five television station. RTL also bought 30% in Russia's REN TV in the same month. In August 2005, RTL increased its holding in Grupo Media Capital SGPS SA, owner of Portugal's most-watched TV station, to 33%. RTL is in talks with „several broadcasters” in Eastern Europe about the purchase of holdings in local TV channels to expand and tap growth in the region, company spokesman Oliver Herrgesell said in an interview in July. Zeiler said today that Eastern Europe is a region in which RTL aims to invest as it offers „many opportunities for growth.” He declined to give more details. (Bloomberg)