RTL Group SA
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RTL Group SA
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Good day, and welcome to the Q1 2018 Results Conference Call of RTL Group. Today's conference is being recorded. At this time, I would like to turn the conference over to Mr. Andrew Buckhurst. Please go ahead.
Good morning, everyone, and thank you for joining this conference call for our results for the first quarter of 2018. Our speaker today is Elmar Heggen, the group's Deputy CEO and CFO, and he will now begin the presentation.
Thank you, Andrew, and good morning from me as well. Starting on Slide #3, the highlights of the first quarter 2018. Thanks to growing advertising markets, our main TV businesses in Germany, France and the Netherlands had a good start into the year. FremantleMedia had also a good quarter on an underlying revenue basis but was hit by negative ForEx movements. The group's digital activities continued to grow despite ongoing concerns of a brand safety and negative ForEx that impacted top line development.All in all, the group's top line grew just under 1%, with EBITDA coming in at EUR 259 million. Both the EBITDA and EBITA were impacted by one-off costs at the level of Groupe M6 around football club, as already explained by M6 and some negative phasing in terms of programming costs. Overall, the group's cash conversion remained very strong at 112% of EBITA, while net profit for RTL Group shareholders came in at EUR 111 million.Let's now turn to the financial review starting on Slide #5. Group revenue rose 0.8% or EUR 11 million to EUR 1,416,000,000. Underlying revenue was up 2.6% after adjusting for consolidation and exchange rate effects. The ForEx effect in the first quarter result was a negative EUR 29 million and the almost 2-percentage-point difference between reported and the underlying number.Group operating expenses rose by just EUR 12 million or 1% over the period. Our EBITDA decreased by EUR 5 million to EUR 259 million, resulting in an EBITDA margin of 18.3% for the quarter, down 0.5 percentage points on the same period last year.The group's EBITA came in at EUR 210 million, resulting in a margin of 14.8%. The group's net debt position was EUR 365 million at the end of the period, down from EUR 545 million at the end of 2017. Net debt has increased since following the dividend payment, amounting to EUR 461 million, that was made on the 26th of April.Let's now move to the next slide. With the slightly lower EBITDA and no positive one-offs this year, the net profit for the period was EUR 111 million, compared to EUR 137 million last year. The tax charge is slightly higher in 2018 due to a lower commission income and to some small one-off relating to prior year adjustments and deferred taxes. Overall, this translates into earnings per share of EUR 0.72 per share.Moving on to the cash flow on Slide #7. Our cash conversion ratio remains at a very high level, reaching 112% during the quarter, broadly in line with last year.Tax paid decreased compared to last year as we have received reimbursements from the French state for the so-called dividend tax.Let me now give you a brief overview of our main business units.Before starting, I'd like to point out that a number of internal reorganizations have taken place, resulting in comparative figures for Mediengruppe RTL Deutschland, FremantleMedia, RTL Nederland and the other division being represented. These 3 organizations cover the Smartclip ad tech business and Divimove.Starting with Germany on Slide #9. The audience share performance for Mediengruppe RTL Deutschland was good during the first quarter, in particular, in access prime time and prime time. In these time slots, the fifth -- the 14 to 59 target group, the lead over the largest commercial rival amount to 6.3 and 5 percentage points, respectively, an increase of over 1.2 and 0.3 percentage points over the same period last year. Across the whole day, the gap remains strong and amounts to 4.5 percentage points of audience share.In an advertising market that we believe rose by -- between 1.5% and 2.5%, Mediengruppe slightly outperformed, resulting in a total revenue growth of 2.9% to EUR 534 million. EBITDA rose slightly to EUR 169 million, resulting in an EBITDA margin of 31.6%.Looking now at Groupe M6 on Slide #10. In the French TV advertising market that was estimated to have grown by around 2%, Groupe M6 outperformed significantly in terms of advertising revenue developments. Lower revenue from the [indiscernible] business and the football club, Girondins de Bordeaux, meant that revenue overall was stable at EUR 360 million. EBITDA came in at EUR 76 million, largely due to higher cost at football club, some of which links to one-off payments to non-playing staff.Moving on to Slide #11. The TV advertising market in the Netherlands was estimated to be up by just over 7% in the first quarter of 2018, a very welcome return to growth. Revenue was up 4.8% year-on-year, with EBITDA rising to EUR 6 million.Let's now move to FremantleMedia on Slide #12. On a ForEx-adjusted basis, FremantleMedia would've had revenue growth of 7% at the high end of the full year guidance given in March. However, on a reported basis, revenue was stable year-on-year at EUR 271 million. Please also note that the Australian drama, Picnic at Hanging Rock, slipped from the first to the second quarter and that the number of delivered episodes of American Idol were just 6 in the first quarter out of a total of 19. The revenue bridge on the chart shows the details of the various impacts in Q1. EBITDA was slightly lower at EUR 13 million.The main business highlight in Q1 was the return of American Idol. The show has so far attracted an average audience of 10.1 million viewers and a total audience share of 9.6%, over 50% higher than ABC's prime time average. Last week, ABC announced, obviously to our satisfaction, that they have recommissioned Idol for next year.In terms of the full year outlook for 2018, we reconfirm our expectations of growth in revenue and an improved absolute full year EBITDA for FremantleMedia, excluding foreign exchange impacts.Moving to the next slide, digital. First quarter revenue growth was 7% year-on-year resulting in revenue of EUR 190 million. Negative ForEx impacted revenue about EUR 10 million, so organic growth revenue grew by 12.4%. Our ad tech businesses, notably SpotX, had a difficult start into 2018, reflecting many of the same issues at the end of last year. Major digital advertisers are demanding transparency, brand safety and time spent optimization strategies. In addition to the top line pressures, these demands require higher infrastructure requirements to support quality of service and more resources generally due to additional competitive and customized work. While the first quarter was difficult for SpotX, we remain convinced that the right strategy's in place, i.e., a focus on a more -- for -- on the more premium OTT model.In terms of our MPN businesses, BroadbandTV continues to show both growth in video views, with 100 billion delivered across the first quarter and revenue, which was up 8%.Divimove reported a 25% increase in revenue year-on-year, whilst StyleHaul was disappointing, reporting a 17% decrease, mostly driven by a lower number of direct sales.The number of video views delivered in the first quarter of the year rose to 124 billion, more than doubling since 2 years ago. This concludes the business review, and I will now turn to the outlook on Slide #15.With European advertising market currently showing mix performances, we do not expect Q2 to show any significant growth, given the impact of the World Cup. FremantleMedia is expected to have a similar performance in Q2 as in Q1, with revenue growth set to accelerate in the second half of the year on the back of the new drama deliveries. The group's digital revenue should return to higher growth rates towards the end of the year as well. Although the second quarter performance is likely to be weak, given some particularly tough comparatives as this includes the sale of American Gods to Amazon in 2017.Despite this short-term headwinds, we reconfirm the full year 2018 outlook given in March this year. This is clearly dependent on the growth in the second half of 2018 as the results are expected to be more back-end loaded than the prior year. Group full year revenue is expected to grow moderately, largely driven by the group's content and digital activities subject to ForEx, while EBITDA, on a normalized basis, will be broadly stable. Thank you. And we are now available to answer any questions that you might have.
[Operator Instructions] Our first question today comes from Lisa Yang of Goldman Sachs.
My first question is on your outlook. I think you said you expect Q2 not to show any significant growth. Were you referring about Germany or any other market? And is it possible to have any color on, maybe, April, May, for your main 3 markets: Germany, France and Netherlands? Second question is about your advertising -- the advertising share that you expect for the year in the same 3 markets. Any color will be appreciated. And the third question is around your digital revenue. I appreciate you gave some color around SpotX and StyleHaul. What was the performance of your AVOD business, given your online video views grew very significantly? Just wondering how that revenue line developed. And the last one is, in the statement, you mentioned you're going to increase investment in video services, so I'm just wondering how much you are planning to invest this year and going forward.
Okay. Thanks a lot, Lisa. Let me try to get back to -- with all the answers. First, on the second quarter. The fact that the World Cup will be played in June, July, and the fact that we do not have the rights for that event means that we will see a more difficult and challenging second quarter for all of our broadcasting entities. So it's not just linked to Germany, even in the Netherlands, where the [ broadcaster ] is fully into advertising money, despite the fact that, that stream is not qualified, yet we still believe that this is going to be a strong impact on the commercial broadcasters. So hence, we expect June to be down for all our broadcasting assets. With regards to the performance in April, May for the 3 main markets...
Germany, France, Netherlands?
Yes.
April, obviously, you've got the negative impact of Easter. So for Germany, April for us, anyway, is down. May is trading positively as we would expect. And obviously, as Elmar has mentioned, given the World Cup starting at the back end of Q2, we would expect a difficult June. So pretty much the same story in all of our markets in many ways, a very volatile Q2 to be expected. France, similar. Obviously, we can't speak for the market. Again, we're just looking at M6. Mixed performances at the moment, so many ups and downs. And Netherlands, less positive in Q2 than Q1. But currently, it's trading slightly upwards. And your last question, Lisa, on AVOD. If I look at our in-stream advertising, Q1 '18 versus Q1 '17, then we have double-digit growth across the group.
And what about your advertising share for the year?
Germany, I think we were still hoping to gain a small market share across the full year, given the strength of our audience performances in '17 and obviously going into '18, notably, around the second channel -- or second channel [indiscernible] VOX. In France, M6, you've seen in Q1 already gaining market share. And this cost, that continues through the rest of the year. Poland is more difficult to give you guidance because of the sports events and the fact that the public broadcaster has full access to the advertising market and will therefore take quite substantial share in June, July. So that's a little bit more difficult. I mean, the positive news is that the market's up. So whether we're gaining share or not, I think it's difficult to give you full year guidance at the moment, obviously, Lisa. But at least it's a positive environment.
But it will be difficult to gain share in an even year, given the sports events on the public broadcasters. So I think that it will be -- the challenge to gain share in '18, it's easier in an uneven year.
Great. And the investment in the -- in your VOD services, the SVOD services?
The hybrid SVOD model?
Yes.
That's really going to start kicking in towards the end of this year, with probably a higher impact through '19 and then '20 as the services actually come online as we start investing more in the programming, et cetera, et cetera. So at the moment, there's a lot of, I think, internal development work going on and planning and discussions. And then the services, as I said, will ramp up towards the end of this year with a more financial impact in '19.
Our next question today comes from Charles Bedouelle of Exane.
Actually, I had quite a few questions that Lisa already asked. But maybe just a quick follow-up. ProSieben talked about strong commitments, which make them confident for the rest of the year. I just wanted to know if you could share any similar confidence on that, on the commitments for clients on a full year basis. That's my first question. And my second question is if we start -- if you try to think about your digital business, which is not quite large, and we try to think about the businesses which are not directly tied to TV. So either on the ad tech side or on the video side, can you give us an idea of how the revenue is developing, the margin is developing and where you have the most or, I would say, less confidence for the future? And also, kind of follow-up also on the digital revenues. We've seen ProSieben with disappointing digital revenues. We've seen Criteo guiding more cautiously in Q2, would you link what's happening in your business with the GDPR and maybe some changes in the way advertisers behave? Or do you think it's just RTL-specific issues?
In terms of the commitments, if we look at the period -- I mean, the position today compared to the same position last year, then our commitments in Germany are up. So we have a higher level of commitments at the moment compared to the same period 2017, which seems to be in line with what ProSieben told the market as well. In terms of the digital question on ad tech, MPNs, et cetera. We've seen the broadband TV, as we mentioned, revenue was up in the first quarter. Divimove was up 25%, although it's a much smaller business. StyleHaul was down, largely due to the issues that Elmar mentioned on the call. Our ad tech businesses had a soft start, well, in particular, SpotX. Smartclip was actually up year-on-year. So we have a very mixed picture, and this probably, in many ways, comes back to your last question, Charles, what's really going on. I think if we look at it from our, certainly, our TV sales out, what they can see is clearly that [indiscernible] advertisers, who have traditionally been happy spending on digital businesses, have been holding back at the beginning of this year. Obviously impacted by some of the concerns around brand safety at the end of last year. Obviously, the Facebook story the beginning of this year didn't help either. So there's been, shall we say, a slight degree of reticence to invest in digital. On top of that, also, I think our sales teams are seeing a degree of reluctance from advertisers to spend ahead of trying to properly assess what the impact of GDPR are going to be. So there's also a little bit of a wait-and-see attitude from advertisers on the digital platforms. And lastly, and this is specifically for us in Germany, is that we also stopped working with Google DoubleClick at the beginning of '18 in terms of the demand side platform. And basically, that was the decision taken locally. So there's been a number of, shall we say, impacts going on within the business. We're just playing a little bit with the slightly slower revenue growth.
That's very clear. And just a follow-up, if I may, on that. Since GDPR is going to start very soon, we could imagine that this softness actually carries on in Q3, right? I mean, unless the clients decide in 5 or 6 weeks after the start of GDPR to completely change their view, is there a chance that we'll continue to see mixed trends, not just in Q2 but actually in Q3 as well?
I think we would agree with you for Q2. I think it's too early to talk for Q3, but certainly, we're more optimistic that the growth will come back towards the end of the year. Now whether that's in Q3, or when in Q3, we can't tell you at the moment. But I think, in this very short term, i.e. Q2, hence some of the discussion and the guidance in Elmar's speech was really about, don't expect much growth in quarter 2 from our digital activities. We see similar trends, i.e. with other tough marketplace in the short term. But growth, we believe, will come back towards the back end of the year. When that starts, Charles, we can't tell you.
Now we'll take a question from Adrien de Saint Hilaire of Bank of America Merrill Lynch.
First of all, Netherlands, the market was up 7% in Q1, and you're talking about the market being -- or your sale being up in quarter 2. Do you think the market has reached now a state of equilibrium after a few years of decline? Secondly, where do we stand on the process of exiting or crystallizing value around broadband TV and some of the other digital assets? And then, thirdly, I just wanted to double check if you were reconfirming your outlook for Fremantle for 2018.
Let me quickly start with the outlook of Fremantle. Yes, we reconfirm the outlook for Fremantle, so we believe that they will be in a position to hit both their revenue as well as their EBITDA target. So revenue is expected to be up in the tune of what we mentioned in March. We obviously need to see how ForEx will continue to develop. As we mentioned earlier, ForEx was an issue for Fremantle in the first quarter. Without ForEx, the underlying growth would have been 7%. But on a reported basis, we've been shown flat revenue for the first quarter. But we remain confident that they should be well positioned to hit their full year targets. With regard to the Dutch market, admittedly, we're positively surprised to see the Dutch market growing by 7% in the first quarter. I think it's an open secret that we haven't expected that in the second half of 2017. But it's a bit too early to really tell you whether this is a -- kind of a structural phenomenon that we're now seeing that the market is eventually flattening out at a lower level or whether this is going to be only a temporary effect. We mentioned earlier that we expect the second half to be much more difficult, given the fact that the World Cup is played on the public broadcaster, and they will fully monetize this event in the Netherlands.
BBTV. [ Yes ]. Nothing's really changed, Adrien, since March, basically. Now we continue to discuss and explore opportunities with the local management team. It's sort of work in progress.
We will now move to a question from Julien Roch of Barclays.
My first question is on German TV advertising in Q1. Elmar, you said you saw the market was up 1.5% to 2.5%, and you're gaining share. But ProSieben reported or told us that TV advertising was up 2.5%. So how much was your TV advertising up in Q1 in Germany versus market share? That's my first question. Second question is coming back on online growth, how much was online advertising up in -- or down, up or down, in Q1 in Germany, excluding ad tech so few online advertising in Germany in Q1. And then the last one is, Andrew, you said your commitment comparing year-to-date '18 to '17 were up in Germany. Can you give us a bit more color on what it means, is it up 2%, 3%, 4%?
On the online advertising -- So I'll take your second question, Julien. If I look at the advertising revenue for Mediengruppe Deutschland, which includes, I mean, basically [indiscernible] stream, et cetera, et cetera, then we were up a high -- I mean, in the 15% to 20% range for the first quarter. In terms of advertising revenue, I mean, there is -- obviously, ProSieben talked about 2.5%. I don't know whether that was 2.5% for advertising revenue including their Austrian and Swiss windows. Obviously, they would have an impact in terms of the consolidation of ATV. So I'm not sure if we're comparing like-for-like. If we look at our advertising revenues as based on our 1.5% to 2.5% estimation of the market, then we were above the higher end of that range to the 2.5% to 3% advertising revenue growth for the first quarter. And the last question in terms of commitments, sadly, I can't give you any more information because I don't have it, other than to say that this is above -- but I can't tell you whether it is 2%, 3%, 4% or whatever percent. But it is -- has been confirmed that this is above last year.
We will now take a question from Conor O'Shea of Kepler Cheuvreux.
A couple of questions from my side as well. Just on other revenues, which are down 2.6% in the first quarter. Can you give us a little bit more color on that? Is that similar to digital businesses that are not consolidated within your country lines or -- and/or your Eastern European businesses is the weakness there? And related to that, in terms of phasing of costs, I think you referenced the launch of 3 video [ on-demand ] platforms in the first quarter in Hungary, Croatia and Belgium. Just wondering about cost phasing relating to similar projects for the rest of the year or overall OpEx, the shape of the increase that you might expect quarter-on-quarter. And then the third question, just in terms of, particularly, Fremantle, if FX exchange rates remain more or less where they are, do you have sort of a rough estimate of the ForEx headwind, full year, please?
Okay. Conor, we'll start with the other revenue which, as we mentioned, is down 2.6% in the first quarter. The so-called other segment is a mix of various activities. But the main components are, for example, our broadcasting businesses in Hungary, and there we've been down in the first quarter. And we already mentioned that we've had a rather slow start in our ad tech business in the first quarter. And basically, Hungary and the slow start of the ad tech business is playing us being down 2.6%, which is in the first quarter compared to prior year. We've had some activities that we are slightly up. Andrew mentioned BroadbandTV earlier. But all in all, Hungary and the ad tech business are the main reasons to blame, so to say, for us being down 2.6% in other revenues in the first quarter.
Okay. In terms of the cost saving question. It wasn't that much additional cost in terms of the launch of the new -- the 3 to the VOD platforms, which effectively, we -- and [indiscernible] M6 basically, or we've used the M6 or [indiscernible] [ obviously ] played back-end and front-end technology to go into Belgium, Croatia and Hungary. That's basically just exploiting sort of, say, intergroup knowledge, expertise, synergies. The cost phasing that we referred to around the presentation -- or Elmar referred to in the presentation, is effectively some higher programming spend in Hungary. So the overall year is going to be the same. It's just that we've front-end loaded a little bit of programming spend at the beginning of the year to hopefully drive audience shares. And certainly, we're seeing a positive effect coming through in Q2 now in terms of advertising revenues. So we say that's been one specific effect in Q1. The -- in terms of the VOD activities, we come back to an earlier question. That largely is going to be in Germany, where we sort of effectively improved the positioning or changed the positioning and developed the positioning of RTL Now in Germany and turned it into more of a hybrid business model. That's really going to start kicking in, probably sort of September, October so more of a Q4 impact. And Fremantle, in terms of the full year FX impact, it's very difficult because, obviously, most of it is going to be coming from our U.S. business, and that's going to be pretty much the first 6 months of the year because, obviously, we've got Idols, which is coming to an end or has ended. We will have America's Got Talent as well, too, this summer. Beyond that, there is, shall we say, less in terms of very big shows in our U.S. business. So you -- it's kind of difficult to give you a picture on that, especially there's a lot of the, as we said, the licensing business is also intensive in dollars as well. I would hate to give you a number, Conor, honestly. If you assume 1/3 of Fremantle's business is U.S., then that will give you -- if you wanted to work it out, a reasonable base to start with.
[Operator Instructions] We will now take a question from Laurie Davison of Deutsche Bank.
The -- it's Laurie here from Deutsche. First question, [indiscernible] are looking to sell [indiscernible]. Do you think that they may be more -- if they do go through that, they might be more relaxed about leverage at group RTL and a higher dividend payout from you? Second question. Given the digital woes, you don't seem to be TV -- we don't seem to be seeing that TV is benefiting significantly in terms of growth. Numbers of first quarter are, they're okay, but they've been benefited by Easter, and obviously, you flagged the weaker second quarter. So where is this digital spend going, and why is it not moving back into TV? And then lastly, just the Fremantle margin development for this year and for next.
Okay, Laurie. Thanks for your questions. Honestly, you need to talk to [indiscernible] on their intentions. I don't believe that a portfolio decision at the level [indiscernible] means a change in our stated dividend policy. We'll continue to pay, as ordinary dividend, 50% to 75% of the adjusted net profit, and we'll continue to try to maintain a gearing of 0.5 to 1x net debt to EBITDA, and this is not going to change, I believe, following a potential disposal of [indiscernible] when it comes to their CRM business. On the Fremantle margin, we always said that it will take us a bit longer to ramp it up to the target level. I believe that the absolute margin of Fremantle in 2018 will be slightly up compared to 2017. But in terms of margin, we have to see how the final revenue number will come in. It also has to do with ForEx, as we mentioned earlier. But all in all, we expect our revenue to grow, but it will take additional time until we will see the return on sales back to the target level, as we also indicated in prior calls.
Your second question on digital, why is it -- why is the digital spend not coming back to TV. It's a good question, and I wish we knew. I mean, certainly, what we're seeing when I speak to the sales team is, as I mentioned here, reluctant to spend on digital at the moment. It's not yet coming back into the marketplace. Saying that, not in [ floods ] any way. There's a lot more positive conversations going on, especially if you talk about the much-maligned FMCG sector, et cetera. We've seen a positive development in that sector in Q1. So there is, I would say, some spend coming back into television, but it's not coming back in [ floods ], we would agree. Maybe advertisers are just sitting on their hands a little bit, as I said, waiting to see what the impact of GDPR will be, how the businesses will develop, et cetera, et cetera, and then they will make a choice. But overall, I'd say there is a more positive attitude in the marketplaces and the discussions with advertisers and agencies. But we had agreed, at the moment, we don't see those conversations necessarily turning into a huge amount of money coming back into television. But the mood is definitely more positive across the board.
We will now take a question from Richard Eary of UBS.
Just actually 2 questions, more on clarity. The first question just on the guidance numbers. Obviously, we're expecting a recovery in the H2. Am I right in assuming the sort of major risk to guidance being hit is whether we get a turnaround in the digital businesses rather than the TV assets? That was the first question. The second thing is just going back to the commitment numbers. I can't remember whether you've given numbers before. But if we look at the commitments, going back, in let's say, 2017, what were the commitments at the start of the year relative to the total revenues that were actually booked in the year, just so we can get an understanding of, obviously, how that moves into '18 as well?
Okay. Let me take the first one, Richard, on guidance. I think, here, it's fair to say that when we look at the revenue guidance, we said that we believe that revenue is up for the full year moderately, i.e., between 2.5% and 5%. There, you're right, this will -- assets will play a certain role, quite an important role, and especially with the unknown effects coming from ForEx. There's a certain kind of challenge or risk that will materialize over the course of the second half. So if we get additional headwinds [ of ] ForEx, then if we fail to grow our digital businesses in line with expectations, there's a risk on our revenue guidance. And yes, this is probably more significant than the revenue risk on our [indiscernible] businesses.
Or even Fremantle.
Yes.
Commitments, Richard, we've never disclose absolute amounts or where we are or what's going on. I think it's very difficult looking at commitments at the start of the year because discussions start in November, December and really finalized through to the January, February. January is always a very strange month in terms of advertising revenues anyway, when you look at the absolute numbers. So yes, I think it's very difficult to sort of say where are we at the beginning of '18 compared to the beginning of '17 because each year is slightly different. And I have to say, in response to an earlier question, we've seen much more positive discussions coming through from FMCGs, for example, the beginning of this year. In Germany, we've had increased spend from the likes of L'Oréal, Ferrero, and P&G, while Unilever remains down, but that's likely -- that's mainly due to the fact that they've sold some brands, so their like-for-like comparison is slightly difficult. Last year, it was a different picture. We had P&G was up as one of the big FMCGs, but all the others were pretty weak. So every year was slightly different. What we can say and can confirm is, based on the position as of today, commitments are up in '18 versus the same period in '17.
Can I just ask one sort of follow-up, just going back to the FX issues on the digital assets?
Yes.
What's the percentage of the digital assets that are, let's say, non-euro or U.S. dollar based?
Well, you've effectively got broadband, you've got ForEx, you've got StyleHaul. Let's have a quick look.
Europe.
Yes, in fact, we only got Divimove, United Screens, which is still very small. Do I have the numbers in front of me, let me have a quick look. Richard, let me get back to you. There's -- as we mentioned on -- as Elmar mentioned on the call, there was a EUR 10 million impact in terms of FX on our digital activities in the first quarter. So that's obviously -- is basically the non-euro businesses. So we would have had EUR 200 million instead of the EUR 190 million as reported.
We will now take a question from Ian Whittaker of Liberum.
Two questions, please. First of all, just going back to online VOD, sort of you mentioned double-digit sort of growth across the board in those revenues. But it just sounds as though that is below the increase you got in views. If that's the case, have you taken a deliberate policy to keep your pricing down in digital VOD to drive traffic -- to drive sort of -- get advertisers to actually sort of take the product and then have the view that you can ramp up prices later? Or is there something else that's happening there? Because if you look at the -- look at some other markets, for example, we've now start to see VOD revenue growth start to outstrip audience growth. And then the second question, just in terms of Netherlands and going back in terms of the market there. I think, before, the commentary has been that -- or the view has been that, in terms of the weakness of Netherlands, some of it was driven by the impact of Netflix maybe on audience numbers, but a lot was driven by, also, as well, [ rival ] group sort of being very aggressive in terms of their pricing. What do you think has changed with either of those dynamics within the market?
Can you -- Ian, sorry, can you repeat your second question?
Yes. Sorry, Andrew. Just in terms of Netherlands, I think the view on the weakness in the market there has been -- sort of it was [ partly driven ] maybe by the impact of the SVOD players but also as well that there was a competitor who has been very aggressive in terms of their pricing within that market. And just wondered sort of what exactly has changed in terms of dynamics just maybe helping the market. Is it that, that competitor has got less aggressive on their pricing? Is it that the impact of the SVOD services is maybe starting to weaken?
No, to both of those. I think what has changed at the beginning of this year is the sales strategy of the public broadcaster, who has removed sort of volume discount and agency rebates. And that has helped, shall we say, the other players in the marketplace because we would have fully expected Q1 if you'd asked us even at the end of 2017 where we saw Q1 in [ Holland ]. But the commercial broadcasters [ wouldn't sit ] down because they went to Olympics and the public broadcasters, as we said and as everyone knows, have full access to the advertising market. Now with them broadcasting the Winter Olympics, you will expect them to suck up all the money. The fact that they changed their sales systems meant, effectively, advertisers went elsewhere back into the commercial broadcasters. So that has helped that the fact that the public channels have changed their sales system seems to have helped the commercial broadcasters. The smaller sales points and the sort of the SVOD growth, they still remain, shall we say, headwinds in that market. And you've actually [indiscernible] on the online VOD pricing. Quite frankly, I don't have an answer for you, but I will get back to you.
We will now take a question from Chris Johnen of HSBC.
First one on the distribution business. Maybe you could talk about the performance here and maybe what you expect for the full year, mainly in Germany and France. Then a second on your VOD businesses, I've seen you've printed decent relative growth on TV Now, for example. Maybe you could help us with a small indication, I guess, you don't want give a specific number, but where do we stand subscriber-wise? Maybe a bit of a range so that we have somewhat of an idea.
Okay, Chris, I'll start with the distribution business. So you will have seen because the business made a number of communications on that, that they've been successful in signing agreements with regard to distribution in France. We also see a continuous rollout of our HD offer in Germany. And that makes us confident to be able to continue to see platform growth revenue growing also in 2018. If you look back over the last 3 to 5 years, we've seen growth of between 10% and 12% per year. I think this is a good proxy of what we should expect also for 2018. So it is looking promising, all in all. Your second question, sorry?
On TV Now and maybe Videoland, so that we have a bit of an idea where we stand subscriber-wise on an absolute basis, maybe a range?
A range in terms of what, Chris, sorry?
Absolute subscribers so that we know whether it's -- we're talking about 100,000, 200,000, 500,000.
Well, what we can say for Videoland is that they had a very positive Q1. And what was interesting there was that it was actually the subscriber growth was not necessarily driven, as we would have expected, by local dramas, as you might expect on a VOD platform but actually driven by an entertainment format. So it goes to show that if you do find the right type of programming for an SVOD platform, which appeals to a younger demographic, it can still drive even SVOD subscription. And we've had a very positive start. I think, certainly, 40,000, 50,000 positive new subscribers coming in on Videoland. We won't give you the base, but it's certainly growing. And remember, last year, we had, I think, almost 80% growth in subscribers for Videoland. So it's moving in the right direction, and it's continuing the trends. The churn is a -- still a single-digit figure, which is much, much lower than it was at the same period of last year. So that platform, it certainly seems to be, at the moment, gaining a little bit of traction, which is encouraging for the development of our TV Now, shall we say, SVOD hybrid model towards the end of this year. TV Now is also positively growing. Again, I won't give you numbers, but it's got -- what we can say is that all the metrics are in the green and is performing in line. It's not slightly above expectations, following, effectively, a little bit of a relaunch. But obviously, the major relaunch could come towards the end of this year.
Okay, great. One more follow-up on the distribution side. What are you guys making of the proposed merger of the cable landscape in Germany with [ Unity ] and [indiscernible]?
I think, to be honest, we will leave any comments for our German colleagues, who are obviously more impacted in that focus of the market. And I think it will be perhaps unwise for us to comment at the level of the group on something which is clearly very national in terms of impact.
We now have a follow-up question from Charles Bedouelle of Exane.
It's a very quick one, actually. I was just wondering whether you're referring to what your colleagues from the sales houses are seeing. And in reference, I think, to Laurie's question on advertising. Are they able to see what money is going actually to Facebook, Google or to Amazon because it seems to me that this is where the money is going, not away from digital into TV but actually to those guys which have all posted spectacularly good numbers in Q1, not necessarily in Germany because we don't have the disclosure, but globally or even outside the U.S. So are you guys able to see if there is any shift of money here or not? Just to put the comment on where the money is going into context.
In all honestly, no.
We don't have this visibility.
So we assume, and based on, as you said, their reported numbers, that's where it's going. But we can't see it through our sales houses other than the fact we don't -- we can see digital, shall we say, as a part or the areas that we can see in terms of digital not growing as fast as expected. But we can't see where that money is going, but you're right, it seems to be going to the large Americans.
[Operator Instructions] We will now take a question from Laurie Davison of Deutsche Bank.
Yes, sorry, just another follow-up. Just on your comments on distribution revenues staying in the same growth range. Shouldn't we be seeing a large uptick in France this year from the -- from the carriage fees that's been negotiated there?
Yes. But it's a question also of mix. Yes, you're right, that the contribution that we should see from France is rather increasing than decreasing. But yet, we'd like to be sufficiently prudent on the guidance for the group. We cannot really predict the uptake in HD subs in Germany. And that's why we believe that it could take 10% to 12%. This is the growth rate that we've been able to generate in prior years. This is probably a good proxy. We hope that it's going to be better, but it's not in our hands [indiscernible].
As there are no further questions, I would like to turn the call back to your host today for any additional or closing remarks.
Thank you very much for joining us today. We both look forward to speaking to you again on the 29th of August, around the half year results.
Thanks from my side. Have a good day. And if you need anything, please don't hesitate to contact me. I'm available as usual.
Ladies and gentlemen, that will conclude today's conference call. Thank you for your participation. You may now disconnect.