RTL writes down Five value by over half

Five owner RTL Group has written down the British broadcaster's value by over half due to tough operating conditions last year in the UK industry.

Pan-European operator RTL reported a €140 million (£127m) impairment loss against the value of Five's assets in 2009, "mainly due to the worse than expected downturn in the United Kingdom".

The move means that Five, including its main channel and digital offerings Fiver and Five USA, is now worth €112m, down from its 2008 value of €252m.

Five reported a loss of €41m last year as its revenues fell 30% year-on-year to €303m. After conversion to UK currency, the revenue drop was 21% year-on-year.

RTL said that the UK TV advertising share of Five's main channel dropped from 9.6% to 8.4% over 2009 following several years of steady growth.

The broadcaster's operating earnings before interest, tax and amortisation fell from a €2m profit in 2008 to a €10m loss last year. However, that is significantly less than the €19m loss Five was running in the first six months of 2009.

Five has worked hard to implement a "significant programme" of operational savings, which has resulted in a 19% cost reduction, or £65m.

RTL, which also owns The X Factor studio FreemantleMedia, revealed plans to launch more digital services as part of efforts to reduce its reliance on TV advertising.

"Although the revenue decline has slowed considerably since autumn 2009, we cannot expect a quick recovery of advertising revenues to previous levels," said RTL Group chief executive Gerhard Zeiler.

"While we remain cautious, we will also continue to invest in promising business opportunities, based on our strong brands and content.

"These include on-demand services as non-linear TV viewing grows rapidly, digital pay channels to establish a second revenue stream, content production, and our broad range of diversification businesses."

FremantleMedia also saw its revenues fall by 1.7% to €1.18 billion, but RTL said that the company's performance was largely solid in the US and UK.