Five expected to make a profit this year

Channel Five will be profitable in 2010, according to the chief executive of its former owner RTL Group, speaking after presenting interim results today.

Five: expected to make a profit this year
Five: expected to make a profit this year

RTL Group’s reported group revenue was €2.7bn in the first half of 2010, up 7.5% compared to the same period in 2010, and made a profit before taxes of €512m, up 79.6% compared to the first six months of 2009.

Gerhard Zeiler, chief exec of RTL Group, said: "We expect that Five will be profitable at the end of the year. At least that was what we envisaged when we were the owners."

Five made an operating loss of €10m in 2009, though the ad market rebounded in the second half and the business actually made an operating profit of €9m in the final six months.

RTL’s results show that when it sold Channel Five to Richard Desmond’s Northern & Shell group in July for £103.5m RTL made a loss, compared with the book value of Five, of €39m.

The loss RTL attributed to Five during the first half of this year was €49m, including the impairment charge of €39m. RTL Group made an impairment charge of €140m in the same period of 2009.

Five's earnings before the deduction of interest, tax and amortization expenses (EBITA) amounted to a loss of €6m in the first six months of 2010, an improvement of 87.8% when compared with a loss of €49m.

Zeiler, when questioned about the sale of Five, said: "In the first half of the year the [ad market] rebounded strongly and we saw a window of opportunity and that's why we started a sale operation at the start of the second quarter."

Zeiler said RTL sold Five because it did not fit with its strategy of being "number one or a strong number two" in each of the markets it operates in.

Zeiler said: "For years we examined Five’s operations but given the competitive market [in the UK] and market developments it was not possible and that’s why we had to make the decision to invest further or to exit."

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