RTL marks Five's value down £83m

Higher than expected programming costs have contributed to Five owner RTL slicing £83m from the value it puts on the broadcaster.

Higher than expected programming costs have contributed to Five owner RTL slicing £83m from the value it puts on the broadcaster.

RTL, itself controlled by German media group Bertelsmann, wrote down the value of Five by £83m (Eu123m) and now values it at £510m. This is well below the broadcaster's £700m price tag in July 2005 when RTL bought the final 35% it did not already own from United Business Media.

RTL chief executive Gerhard Zeiler said the write-down was due to 'stronger competition in the increasingly fragmented UK television market', 'higher content cost growth than previously forecast' and 'a cautious outlook concerning call TV revenue and advertising market growth rates'.

Speaking at the Edinburgh TV Festival, Five managing director of content Lisa Opie said the rising cost of US acquisitions, with which the channel has become synonymous, meant that she was going to cut back on acquired programming to spend more on UK-originated content.

Despite the write-down, Zeiler was upbeat about Five's future. Its share of advertising was 9% in the first half of this year, up from 8.4% last year, and Zeiler said it would be 'significantly higher 'for the second half of 2007. He was also confident about the future of the UK television advertising market, predicting growth of between 1% and 2% over the next year.

Half year results showed that Five's earnings fell by £6.7m (Eu10m) to £3.4m (Eu5m).The drop in profits was put down to investment in Five's digital channels, Five Life and Five US, which were launched in October last year.

Earnings for the main channel before interest, tax and amortisation (EBITDA) remained flat at £10m (Eu15m).