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RTL CEO Thomas Rabe on Fremantle Investment Strategy – The Hollywood Reporter

Thomas Rabe was born in tiny Luxembourg, the mini-nation squeezed in between France, Germany and Belgium. But when it comes to business, as CEO of pan-European broadcast giant RTL Group and chairman and CEO of RTL’s parent, global media conglomerate Bertelsmann, Rabe likes to think big.

At an RTL shareholders’ meeting back in August 2021, Rabe dropped a bombshell: Fremantle, RTL’s production division, making of entertainment formats like X Factor and American Idol and already one of the biggest independent TV producers in the world, was about to get a lot bigger. In four years, Rabe said, Fremantle would boost revenue by a cool $1.1 billion (€1 billion) to hit a new revenue target of $3.3 billion (€3 billion) by 2025.

RTL gave Fremantle the cash to pump into M&A expansion, fueling a buying spree that has seen the company spend more than a quarter of a billion dollars in the past three years snatching up independent companies, including Ireland’s Element Pictures, producers of Normal People and Oscar-winner The Favourite; Italy’s Lux Vide, producers of Netflix’s Medici, and Abot Hameiri, the Isreal group behind hit Shtisel. And many, many more.

The push took Fremantle out of its comfort zone in non-scripted entertainment and into the riskier business of drama and scripted production, including independent film, backing productions from the likes of Pablo Sorrentino (The Hand of God), Luca Guadangino (Bones and All) and Yorgos Lanthimos (Poor Things). As well as documentaries: Last year Fremantle took a majority stake in 72 Films, producers of BBC documentary series The Elon Musk Show, and Wildstar Films, who produce National Geographic’s America’s National Parks.

It has also transformed Fremantle into a global drama juggernaut, earning the company the inaugural honor of being named The Hollywood Reporter‘s 2023 international producer of the year.

In an email interview with THR, Rabe explains why RTL is still betting big on Fremantle, how drama fits into the company’s global strategy, and what links indie film and American Idol: “Premium content and storytelling are at Fremantle’s core.”

You are investing heavily in expanding Fremantle’s business and have very ambitious goals for the division — a $3.24 billion (€3 billion) turnover target by 2025. What is behind this strategy of doubling down on film and TV content production at this time?

Content is the lifeblood of RTL Group, as it drives audiences in broadcasting and streaming. We spend more than $2.16 billion (€2 billion) on content every year, in addition to the Fremantle productions. Fremantle is one of the world’s largest creators, producers and distributors of scripted and unscripted content. Our target to reach 3 billion Euros in revenue by 2025 is ambitious. To achieve it, we are committed to investing across entertainment, drama and film, and documentaries – both organically and via acquisitions.

Last year, Fremantle completed eight acquisitions, including Italian fiction producer Lux Vide, film and drama production company Element Pictures, and documentary producers 72 Films and Wildstar Films. Alongside acquisitions, partnering with world-class storytellers and international talent is key to Fremantle’s success. In the past two years, Fremantle has signed agreements with Angelina Jolie, Michael Winterbottom, Richard Brown and Edward Berger.

As a result, last year Fremantle’s revenue grew by 22 percent to more than $2.5 billion (€2.3 billion) – a record level and a major step towards the $3.24 billion (€3 billion) mark.

What role do you see Fremantle playing compared to the “national media champions” approach of RTL’s streaming and broadcast businesses?

Expanding our global content business Fremantle and our national streaming services are key to our growth strategy. Fremantle’s expansion into scripted has helped to establish partnerships with streamers around the world, which in 2022 accounted for more than 15 percent of Fremantle’s revenue. To replicate this success in documentaries, Fremantle has established a new global documentary division, acquired documentary production companies and set up its own premium documentary label: Undeniable.

Importantly, Fremantle’s flagship entertainment formats continue to be successful. In the first half of 2023, for example, Fremantle formats America’s Got Talent and American Idol significantly outperformed prime-time averages of the respective TV networks in the US. In the UK, Fremantle produces the country’s two leading entertainment shows: The Apprentice and Britain’s Got Talent. In Germany, Fremantle’s production company UFA produces successful formats for RTL Deutschland’s linear TV channels, such as the long-running talent show Deutschland sucht den Superstar.

Overall, in the last years, Fremantle has become an even stronger, more creative and more diverse global content powerhouse – both in terms of geographic footprint and output across entertainment, drama & film and documentaries.

In addition to the core business of non-scripted television Fremantle has expanded its drama, documentary and even film production. What is the strategic appeal of these typically lower-margin, higher-risk businesses – particularly independent film – for Fremantle?

Premium content and storytelling are at Fremantle’s core – whether entertainment, drama or documentaries. In 2022, Fremantle generated 35 percent of its total revenue from drama and film productions, with adequate returns.

Fremantle’s drama and film productions have been rewarded by multiple awards. In the past two years, The Hand of God was nominated for an Oscar, Bones and All won two awards at the 2022 Venice Film Festival, and The Eight Mountains was awarded at the 2022 Festival de Cannes. Fremantle has five titles in competition at this year’s Venice Film Festival.

In documentaries, notable examples are Arctic Drift, which won multiple awards and will return with a sequel before the end of the year, and Shadow of Truth (from Israel-based label Silvio Productions), which was acquired by Netflix and has just aired on the BBC in the UK.

Scripted is arguably more risky, and more capital intensive. But it is key for partnering with top creatives, expanding the relationship with streamers around the world and creating library value.

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