2013-03-08 audkt.br (nomura) rtl - a closer look at the refreshed equity story.62604965

7/28/2019 2013-03-08 AUDKT.br (Nomura) RTL - A Closer Look at the Refreshed Equity Story.62604965

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Key company data: See page 2 for company data and detailed price/index chart.

RTL AUDKt.BR RTL LX .EUROPEAN MEDIA

EQUITY RESEARCH

S

A closer look at the refreshed equity story

Potential free float increasewarrants a closer look at thefundamentals

March 8, 2013

Relative r ating

Remains Neutral

Target pri ce

Reduced from 80.00EUR 65.00

Closing price

March 7, 2013EUR 59.26

Potential upside +9.7%

Spotlight back on the RTL equity story

Bertelsmann announced on 31 January that it will be reducing its 92.3%stake in RTL to 75% and, according to Reuters (21 February), a potentialQ2 placing is likely. Given the potentially significant increase in liquidity

and free float, the largest barrier to investing in RTL equity may soon belifted. As a result, we take a closer look at the business.

Many posi tives, but weak advertising markets take its toll

There are clearly strong positives to RTLs equity story, given its exposureto the resilient German TV ad market (FY13 1% revenue growth forecast),a world-leading content business in Fremantle, geographic diversificationand a strong balance sheet (FY13 net cash of EUR35m). Despite thesepositives, the company remains burdened by cyclical pressure from itsnon-German TV stakes, which are facing weak FY13 ad markets (weforecast -6.5% for both M6 and Antena3, with high-single-digit declines inits Eastern European TV businesses), and Fremantle also remains weakgiven pressure from the tightening of broadcasters budgets. As a result,

we forecast FY13 EBITA declining by 5.3% YoY, with adjusted EPS fallingby 8% (affected by higher interest cost post special dividend payment).For FY14, we expect 4% EPS growth, driven by advertising improvement.

Cyclical pressure drives our Neutral viewWe update our estimates post the FY12 results, which were broadly in linewith NOMe. However, after adjusting our estimates for ad cuts to M6 andAntena3 in combination with ongoing margin weakness in Fremantle, wereduce our FY13 adjusted EPS by 9%. The EPS cuts together with thespecial dividend outflow mean we lower our DCF-driven TP to EUR65(from EUR80). Our SOTP provides a valuation of EUR64 (10x EV/EBITAmultiple on the German business and 12x on Fremantle), while on

EV/EBITDA the stock trades 10% below peers at an 8.3x FY13 multiple.We like RTL, and there are many fundamental positives; however, givencyclical weakness in key markets (France, Spain), we remain Neutral.

Year end:12-2012 2012a 2013e 2014e 2015e

Currency EUR Actual Old New Old New Old New

Revenue (m) 6043 5971 6053 6142 6208 N/A 6383

PTP (m) 968 1088 1026 1112 1066 N/A 1109

EPS 4.54 4.59 4.18 4.67 4.35 N/A 4.54

DPS 10.50 5.05 3.14 4.91 3.26 N/A 3.40

P/E (x) 13.1 N/A 14.2 N/A 13.6 N/A 13.1

EV/EBITDA (x) 7.0 N/A 8.3 N/A 7.6 N/A 7.1

Dividend Yield (%) 17.7 N/A 5.3 N/A 5.5 N/A 5.7

Source: Company data, Nomura estimates

Research analysts

European Media

William Mairs, CFA - NIplc

[email protected]+44 20 7102 4823

Ajay Agrawal


Matthew Walker - NIplc


Kunal Gulati, CFA


Marketing Analyst

Kate Woolfoot - NIplc


See Appendix A-1 for analystcertification, importantdisclosures and the status ofnon-US analysts.


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Nomura | RTL March 8, 2013

2

Key data on RTLRating

Stock Neutral

Sector Neutral

Relative performance chart

Source: Thomson Reuters, Nomura research

PerformanceYear end:12-2012 1m 3m 12m

Absolute % -14 -22 -21

Rel. Sector % -18 -29 -43Market data

Market Cap (m) 9172.74

Shares Outstanding (m) 154.8

Dividend Yield (current yr.) 17.72Financial summary

Five Yr. EPS CAGR (%) N/A

Return on Equity FY12 (%) 13.7

Current BVPS N/A

Net Debt (m current) 1050.05Source: Thomson Reuters, Nomura research

Income statement m

Year end Dec 2012A 2013E 2014E 2015E

Revenues 6042.8 6053.1 6208.5 6383.0

EBITDA 1265.0 1204.2 1245.8 1291.0

EBITA 1078.0 1020.8 1059.7 1102.1

PTP 968.0 1025.8 1065.7 1109.1

Net income 697.0 642.8 668.6 696.9

Recurring EPS 4.54 4.18 4.35 4.54

EPS growth -0.9% -7.8% 4.0% 4.2%

DPS 10.50 3.14 3.26 3.40

Cash flow statement m

Year end Dec 2012A 2013E 2014E 2015E

Change in working cap -44.0 0.5 7.8 8.7

Cash from operations 925.0 1014.5 1058.2 1098.2

Capital expenditure -63.0 -94.5 -97.3 -100.3

FCF (post-capex) 842.1 829.4 858.5 904.0

Net acquisitions/disposal -25.0 -60.0 -61.1 -62.1

Share buyback/issuance 0.0 0.0 0.0 0.0

Dividends -880.0 -1731.6 -536.9 -556.9

Change in net cash/(debt) -56.0 -864.6 365.9 377.9

Closing net cash/(debt) 1050.0 35.5 521.4 899.3

Valuation

Year end Dec 2012A 2013E 2014E 2015E

P/E 13.3x 14.4x 13.8x 13.3x

Dividend yield 17.5% 5.2% 5.4% 5.7%

FCF yield (FCF/mkt cap) 9.1% 9.0% 9.3% 9.8%

EV/EBITDA 7.0x 8.3x 7.6x 7.1x

EV/EBITA 8.3x 9.8x 9.0x 8.3x

EV/Sales 1.5x 1.6x 1.5x 1.4x

Key ratiosYear end Dec 2012A 2013E 2014E 2015E

Revenue growth 4.0% 0.2% 2.6% 2.8%

Operating margin 17.8% 16.9% 17.1% 17.3%

Adj net debt/EBITDA -0.8x 0.0x -0.4x -0.7x

Adj net debt/equity -0.2x 0.0x -0.1x -0.2x

ROCE 21.4% 18.4% 19.9% 20.7%


Closing price from Datastrea 06 March 2013


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Bertelsmann to sell down to refocus investor attention on RTL

Bertelsmann announced on 31 January that it would be seeking to partially sell down its

stake in RTL from 92.3% to 75% to fund Bertelsmanns growth strategy in other areas. At

current prices, the 17.3% stake would be equivalent to a EUR1.6bn stake, with a sale

into the market the most likely option (Reuters 21 February). This would transform RTL

from an investment perspective, in our view, as it would substantially increase its free

float and liquidity. Following the potential placing (the FT indicated in February 2013 that

it may take place April/May this year), there will be two large-scale investable public

German TV companies in RTL and ProSieben. Given the refocus of attention on RTL,

we have completed a review of the underlying business.

Key investments attractions and ri sks

We summarise below the key RTL investment attractions, management strategy for

future growth and the key business risks in our view.

Key attractions

RTL is by far the largest European free-to-air (FTA) broadcaster within Europe, with

FY12 revenues of EUR6bn, followed by Mediaset at EUR3.9bn, ITV at EUR2.7bn and

ProSieben with EUR2.4bn.

As a result, RTL is the only European FTA broadcaster with strong geographic

diversification given its exposure to Germany, France, North America (via Fremantle),

the Netherlands, Belgium and Eastern Europe, among others.

RTL is either the first or second main broadcaster within eight European countries.

Such a strong position is crucial for driving premium prices amongst advertisers.

FremantleMedia is the worlds leading TV entertainment production business (ahead of

producers such as Endemol and ITV Studios). Fremantle also provides RTL exposure

to the North American and UK markets.

RTLs online business has a strong position, with 6.9bn online video views in 2012, and

in FY12 saw organic revenue up 20% to EUR200m.

Business strategy

RTL has a three-pillared strategy to drive future growth:

1) Broadcast RTL aims to strengthen its existing channels while growing non-

advertising revenue from its TV platform (such as HD revenues). RTL also aims

to continue its expansion in high-growth markets (it is present in India) with local

J V partnerships being the preferred approach.

2) Content Investment within the Fremantle business will help the content

business to build future brands, not only on TV but also through multiple

platforms.

3) Digital The divisions strong growth will continue through the expansion of its

VOD platform across multiple devices while also developing its online brands.

Key risks

Advertising accounts for 57% of group revenue, which leaves RTL exposed to the

cyclical advertising market.

We think Fremantle may need to invest further in its business to replace hit shows suchas X-Factor, Idols and Talent.

There are longer-term structural concerns over the impact from online/VOD and the

disintermediation of the core TV business.


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Advertising rel iant, al though geographically diversif ied

Figure 1 highlights group reported revenue splits. In Figure 2, we look at an adjusted

group revenue by taking only 49% of M6 revenue (RTL has a 49% stake in M6 but fully

consolidates this as it has control over the board). Advertising accounts for about 57% of

group revenues (largely TV advertising, 4% from radio advertising); however, unlike the

majority of other broadcasters, RTLs advertising revenue is diversified across several

geographies (mainly Germany, France, the Netherlands and Spain but also smaller

stakes in Hungary and Croatia). Figure 3 highlights the levels of advertising exposure

amongst the broadcasters, with each company (other than RTL) largely having 100% of

advertising revenue from its domestic market.

Within the broadcasting space, advertising exposure to Northern Europe has

outperformed, which we believe is set to continue. In Germany, TV continues to gain

share from print, which has helped drive solid growth for both ProSiebens and RTLs

German operations (we forecast 1% FY13 revenue growth for ProSiebens German

Speaking division and for RTLs German operations). However, the French advertising

market continues to struggle with structural pressure (significant channel expansion

driving further competition within FTA), combined with a poor macro cyclical backdrop,

and we recently downgraded our M6 FY13 advertising forecast to -6.5% from -4%. Italy

and Spain have shown even sharper declines, with Antena3 (RTL has a 21% stake)

indicating the Spanish TV ad market is down c.15% for 1Q13. Dutch TV also remains

weak, with the ad market down -5.4% in FY12.

Given the diverging advertising trends within Europe, we see only 36% of adjusted group

revenues being derived from a robust TV ad market (Germany), while c.30% of revenues

are derived from the more challenged French, Dutch and Eastern European markets.

Fig. 1: RTL consol idated revenue split , 2013E


Fig. 2: RTL adjusted (49% of M6) revenue split, 2013E

Source: Company data, Nomura estimates. Note we take 49% of M6 group revenue

RTLGermany

32%

Groupe M622%

Fremantle28%

RTLNederland

7%

RTL Belgium3%

French radio3%

Othersegments

5%

RTL

Germany36%

Groupe M6(49% stake)

12%

Fremantle32%

RTLNederland

8%

RTL Belgium4%

French radio3%

Othersegments

5%


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Fig. 3: Broadcasters 2012 net advertising revenue exposure

Note: For Prosieben, we look at continuing operations.Source: Company data, Nomura estimates

Figure 4 highlights the EBITA split between the different regions. RTL Germany, which

benefits from strong margins (c.30%), accounts for a disproportionate amount of EBITA

(54%), which is driven by lower Fremantle margins (c.8%) and weaker margins amongst

its other division (e.g., M6 reported 15% EBITA margins due to margin dilution from its

nonbroadcasting activities and challenged ad market).

Fig. 4: RTL EBITA 2013E split


Strong short- and long-term growth potential for German TV

Management stated on its earnings call that January and February are slightly up for

both RTL and the German advertising market. This tone is in line with commentary from

ProSieben, which stated that 2013 German TV advertising has had a healthy start. We

forecast 1% FY13 revenue growth for RTLs German business (as well as for

ProSiebens German Speaking division), which is the highest amongst the European

broadcasters under our coverage.

68%

82%

60%66%

76%

91%97%

57%

32%

18%

40%34%

24%

9%3%

43%

0.0%

10.0%

20.0%

30.0%

40.0%

50.0%

60.0%

70.0%

80.0%

90.0%

100.0%

ITV P rosieben M6 TF1 Mediaset MediasetEspana

(TL5)

Antena 3 RTL

NAR Non-NAR Rev

RTL Germany54%

Groupe M617%

FremantleMedia13%

RTL Nederland9%

RTL Belgium4%

French radio3%


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Fig. 5: RTL and ProSieben German revenues

1999A 2000A 2001A 2002A 2003A 2004A 2005A 2006A 2007A 2008A 2009A 2010A 2011A 2012A 2013E

RTL Germany revenues 1,404 1,715 1,713 1,700 1,865 1,813 1,844 1,948 1,966 2,020 1,732 1,892 1,912 1,982 2,002

RTL German Rev Growth -- 22.2% -0.1% -0.8% 9.7% -2.8% 1.7% 5.6% 0.9% 2.7% -14.2% 9.2% 1.1% 3.7% 1.0%

Pro7 German speaking revenues 1,572 1,606 1,811 1,867 1,900 1,736 1,698 1,863 1,903 1,910 1,929

Pro7 German speaking rev growth 2.1% 5.6% 3.1% 1.8% -8.6% -2.2% 9.7% 4.0% 0.3% 1.0%


Fig. 6: RTL and ProSieben German EBITA margins

1999A 2000A 2001A 2002A 2003A 2004A 2005A 2006A 2007A 2008A 2009A 2010A 2011A 2012A 2013E

RTL Germany EBITA 198 285 232 244 257 261 240 297 329 414 366 551 529 581 566

RTL Germany EBITA Margin 14.1% 16.6% 13.5% 14.4% 13.8% 14.4% 13.0% 15.2% 16.7% 20.5% 21.1% 29.1% 27.7% 29.3% 28.3%

Pro7 German speaking EBITDA 299 379 429 484 407 458 631 658 660 653

Pro7 German speaking EBITDA margin 18.6% 20.9% 23.0% 25.5% 23.4% 27.0% 33.8% 34.5% 34.6% 33.8%


From a longer-term perspective, we believe RTL is well placed to benefit from the

structural advertising shift within Germany as advertising spend moves from the overly

penetrated print market (print accounts for 49% of ad spend in Germany vs. 35% in

Western Europe) to the underpenetrated TV sector (22% of ad spend in Germany vs

29% in Western Europe). Furthermore, RTL continues to command a strong audience

share of close to 34% (including RTL II which RTL has a 36% stake).

Fig. 7: German audience share

Note: This chart excludes RTL II from the RTL group of channels.Source: AGF in Zusammenarbeit mit GfK / pc#tv/TV Scope / ProSiebenSat.1 TV Deutschland Audience Research

Fremantle is a world leader in content, but margins under pressure

While broadcasters such as ITV and ProSieben continue to develop their respective

studio businesses to diversify away from cyclical advertising, RTL already has an

established and global leading content business through FremantleMedia. Fremantle,

which accounts for c.30% of group revenue, has a leading market presence within

key markets such as the UK, US and wider Europe, with a strong presence in more than

40 other countries; it is responsible for key shows such as X-Factor, Got Talent, Idol and

Take Me Out.

As Figure 8 indicates, Fremantles revenue development has been volatile. This is partly

due to the lumpiness of studio commissions, but it has also been affected by FX and

0.0%

5.0%

10.0%

15.0%

20.0%

25.0%

30.0%

35.0%

40.0%

45.0%

50.0%

2001A 2002A 2003A 2004A 2005A 2006A 2007A 2008A 2009A 2010A 2011A 2012E

RTL Stations (Excl RTL2) Sat 1 Pro7 Pro7 Group Others


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acquisitions. While FY12 posted 20% revenue growth, half of this growth was owing to

FX and US content recharges (at zero margin, which helped push down margins to 8.1%

for FY12). Management commented on its recent earnings call that given a challenging

economic climate, there is continued pressure from broadcasters on both volumes and

margins. As a result, we forecast low revenue growth (3%) with stable margins.

Fig. 8: Fremantle content revenue (not organic growt h) and margins

1999A 2000A 2001A 2002A 2003A 2004A 2005A 2006A 2007A 2008A 2009A 2010A 2012A 2013ERevenue 1,036 1,090 1,148 1,386 1,294 1,152 1,057 1,207 1,176 1,296 1,273 1,372 1,711 1,762

Growth 5.2% 5.3% 20.7% -6.6% -11.0% -8.2% 14.2% -2.6% 10.2% -1.8% 7.8% 19.7% 3.0%

EBITA 125 126 48 89 86 122 120 128 126 156 156 140 138 142

Margin 12.1% 11.6% 4.2% 6.4% 6.6% 10.6% 11.4% 10.6% 10.7% 12.0% 12.3% 10.2% 8.1% 8.1%


Estimate changes and valuation

FY12 results were broadly in line with our estimates, and we update our forecasts to

reflect these results. We also increase costs at the German division to reflect ongoing

programming investment (particularly in its new channel Nitro), which means we seeGerman EBITA margins falling to 28.3%. As part of the Bertelsmann sell-down process,

RTL has paid a EUR1.6bn dividend (EUR5.1 ordinary per share and EUR5.4 special),

which results in a cash balance of EUR35m at the end of 2013. We reflect

managements new guidance on payout ratio (50-75%) and expect the upper range of

this given the historical high payout ratio of c.100%.

In terms of valuation, our analysis shows a mixed picture. Our DCF-derived target price

delivers EUR65, which assumes a 9.5% WACC and 3.5% terminal 2030 growth rate (as

we do with all of our broadcasters) and a terminal EBITA margin assumption of 18%,

which we view as unaggressive vs 16.9% for 2013E (a 21% assumption would drive a

EUR70 TP).

We highlight valuation multiples for the broadcasters in Figure 9. In terms of an

EV/EBITDA multiple, RTL appears relatively undervalued (10% below peers), with alsostrong support on a FCF basis. However, on a P/E basis, it appears more expensive,

although we note that this would not take into consideration the relatively strong balance

sheet and that the other broadcasters are more cyclically exposed due to greater

advertising exposure. Our SOTP in Figure 10 provides a EUR64 valuation.

Fig. 9: Valuation mult iple comparisons

EV/EBITDA P/FCF P/E

RTL 8.3 11.1 14.4

ProSieben* 9.2 12 11.5

ITV 8.8 12.7 12.4

Mediaset 13 20 NA

Mediaset Espana 18.7 31 26.2Antena3 31.5 23 40.3

M6 6.7 14 13.8

TF1 4.9 10 13

Median (ex RTL) 9.2 14 13.4

*Remove dividend from P for ProSieben.Source: Nomura estimates


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Fig. 10: Sum-of-the-parts valuation

Asset 2013E EBITA Multiple Methodol ogy 100% Value Stake RTL Val

Mediengruppe RTL Deutschland 566 10.0x EV/EBITA 5658.0 100% 5658.0

Groupe M6 Market Value 1557.2 49% 756.8

FremantleMedia 142 12.0x EV/EBITA 1705.7 100% 1705.7

RTL Nederland 95 8.0x EV/EBITA 762.6 100% 762.6

RTL Belgium 43 8.0x EV/EBITA 340.4 66% 224.7

French radio 28 7.0x EV/EBITA 193.2 100% 193.2

Total 9,301Net Cash/(Debt) Add: 35

Associates

- AtresMedia (Antena3) Add: 218

- Others Add: 221

Total Equity Value 9,775

Equity Value per share 64

Source: Nomura estimates

We set our TP in line with our DCF, and we reiterate our Neutral rating, given no clear

upside on current valuation metrics, challenged non-German TV businesses and

Fremantle margins under pressure.


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Fig. 11: RTL P&L forecasts


Year End 31 Dec (EUR Million) 2010A 2011A 2012A 2013E 2014E 2015E

Revenues

Mediengruppe RTL Deutschland 1,912 1,982 2,002 2,042 2,083Groupe M6 1,421 1,387 1,350 1,390 1,432FremantleMedia 1,429 1,711 1,762 1,833 1,906RTL Nederland 491 431 431 440 453RTL Belgium 216 210 202 200 205

French radio 184 180 175 174 173Other segments 330 304 298 299 304Eliminations -218 -207 -211 -215 -220Total Sales 5,591 5,765 5,998 6,008 6,162 6,335

% Growth 3.3% 3.1% 4.0% 0.2% 2.6% 2.8%

Other Operating Income 54 40 45 45 46 48Total Consolidated Revenues 5,645 5,805 6,043 6,053 6,208 6,383

% Growth 3.5% 2.8% 4.1% 0.2% 2.6% 2.8%

Cost of Goods and Services -4,338 -4,493 -4,778 -4,849 -4,963 -5,092

EBITDA (After Prog. Rights Amortisation) 1,307 1,312 1,265 1,204 1,246 1,291

% Growth 38.1% 0.4% -3.6% -4.8% 3.5% 3.6%

% Margin 23.2% 22.6% 20.9% 19.9% 20.1% 20.2%

Depreciation and Amortisation -196 -178 -187 -183 -186 -189

EBITA

Mediengruppe RTL Deutschland 529 581 566 580 595Groupe M6 249 224 180 181 181

FremantleMedia 143 138 142 164 187RTL Nederland 134 97 95 94 97RTL Belgium 46 45 43 41 41French radio 30 30 28 27 27Other segments 3 -37 -33 -28 -26

EBITA (Including Associates) 1,111 1,134 1,078 1,021 1,060 1,102

% Growth 47.1% 2.1% -4.9% -5.3% 3.8% 4.0%

% Margin 19.7% 19.5% 17.8% 16.9% 17.1% 17.3%

Fair value adjustments -11 -13 -8 0 0 0

Impairment of goodwill -52 -6 -82 0 0 0Gain/loss sale of subsidiaries -7 107 -9 0 0 0EBIT 1,041 1,222 979 1,021 1,060 1,102

% Growth 104.8% 17.4% -19.9% 4.3% 3.8% 4.0%

% Margin 18.4% 21.0% 16.2% 16.9% 17.1% 17.3%

Net Interests 10 -2 -10 5 6 7Other Financial Results 4 -27 -1 0 0 0Adjusted PTP (Excl. G'dwil l & Excep'als) 1,121 1,132 1,068 1,026 1,066 1,109

% Growth 50.8% 1.0% -5.6% -3.9% 3.9% 4.1%

% Margin 19.9% 19.5% 17.7% 16.9% 17.2% 17.4%

Pre-Tax Profit 1,055 1,193 968 1,026 1,066 1,109

% Growth 103.6% 13.1% -18.8% 6.0% 3.9% 4.1%

% Margin 18.7% 20.5% 16.0% 16.9% 17.2% 17.4%

Taxes -268 -302 -277 -287 -298 -311Minority Interests -119 -99 -93 -96 -99 -102Basic Net Income 611 696 597 643 669 697

% Growth 197.8% 13.9% -14.2% 7.7% 4.0% 4.2%

% Margin 10.8% 12.0% 9.9% 10.6% 10.8% 10.9%

Adjusted Net Inc. (Excl . G'dwi ll & Excep'als) 738 704 697 643 669 697

% Growth 63.2% -4.6% -0.9% -7.8% 4.0% 4.2%

% Margin 13.1% 12.1% 11.5% 10.6% 10.8% 10.9%

Diluted Basic EPS () 3.98 4.53 3.89 4.18 4.35 4.54Diluted Adjusted EPS () 4.80 4.58 4.54 4.18 4.35 4.54

% Growth 63.2% -4.6% -0.9% -7.8% 4.0% 4.2%

DPS () 5.00 5.10 10.50 3.14 3.26 3.40


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Fig. 12: RTL Cash Flow forecasts


Fig. 13: RTL balance sheet forecasts


Year End 31 Dec (EUR Million) 2010A 2011A 2012A 2013E 2014E 2015E

Pre Tax Profit 1,055 1,193 968 1,026 1,066 1,109D&A 196 175 185 183 186 189Value Adj., Impairment & Provisions 134 232 200 50 50 50Share based payments 5 6 7 5 9 9Net Result on Disposals 32 -116 -33 0 0 0Net Interests Incl. Share of Associates -29 19 83 45 50 55

Use of provisions -62 -79 -113 -30 -30 -30Change in Working Capital 148 -1 -44 1 8 9Income Tax Paid -293 -287 -325 -269 -280 -293Other Movements -57 -99 -1 0 0 0

Operating Cash Flow 1,130 1,044 925 1,014 1,058 1,098

Acquisitions of Programme and Sport Rights -96 -79 -103 -109 -115 -121Subsidiaries and J Vs -30 -134 -8 -25 -25 -25Other Investments & Fin. Assets -18 -38 -48 -35 -36 -37Other Int. & Tangible Assets -131 -120 -90 -95 -97 -100Current Deposit with Shareholder -254 206 162 100 100 100Proceeds from Sale of T and IT assets 19 22 27 0 0 0Disposal of Subsids and J V (net of cash) 112 -6 -2 0 0 0Sale of Other investments and financial assets 403 29 33 0 0 0Interest received 22 18 13 16 18 20Investing Cash Flow 27 -102 -16 -148 -155 -163

Dividends -721 -902 -880 -1,732 -537 -557Equity Issuance 0 0 0 0 0 0Debt Issuance/(Paydown) 6 -174 -85 0 0 0Financing Cash Flow -715 -1,076 -965 -1,732 -537 -557

Change in Cash 442 -134 -56 -865 366 378

Net Cash/(Debt) 1,437 1,238 1,050 35 521 899

Year End 31 Dec (EUR Million) 2010A 2011A 2012A 2013E 2014E 2015ETangible +Other Intangible Fixed Assets 589 550 548 459 370 282Goodwill 2,708 2,671 2,679 2,704 2,729 2,754Programme And Sport Rights 1,037 1,046 1,030 1,056 1,086 1,120Investment In Associated Companies 358 356 251 251 251 251Loans And Other Financial Assets 271 249 239 274 310 347Deferred Tax Assets +Income Tax Receivable 476 418 463 463 463 463Receivables +Other Inventories 2,547 2,195 2,038 2,038 2,038 2,038Cash, Cash Equivalent, Securities 841 701 649 649 1,015 1,393Total Assets 8,827 8,186 7,897 7,894 8,263 8,648

Shareholders Equity 5,016 4,653 4,365 3,497 3,858 4,235Minority 584 497 492 492 492 492

Financial Debt 188 53 29 894 894 894Current Tax Liabilities And Deferred Tax 157 156 141 141 141 141Provisions 319 354 395 395 395 395Payables 2,563 2,473 2,475 2,476 2,483 2,492Total Liabilities And Shareholders' Equity 8,827 8,186 7,897 7,894 8,263 8,648

Net Cash/(Debt) 1,437 1,238 1,050 35 521 899


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Appendix A-1

Analyst Cert ificat ion

I, William Mairs, hereby certify (1) that the views expressed in this Research report accurately reflect my personal views about

any or all of the subject securities or issuers referred to in this Research report, (2) no part of my compensation was, is or will be

directly or indirectly related to the specific recommendations or views expressed in this Research report and (3) no part of my

compensation is tied to any specific investment banking transactions performed by Nomura Securities International, Inc.,

Nomura International plc or any other Nomura Group company.Issuer Specific Regulatory Disclosures

The term "Nomura Group" used herein refers to Nomura Holdings, Inc. or any of its affiliates or subsidiaries, and may refer to one or more

Nomura Group companies.

Materially mentioned issuers

Issuer Ticker Price Price date Stock rating Sector rating Disclosures

RTL RTL LX EUR 60.15 06-Mar-2013 Neutral Neutral

RTL (RTL LX) EUR 60.15 (06-Mar-2013)Rating and target price chart (three year history)

Neutral (Sector rating: Neutral)

Date Rating Target price Closing price

08-Dec-10 80.00 66.02

09-Nov-10 73.00 68.80

07-May-10 64.00 57.60

15-Mar-10 60.00 53.01

For explanation of ratings refer to the stock rating keys located after chart(s)

Valuation Methodology Our DCF-based target price of EUR 65.00 assumes a WACC of 9.5% and terminal growth rate of3.5%. Our cash flows are discounted from 2030 and discounted back to 2013. The benchmark index for this stock is Dow J onesSTOXX 600Media.

Risks that may impede the achievement of the target price The company derived the majority of its revenues from severalEuropean advertising markets, a very cyclical source of turnover. The company has a dominant shareholder, Bertelsmann, withmore than 90% ownership, whose interest might be different from those of minority shareholders.


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Important DisclosuresOnline availability of research and conflict-of-interest disclosuresNomura research is available on www.nomuranow.com/research, Bloomberg, Capital IQ, Factset, MarkitHub, Reuters and ThomsonOne.Important disclosures may be read at http://go.nomuranow.com/research/globalresearchportal/pages/disclosures/disclosures.aspxor requestedfrom Nomura Securities International, Inc., on 1-877-865-5752. If you have any difficulties with the website, [email protected] help.The analysts responsible for preparing this report have received compensation based upon various factors including the firm's total revenues, aportion of which is generated by Investment Banking activities. Unless otherwise noted, the non-US analysts listed at the front of this report arenot registered/qualified as research analysts under FINRA/NYSE rules, may not be associated persons of NSI, and may not be subject toFINRA Rule 2711 and NYSE Rule 472 restrictions on communications with covered companies, public appearances, and trading securities heldby a research analyst account.Nomura Global Financial Products Inc. (NGFP) Nomura Derivative Products Inc. (NDPI) and Nomura International plc. (NIplc) areregistered with the Commodities Futures Trading Commission and the National Futures Association (NFA) as swap dealers. NGFP, NDPI, andNIplc are generally engaged in the trading of swaps and other derivative products, any of which may be the subject of this report.Any authors named in this report are research analysts unless otherwise indicated. Industry Specialists identified in some Nomura Internationalplc research reports are employees within the Firm who are responsible for the sales and trading effort in the sector for which they havecoverage. Industry Specialists do not contribute in any manner to the content of research reports in which their names appear. Marketing

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43% have been assigned a Buy rating which, for purposes of mandatory disclosures, are classified as a Buy rating; 41% of companies with thisrating are investment banking clients of the Nomura Group*.45% have been assigned a Neutral rating which, for purposes of mandatory disclosures, is classified as a Hold rating; 46% of companies withthis rating are investment banking clients of the Nomura Group*.12% have been assigned a Reduce rating which, for purposes of mandatory disclosures, are classified as a Sell rating; 26% of companies withthis rating are investment banking clients of the Nomura Group*.As at 31 December 2012. *The Nomura Group as defined in the Disclaimer section at the end of this report.Explanation of Nomura's equity research rating system in Europe, Middle East and Africa, US and Latin America The rating system is a relative system indicating expected performance against a specific benchmark identified for each individual stock.Analysts may also indicate absolute upside to target price defined as (fair value - current price)/current price, subject to limited managementdiscretion. In most cases, the fair value will equal the analyst's assessment of the current intrinsic fair value of the stock using an appropriatevaluation methodology such as discounted cash flow or multiple analysis, etc.STOCKSA rating of 'Buy',indicates that the analyst expects the stock to outperform the Benchmark over the next 12 months. A rating of ' Neutral',indicates that the analyst expects the stock to perform in line with the Benchmark over the next 12 months. A rating of ' Reduce', indicates thatthe analyst expects the stock to underperform the Benchmark over the next 12 months. A rating of 'Suspended', indicates that the rating, targetprice and estimates have been suspended temporarily to comply with applicable regulations and/or firm policies in certain circumstancesincluding, but not limited to, when Nomura is acting in an advisory capacity in a merger or strategic transaction involving the company.Benchmarks are as follows: United States/Europe: please see valuation methodologies for explanations of relevant benchmarks for stocks,which can be accessed at: http://go.nomuranow.com/research/globalresearchportal/pages/disclosures/disclosures.aspx; Global EmergingMarkets (ex-Asia): MSCI Emerging Markets ex-Asia, unless otherwise stated in the valuation methodology.SECTORSA 'Bullish' stance, indicates that the analyst expects the sector to outperform the Benchmark during the next 12 months. A 'Neutral' stance,indicates that the analyst expects the sector to perform in line with the Benchmark during the next 12 months. A ' Bearish' stance, indicates thatthe analyst expects the sector to underperform the Benchmark during the next 12 months. Benchmarks are as follows: United States: S&P 500;Europe: Dow J ones STOXX 600; Global Emerging Markets (ex-Asia): MSCI Emerging Markets ex-Asia.Explanation of Nomura's equity research rating system in Japan and Asia ex-Japan STOCKSStock recommendations are based on absolute valuation upside (downside), which is defined as (Target Price - Current Price) / Current Price,subject to limited management discretion. In most cases, the Target Price will equal the analyst's 12-month intrinsic valuation of the stock,based on an appropriate valuation methodology such as discounted cash flow, multiple analysis, etc. A 'Buy' recommendation indicates thatpotential upside is 15% or more. A 'Neutral' recommendation indicates that potential upside is less than 15% or downside is less than 5%. A'Reduce' recommendation indicates that potential downside is 5% or more. A rating of 'Suspended' indicates that the rating and target pricehave been suspended temporarily to comply with applicable regulations and/or firm policies in certain circumstances including when Nomura isacting in an advisory capacity in a merger or strategic transaction involving the subject company. Securities and/or companies that are labelledas 'Not rated' or shown as 'No rating' are not in regular research coverage of the Nomura entity identified in the top banner. Investors shouldnot expect continuing or additional information from Nomura relating to such securities and/or companies. SECTORSA 'Bullish' rating means most stocks in the sector have (or the weighted average recommendation of the stocks under coverage is) a positiveabsolute recommendation. A 'Neutral' rating means most stocks in the sector have (or the weighted average recommendation of the stocksunder coverage is) a neutral absolute recommendation. A 'Bearish' rating means most stocks in the sector have (or the weighted average

recommendation of the stocks under coverage is) a negative absolute recommendation.
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Target PriceA Target Price, if discussed, reflects in part the analyst's estimates for the company's earnings. The achievement of any target price may beimpeded by general market and macroeconomic trends, and by other risks related to the company or the market, and may not occur if thecompany's earnings differ from estimates.


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2013-03-08 audkt.br (nomura) rtl - a closer look at the refreshed equity story.62604965

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