Following a sharp decline in the second quarter of 2020, we saw a strong rebound in TV advertising in the second half of the year. In the important fourth quarter, TV advertising revenue across the Group was up 2.8 per cent year on year. The pandemic has shown that there is no substitute for TV when it comes to brand building, storytelling in a brand-safe environment and for achieving high reach in a short period of time.
Our full-year revenue decreased by 9.5 per cent to €6.0 billion. With programme cost savings at our broadcasting businesses and production cost savings at Fremantle, we succeeded in offsetting more than 70 per cent of the total revenue decline, on a comparable basis. We did so without cutting into the substance of our businesses or reducing investments in our streaming services. This is reflected in an Adjusted EBITA margin of 14.2 per cent, a net profit of €625 million and an operating cash conversion rate of more than 100 per cent. We continued to outperform our commercial competitors on audience ratings, and grew the number of paying subscribers for our streaming services by 52 per cent. All this demonstrates the resilience of our businesses, and the strength of our management teams, who had to operate under immense pressure, in particular in the months from March to July 2020.
RTL Group ended the year 2020 with net cash of €236 million, and our strong balance sheet has allowed us to return to our stated dividend policy. The proposed dividend of €3.00 per share represents a dividend yield of 8.9 per cent, based on the average share price in 2020.
STRENGTHENING THE PORTFOLIO
RTL Group’s three-priority strategy – core, growth, alliances & partnerships – has remained unchanged. I am very pleased to report that we have made major progress in all three priorities.
We strengthened our portfolio with the full acquisition of RTL Belgium and we recently signed a definitive agreement with Disney to fully acquire Super RTL in Germany. We sold non-core businesses, unlocking significant shareholder value. The disposals of BroadbandTV and iGraal generated capital gains of €158 million in 2020. In February 2021, we announced the sale of our US ad-tech company SpotX to Magnite for US-$560 million in cash and 14.0 million shares of Magnite stock. Based on the closing price of Magnite stock as of 4 February 2021, the agreement implied an enterprise value for SpotX of US-$1.17 billion. All disposals are fully in line with our strategy to concentrate on growing our European digital businesses and our global content business, Fremantle.
We confirm our mid-term targets for the streaming services TV Now in Germany and Videoland in the Netherlands to grow their total number of paying subscribers to between 5 and 7 million, to grow streaming revenue to at least €500 million and to break even by 2025. To reach these goals, our annual content spend in TV Now and Videoland will increase to around €350 million in 2025. The growth in paying subscribers, viewing time and streaming revenue in 2020 is in line with these targets.
In last year’s report, I announced we had started a review of our brand architecture, taking into account how profoundly our competitive landscape has changed over the past five to ten years. As this report is published, we are working on implementing a comprehensive redesign and repositioning of the RTL brand. We will sustainably strengthen RTL as the leading European entertainment brand and harmonise the brand architecture across the entire RTL Group – from the corporate brands to the channel and format brands, and across all digital platforms. The focus is on ‘one RTL’ brand that stands for positive entertainment and independent journalism, as well as inspiration, energy and attitude.
We have planned the roll-out of this transformational project for the second half of 2021, starting with RTL Group and RTL Deutschland, and then gradually across the other European RTL families of channels. As part of the plan, TV Now will become RTL+, a clear statement of our ambition to build national streaming champions.
Strong partnerships are vital for this strategy. In November 2020, Deutsche Telekom and our largest business unit, RTL Deutschland, announced they would extend their cooperation. We integrated our streaming service TV Now Premium within Deutsche Telekom’s TV offer, Magenta TV – and have already seen a positive effect on our subscriber numbers as a result. Both companies have also agreed to increase cooperation in advertising technology, advertising sales and content, with a special focus on addressable TV.
TAPPING INTO ADDRESSABLE TV
Addressable TV (ATV) advertising is one of the biggest growth opportunities for European broadcasters. ATV enables advertisers to continue to make the most of TV for what it has always been best at – creating brand awareness with massive audience reach in a high-quality, brand-safe environment. At the same time, advertisers can use new data-driven capabilities to target audience segments that are more likely to generate a specific business impact and, ultimately, measure that impact. In essence, ATV will grow available inventory, attract new advertisers – for example local and regional advertisers – and achieve higher CPMs (Cost Per Mille).
In Germany alone, the market for addressable TV advertising is expected to grow to more than €500 million by 2025 – with RTL Deutschland taking approximately €200 million of this market.
Advertising technology remains a strategic priority for RTL Group. To transform our business successfully, two factors are particularly important. One is higher reach, in both linear and non-linear TV. The second is better monetisation of our reach, through targeting and personalisation – and this requires state-of-the-art advertising technology and data management. With our European ad-tech companies Smartclip and Yospace, we have made significant progress in building an open European ad-tech platform and tapping into the high-growth market of addressable TV advertising.