Slump and no end in sight: The economy is in the doldrums, consumers are holding back, and companies are cutting their advertising budgets. RTL estimates that the television advertising market in Germany grew by just 0.5% to 1.5% at best in the first nine months of this year. The range refers to net revenues.

Gross figures, which exclude discounts and also include self-promotion and commissions for agencies, gloss over the situation: On this basis, ProSiebenSat.1's advertising revenues rose by 7.3% from January to September, according to the market research company Nielsen. In fact, ProSiebenSat.1 only reported a meagre increase of 1%. TV advertising revenues actually fell by just under 2% to 986 million euros. On the other hand, digital revenues increased by 7.5% to 214 million euros. But the size ratio shows: Television advertising continues to dominate revenue – with two thirds. Most recently, it accounted for 37% of group sales. RTL was a tad higher with a share of 38%.

A strong Christmas period could make up for this. However, this does not look likely. „Private consumption, which is crucial for our TV advertising business, has not developed as positively as we expected at the beginning of the year,“ says Martin Mildner, CFO of ProSiebenSat.1. He expects a further decline for the final months of the year versus 2023. The development cannot be predicted more precisely, as clients sometimes only book advertising at short notice. In any case, the latest figures from Nielsen offer little reason for optimism: Gross advertising revenues stagnated in October.

In the fourth quarter, ProSiebenSat.1 generates around 30% of its annual revenues and even around 40% of its operating result (EBITDA excluding special items).

RTL also generates around a third of its consolidated revenues in the last three months of the year. The company does not disclose quarterly earnings. However, earnings in the second half of the year tend to be significantly higher than in the first half.

The advertising business is very profitable. In previous years, ProSiebenSat.1's margin was 30%. In the meantime, the mix has changed: Digital advertising has been added to traditional TV advertising. The reach and revenues of the streaming platforms of both broadcasting groups are increasing, but they still have to cope with start-up losses: ProSiebenSat.1 with „Joyn“, its competitor with RTL+ and M6+ in France.

The so-called thousand-contact price of advertising on streaming platforms is higher than that of traditional TV advertising, says an RTL spokesperson. This price indicates how much a customer has to pay to reach 1,000 people in a target group with advertising. More can be charged for the digital version as it is more targeted. However, the volume is still relatively limited.

Losses in advertising are directly reflected in revenues: Both ProSiebenSat.1 and RTL have recently lowered their annual targets to the lower end of the target range. In contrast to ProSiebenSat.1, RTL managed to increase its TV advertising revenues in the first nine months by 2.3% to 1.6 billion euros. For the year as a whole, however, the company expects revenues to remain stable at best. The advertising market in France contributed to the slight growth in the first nine months, with RTL estimating a 5% increase in net revenues. France performed significantly better than Germany, but the domestic market the largest for RTL.

In France, the company has a stake in the second-largest channel, M6. Like RTL, it showed some of the matches from the UEFA European Football Championship in Germany in June and July. ProSiebenSat.1 did not have the tournament in its programme.

Major sporting events with high viewing figures are an attractive setting for advertising customers. The Olympic Games in Paris in August were broadcast by ARD and ZDF. This also explains the 2.3% decline in RTL's TV advertising revenues in the third quarter. ProSiebenSat.1 also points to the Olympic effect.

In view of the difficult environment, stock analysts rate ProSiebenSat.1's quarterly report as passable to decent, in some cases better than expected. „Could have been worse,“ says DZ Bank. However, its industry experts do not expect a „dynamic recovery“ in the TV advertising market in 2025 either. The situation will even get worse, according to analysts Warburg Research and UBS. Barclays reduced its estimates for RTL and M6 as well as for TF1, the largest French TV channel.

The advertising crisis is reflected in share prices. Since spring 2022, the stock market values of RTL and ProSiebenSat.1 have more than halved. Nine years ago, ProSiebenSat.1's share price peaked at around 50 euros. A few months later, the company was the first in the media industry to make the leap into the Dax, which at the time still had 30 members. After two relegations, it has been in the SDax for just under a year. Just a tenth of the peak value is still left. DZ Bank recognises something positive in the recent decline: Potential for a recovery rally. However, as long as the outlook for the German economy remains so gloomy, there is no engine for this.