RDF results hit by Crowngate

David Frank

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RDF Media chief executive David Frank has put a brave face on RDF’s latest results.

RDF Media chief executive David Frank has put a brave face on RDF’s latest results, admitting that the group has been hit by the fallout from the Crowngate controversy.

Announcing interim results for the 6 months to the end of July 2007 which revealed pre-tax profits down 27% to £1.9m Frank said: “I am not denying that we have taken a hit… but RDF continues to diversify its revenues by investing in new markets and extending the range of activities in which we engage.”

RDF has been hit by a commissioning hiatus from the BBC and ITV in the wake of the Crowngate affair in which a promotional trailer for a forthcoming RDF show A Year with the Queen was misleadingly edited for promotional purposes.

While ITV has lifted the suspension on RDF commissions, the BBC’s ban is still in place. 

Frank said: “The recent suspension of commissioning imposed on RDF by the BBC and ITV lasted longer than we originally anticipated. As a result, the group will not make up sufficient ground to fulfil expectations for this year within its UK production division.”

However Frank stressed that strong performances in the US would help redress the shortfall and that investments in RDF Kids, family entertainment and RDF’s digital division would help diversify revenues.

He added: “It is unhealthy for any business to over rely on one particular product which is why we have always made sure we are in business with as many broadcasters as we can be and seeing as many products as we can be.”

“The one vindication of what has happened over the last few months is that RDF is able to survive this in very good shape because we have diversified very aggressively over the last two years.”

Revenues were up 38% to £51.6m, compared to £37.5m for the same period in 2006, although adjusted profits before tax were down from £2.6m in 2006 to £1.9m.

Investment bank Altium Securities said that a further downgrade of RDF Media might be required as there was no clear guidance on the timing of a return to commissioning by the BBC.

“This continuing lack of short term visibility is disappointing and the resolution of the BBC hiatus remains a key priority. We recently reduced our current year revenue and EPS estimates by 3% and 5% respectively as a precautionary measure but on a first pass basis feel a further downgrade may be required,” said analyst Roddy Davidson.

Davidson was more positive about the long term. “We remain firmly of the view that RDF’s creative and commercial pedigree, presence across a range of genres, well established corporate infrastructure and the strength of its historic broadcaster relationships leave it well placed to capitalise on a positive demand environment for independent producers. For the same reasons, we believe recent difficulties will not have a long lasting impact on the business.”