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RTL profit rises on advertising, TV shows - extended

RTL Group, Europe's biggest broadcaster, said profit rose 66% last year after companies spent more on advertising and as television movies and entertainment shows attracted viewers.

Net income climbed to €890 million ($1.12 billion) from €537 million a year earlier, Luxembourg-based RTL said in a statement today. Sales rose 10% to €5.64 billion. RTL will pay a dividend of €1.20 for 2006 as well as a bonus payout of €1.80 with cash raised from disposals. „A good set of results with an exceptional dividend,” Stefaan Genoe, a Brussels-based analyst at Petercam SA, said in a note to clients. He recommends investors buy the stock. CEO Gerhard Zeiler said the German and French channels had a „promising start” to the year and that RTL may make acquisitions to help the company grow. RTL's operations span 38 TV channels and 29 radio stations in 10 European countries, and the region's economic recovery has led companies to book more advertisements on RTL's networks. RTL shares rose as much as €1.2, or 1.4%, to €88 in Brussels and traded at €87.49 as of 1:41 p.m., valuing the company at €13.5 billion. The stock has risen 13% in six months. Kristof Samoy, a KBC Securities analyst who rates the stock „accumulate,” had expected net income of €579 million on sales of €5.46 billion. Earnings were lifted by the unit producing shows including the „Idols” franchise, „The X Factor,” „The Apprentice,” and „The Price is Right.” RTL is the most profitable unit of Bertelsmann AG, Europe's biggest media company.

Last year, RTL generated 77% of sales from its television unit, while 21% of revenue came from the production of content such as shows and movies. The radio operations accounted for 4% of total sales. ProSiebenSat.1 Media AG, RTL's main rival in Germany, last month said it expects to grow stronger than the overall German TV advertising market, which the company forecast will expand by between 2% and 3% this year. Germany and France account for 64% of RTL's earnings before interest, taxes and amortization, according to Petercam's Genoe. RTL decided to pay a bonus dividend after the company in February agreed to sell a 33% stake in Portugal's Grupo Media Capital SGPS SA to Spain's Promotora de Informaciones SA for more than €206 million. Last year, RTL also sold its Dutch radio unit and a stake in French pay-TV broadcaster TPS.

Growth in 2007 will partly come from acquisitions, Zeiler said. RTL won't bid for the 75% stake in Dutch TV producer Endemol NV that Telefonica SA of Spain plans to put on the block, he said. Zeiler forecast the UK TV ad market will improve this year after a „very difficult” last year. The TV advertising market in the UK contracted 5.5% in 2006, compared with a 4% gain in France and a similar increase in Germany. In the UK, RTL operates the Five television station and aims to further expand in the country to reach the „necessary critical mass,” Zeiler said. Making acquisitions to grow is one possibility, „if the right opportunity comes along,” he said. Zeiler declined to say if RTL would consider buying ITV Plc, the UK's biggest commercial broadcaster. Last month, Zeiler said ITV would be a good match for RTL, though a full takeover wasn't being considered. London-based ITV has a market value of about £4.2 billion ($5.5 billion). (Bloomberg)