RTL

AUDKt.BR RTL LX .

EUROPEAN MEDIA

EQUITY RESEARCH S

A closer look at the refreshed equity story

March 8, 2013 Relative rating Remains Target price Reduced from 80.00 Closing price March 7, 2013 Potential upside

Potential free float increase warrants a closer look at the fundamentals

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 potential Q2 placing is likely. Given the potentially significant increase in liquidity and free float, the largest barrier to investing in RTL equity may soon be lifted. As a result, we take a closer look at the business. Many positives, but weak advertising markets take its toll There are clearly strong positives to RTLs equity story, given its exposure to the resilient German TV ad market (FY13 1% revenue growth forecast), a world-leading content business in Fremantle, geographic diversification and a strong balance sheet (FY13 net cash of EUR35m). Despite these positives, the company remains burdened by cyclical pressure from its non-German TV stakes, which are facing weak FY13 ad markets (we forecast -6.5% for both M6 and Antena3, with high-single-digit declines in its Eastern European TV businesses), and Fremantle also remains weak given pressure from the tightening of broadcasters budgets. As a result, we forecast FY13 EBITA declining by 5.3% YoY, with adjusted EPS falling by 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 view We update our estimates post the FY12 results, which were broadly in line with NOMe. However, after adjusting our estimates for ad cuts to M6 and Antena3 in combination with ongoing margin weakness in Fremantle, we reduce our FY13 adjusted EPS by 9%. The EPS cuts together with the special dividend outflow mean we lower our DCF-driven TP to EUR65 (from EUR80). Our SOTP provides a valuation of EUR64 (10x EV/EBITA multiple 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, given cyclical weakness in key markets (France, Spain), we remain Neutral.
Year end:12-2012 Currency EUR 2012a Actual Old 2013e New Old 2014e New Old 2015e New

Neutral
EUR 65.00 EUR 59.26 +9.7%

Research analysts European Media William Mairs, CFA - NIplc william.mairs@nomura.com +44 20 7102 4823 Ajay Agrawal ajay.agrawal@nomura.com +44 20 7102 9171 Matthew Walker - NIplc matthew.walker@nomura.com +44 20 7102 4459 Kunal Gulati, CFA kunal.gulati@nomura.com +44 20 7102 3845

Marketing Analyst Kate Woolfoot - NIplc kate.woolfoot@nomura.com +44 20 7102 3936

Revenue (m) PTP (m) EPS DPS P/E (x) EV/EBITDA (x) Dividend Yield (%)

6043 968 4.54 10.50 13.1 7.0 17.7

5971 1088 4.59 5.05 N/A N/A N/A

6053 1026 4.18 3.14 14.2 8.3 5.3

6142 1112 4.67 4.91 N/A N/A N/A

6208 1066 4.35 3.26 13.6 7.6 5.5

N/A N/A N/A N/A N/A N/A N/A

6383 1109 4.54 3.40 13.1 7.1 5.7

Source: Company data, Nomura estimates

See Appendix A-1 for analyst certification, important disclosures and the status of non-US analysts.

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

Nomura | RTL

March 8, 2013

Key data on RTL

Rating
Stock Sector Neutral Neutral

Income statement m
Year end Dec Revenues EBITDA EBITA PTP Net income Recurring EPS EPS growth DPS 2012A 6042.8 1265.0 1078.0 968.0 697.0 4.54 -0.9% 10.50 2013E 6053.1 1204.2 1020.8 1025.8 642.8 4.18 -7.8% 3.14 2014E 6208.5 1245.8 1059.7 1065.7 668.6 4.35 4.0% 3.26 2015E 6383.0 1291.0 1102.1 1109.1 696.9 4.54 4.2% 3.40

Relative performance chart

Cash flow statement m

Year end Dec Change in working cap Cash from operations Capital expenditure FCF (post-capex) Net acquisitions/disposals Share buyback/issuance Dividends Change in net cash/(debt) Closing net cash/(debt) 2012A -44.0 925.0 -63.0 842.1 -25.0 0.0 -880.0 -56.0 1050.0 2013E 0.5 1014.5 -94.5 829.4 -60.0 0.0 -1731.6 -864.6 35.5 2014E 7.8 1058.2 -97.3 858.5 -61.1 0.0 -536.9 365.9 521.4 2015E 8.7 1098.2 -100.3 904.0 -62.1 0.0 -556.9 377.9 899.3

Source: Thomson Reuters, Nomura research

Performance
Year end:12-2012 Absolute % Rel. Sector % 1m -14 -18 3m -22 -29 12m -21 -43

Market data
Market Cap (m) Shares Outstanding (m) Dividend Yield (current yr.) 9172.74 154.8 17.72

Valuation
Year end Dec P/E Dividend yield FCF yield (FCF/mkt cap) EV/EBITDA EV/EBITA EV/Sales 2012A 13.3x 17.5% 9.1% 7.0x 8.3x 1.5x 2013E 14.4x 5.2% 9.0% 8.3x 9.8x 1.6x 2014E 13.8x 5.4% 9.3% 7.6x 9.0x 1.5x 2015E 13.3x 5.7% 9.8% 7.1x 8.3x 1.4x

Financial summary
Five Yr. EPS CAGR (%) Return on Equity FY12 (%) Current BVPS Net Debt (m current) N/A 13.7 N/A 1050.05

Key ratios
Source: Thomson Reuters, Nomura research

Year end Dec Revenue growth Operating margin Adj net debt/EBITDA Adj net debt/equity ROCE

2012A 4.0% 17.8% -0.8x -0.2x 21.4%

2013E 0.2% 16.9% 0.0x 0.0x 18.4%

2014E 2.6% 17.1% -0.4x -0.1x 19.9%

2015E 2.8% 17.3% -0.7x -0.2x 20.7%

Source: Company data, Nomura estimates Closing price from Datastream06 March 2013

Nomura | RTL

March 8, 2013

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 risks 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 nonadvertising 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 JV partnerships being the preferred approach. Content Investment within the Fremantle business will help the content business to build future brands, not only on TV but also through multiple platforms. Digital The divisions strong growth will continue through the expansion of its VOD platform across multiple devices while also developing its online brands.

2)

3)

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 such as 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.

Nomura | RTL

March 8, 2013

Advertising reliant, although geographically diversified 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 consolidated revenue split, 2013E

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

French radio RTL Belgium 3% 3% RTL Nederland 7%

Other segments 5%

French radio RTL Belgium 3% 4% RTL Germany 32% RTL Nederland 8%

Other segments 5%

RTL Germany 36%

Fremantle 28% Fremantle 32% Groupe M6 22% Groupe M6 (49% stake) 12%
Source: Company data, Nomura estimates. Note we take 49% of M6 group revenue

Source: Company data, Nomura estimates

Nomura | RTL

March 8, 2013

Fig. 3: Broadcasters 2012 net advertising revenue exposure

100.0% 9% 90.0% 80.0% 70.0% 60.0% 50.0% 91% 40.0% 30.0% 20.0% 10.0% 0.0% ITV Prosieben M6 TF1 Mediaset Mediaset Espana (TL5) Antena 3 RTL 68% 60% 82% 66% 57% 76% 97% 32% 40% 18% 34% 43% 24%

3%

NAR

Non-NAR Rev

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
RTL Belgium 4% RTL Nederland 9% French radio 3%

FremantleMedia 13% RTL Germany 54%

Groupe M6 17%

Source: Company data, Nomura estimates

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.

Nomura | RTL

March 8, 2013

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 RTL German Rev Growth -- 22.2% -0.1% -0.8% Pro7 German speaking revenues Pro7 German speaking rev growth
Source: Company data, Nomura estimates

1,865 1,813 1,844 9.7% -2.8% 1.7% 1,572 1,606 1,811 2.1% 5.6%

1,948 5.6% 1,867 3.1%

1,966 2,020 1,732 1,892 1,912 1,982 0.9% 2.7% -14.2% 9.2% 1.1% 3.7% 1,900 1,736 1,698 1,863 1,903 1,910 1.8% -8.6% -2.2% 9.7% 4.0% 0.3%

2,002 1.0% 1,929 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%
Source: Company data, Nomura estimates

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

50.0% 45.0% 40.0% 35.0% 30.0% 25.0% 20.0% 15.0% 10.0% 5.0% 0.0% 2001A 2002A 2003A 2004A 2005A 2006A 2007A 2008A 2009A 2010A 2011A 2012E

RTL Stations (Excl RTL2)

Sat 1

Pro7

Pro7 Group

Others

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

Nomura | RTL

March 8, 2013

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 growth) and margins

1999A Revenue Growth EBITA Margin 125 12.1% 1,036

2000A 1,090 5.2% 126 11.6%

2001A 1,148 5.3% 48 4.2%

2002A 1,386 20.7% 89 6.4%

2003A 1,294 86 6.6%

2004A 1,152 122 10.6%

2005A 1,057 -8.2% 120 11.4%

2006A 1,207 14.2% 128 10.6%

2007A 1,176 -2.6% 126 10.7%

2008A 1,296 10.2% 156 12.0%

2009A 1,273 -1.8% 156 12.3%

2010A 1,372 7.8% 140 10.2%

2012A 1,711 19.7% 138 8.1%

2013E 1,762 3.0% 142 8.1%

-6.6% -11.0%

Source: Company data, Nomura estimates

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 see German 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 also strong 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 multiple comparisons

EV/EBITDA RTL ProSieben* ITV Mediaset Mediaset Espana Antena3 M6 TF1 Median (ex RTL)
*Remove dividend from P for ProSieben. Source: Nomura estimates

P/FCF 11.1 12 12.7 20 31 23 14 10 14

P/E 14.4 11.5 12.4 NA 26.2 40.3 13.8 13 13.4

8.3 9.2 8.8 13 18.7 31.5 6.7 4.9 9.2

Nomura | RTL

March 8, 2013

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

Asset Mediengruppe RTL Deutschland Groupe M6 FremantleMedia RTL Nederland RTL Belgium French radio Total Net Cash/(Debt) Associates - AtresMedia (Antena3) - Others Total Equity Value Equity Value per share
Source: Nomura estimates

2013E EBITA 566 142 95 43 28

Multiple 10.0x 12.0x 8.0x 8.0x 7.0x

Methodology EV/EBITA Market Value EV/EBITA EV/EBITA EV/EBITA EV/EBITA

100% Value 5658.0 1557.2 1705.7 762.6 340.4 193.2

Stake 100% 49% 100% 100% 66% 100% Add: Add: Add:

RTL Val 5658.0 756.8 1705.7 762.6 224.7 193.2 9,301 35 218 221 9,775 64

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.

Nomura | RTL

March 8, 2013

Fig. 11: RTL P&L forecasts

Year End 31 Dec (EUR Million) Revenues Mediengruppe RTL Deutschland Groupe M6 FremantleMedia RTL Nederland RTL Belgium French radio Other segments Eliminations Total Sales % Growth Other Operating Income Total Consolidated Revenues % Growth Cost of Goods and Services EBITDA (After Prog. Rights Amortisation) % Growth % Margin Depreciation and Amortisation EBITA Mediengruppe RTL Deutschland Groupe M6 FremantleMedia RTL Nederland RTL Belgium French radio Other segments EBITA (Including Associates) % Growth % Margin Fair value adjustments Impairment of goodwill Gain/loss sale of subsidiaries EBIT % Growth % Margin Net Interests Other Financial Results Adjusted PTP (Excl. G'dwill & Excep'als) % Growth % Margin Pre-Tax Profit % Growth % Margin Taxes Minority Interests Basic Net Income % Growth % Margin Adjusted Net Inc. (Excl. G'dwill & Excep'als) % Growth % Margin Diluted Basic EPS () Diluted Adjusted EPS () % Growth DPS ()
Source: Company data, Nomura estimates

2010A

2011A

2012A

2013E

2014E

2015E

5,591 3.3% 54 5,645 3.5% -4,338 1,307 38.1% 23.2% -196

1,912 1,421 1,429 491 216 184 330 -218 5,765 3.1% 40 5,805 2.8% -4,493 1,312 0.4% 22.6% -178

1,982 1,387 1,711 431 210 180 304 -207 5,998 4.0% 45 6,043 4.1% -4,778 1,265 -3.6% 20.9% -187

2,002 1,350 1,762 431 202 175 298 -211 6,008 0.2% 45 6,053 0.2% -4,849 1,204 -4.8% 19.9% -183

2,042 1,390 1,833 440 200 174 299 -215 6,162 2.6% 46 6,208 2.6% -4,963 1,246 3.5% 20.1% -186

2,083 1,432 1,906 453 205 173 304 -220 6,335 2.8% 48 6,383 2.8% -5,092 1,291 3.6% 20.2% -189

529 249 143 134 46 30 3 1,111 47.1% 19.7% -11 -52 -7 1,041 104.8% 18.4% 10 4 1,121 50.8% 19.9% 1,055 103.6% 18.7% -268 -119 611 197.8% 10.8% 738 63.2% 13.1% 3.98 4.80 63.2% 5.00 1,134 2.1% 19.5% -13 -6 107 1,222 17.4% 21.0% -2 -27 1,132 1.0% 19.5% 1,193 13.1% 20.5% -302 -99 696 13.9% 12.0% 704 -4.6% 12.1% 4.53 4.58 -4.6% 5.10

581 224 138 97 45 30 -37 1,078 -4.9% 17.8% -8 -82 -9 979 -19.9% 16.2% -10 -1 1,068 -5.6% 17.7% 968 -18.8% 16.0% -277 -93 597 -14.2% 9.9% 697 -0.9% 11.5% 3.89 4.54 -0.9% 10.50

566 180 142 95 43 28 -33 1,021 -5.3% 16.9% 0 0 0 1,021 4.3% 16.9% 5 0 1,026 -3.9% 16.9% 1,026 6.0% 16.9% -287 -96 643 7.7% 10.6% 643 -7.8% 10.6% 4.18 4.18 -7.8% 3.14

580 181 164 94 41 27 -28 1,060 3.8% 17.1% 0 0 0 1,060 3.8% 17.1% 6 0 1,066 3.9% 17.2% 1,066 3.9% 17.2% -298 -99 669 4.0% 10.8% 669 4.0% 10.8% 4.35 4.35 4.0% 3.26

595 181 187 97 41 27 -26 1,102 4.0% 17.3% 0 0 0 1,102 4.0% 17.3% 7 0 1,109 4.1% 17.4% 1,109 4.1% 17.4% -311 -102 697 4.2% 10.9% 697 4.2% 10.9% 4.54 4.54 4.2% 3.40

Nomura | RTL

March 8, 2013

Fig. 12: RTL Cash Flow forecasts

Year End 31 Dec (EUR Million) Pre Tax Profit D&A Value Adj., Impairment & Provisions Share based payments Net Result on Disposals Net Interests Incl. Share of Associates Use of provisions Change in Working Capital Income Tax Paid Other Movements Operating Cash Flow Acquisitions of Programme and Sport Rights Subsidiaries and JVs Other Investments & Fin. Assets Other Int. & Tangible Assets Current Deposit with Shareholder Proceeds from Sale of T and IT assets Disposal of Subsids and JV (net of cash) Sale of Other investments and financial assets Interest received Investing Cash Flow Dividends Equity Issuance Debt Issuance/(Paydown) Financing Cash Flow Change in Cash Net Cash/(Debt)
Source: Company data, Nomura estimates

2010A 1,055 196 134 5 32 -29 -62 148 -293 -57 1,130 -96 -30 -18 -131 -254 19 112 403 22 27 -721 0 6 -715 442 1,437

2011A 1,193 175 232 6 -116 19 -79 -1 -287 -99 1,044 -79 -134 -38 -120 206 22 -6 29 18 -102 -902 0 -174 -1,076 -134 1,238

2012A 968 185 200 7 -33 83 -113 -44 -325 -1 925 -103 -8 -48 -90 162 27 -2 33 13 -16 -880 0 -85 -965 -56 1,050

2013E 1,026 183 50 5 0 45 -30 1 -269 0 1,014 -109 -25 -35 -95 100 0 0 0 16 -148 -1,732 0 0 -1,732 -865 35

2014E 1,066 186 50 9 0 50 -30 8 -280 0 1,058 -115 -25 -36 -97 100 0 0 0 18 -155 -537 0 0 -537 366 521

2015E 1,109 189 50 9 0 55 -30 9 -293 0 1,098 -121 -25 -37 -100 100 0 0 0 20 -163 -557 0 0 -557 378 899

Fig. 13: RTL balance sheet forecasts

Year End 31 Dec (EUR Million) Tangible + Other Intangible Fixed Assets Goodwill Programme And Sport Rights Investment In Associated Companies Loans And Other Financial Assets Deferred Tax Assets + Income Tax Receivable Receivables + Other Inventories Cash, Cash Equivalent, Securities Total Assets Shareholders Equity Minority Financial Debt Current Tax Liabilities And Deferred Tax Provisions Payables Total Liabilities And Shareholders' Equity Net Cash/(Debt)
Source: Company data, Nomura estimates

2010A 589 2,708 1,037 358 271 476 2,547 841 8,827 5,016 584 188 157 319 2,563 8,827 1,437

2011A 550 2,671 1,046 356 249 418 2,195 701 8,186 4,653 497 53 156 354 2,473 8,186 1,238

2012A 548 2,679 1,030 251 239 463 2,038 649 7,897 4,365 492 29 141 395 2,475 7,897 1,050

2013E 459 2,704 1,056 251 274 463 2,038 649 7,894 3,497 492 894 141 395 2,476 7,894 35

2014E 370 2,729 1,086 251 310 463 2,038 1,015 8,263 3,858 492 894 141 395 2,483 8,263 521

2015E 282 2,754 1,120 251 347 463 2,038 1,393 8,648 4,235 492 894 141 395 2,492 8,648 899

10

Nomura | RTL

March 8, 2013

Appendix A-1
Analyst Certification
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 RTL Ticker RTL LX Price EUR 60.15 Price date Stock rating Sector rating Disclosures 06-Mar-2013 Neutral Neutral

RTL (RTL LX)

Rating and target price chart (three year history)

EUR 60.15 (06-Mar-2013) Neutral (Sector rating: Neutral)

Date 08-Dec-10 09-Nov-10 07-May-10 15-Mar-10 Rating Target price 80.00 73.00 64.00 60.00 Closing price 66.02 68.80 57.60 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 of 3.5%. Our cash flows are discounted from 2030 and discounted back to 2013. The benchmark index for this stock is Dow Jones STOXX 600 Media. Risks that may impede the achievement of the target price The company derived the majority of its revenues from several European advertising markets, a very cyclical source of turnover. The company has a dominant shareholder, Bertelsmann, with more than 90% ownership, whose interest might be different from those of minority shareholders.

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Nomura | RTL

March 8, 2013

Important Disclosures
Online availability of research and conflict-of-interest disclosures
Nomura 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.aspx or requested from Nomura Securities International, Inc., on 1-877-865-5752. If you have any difficulties with the website, please email grpsupport@nomura.com for help. The analysts responsible for preparing this report have received compensation based upon various factors including the firm's total revenues, a portion of which is generated by Investment Banking activities. Unless otherwise noted, the non-US analysts listed at the front of this report are not registered/qualified as research analysts under FINRA/NYSE rules, may not be associated persons of NSI, and may not be subject to FINRA Rule 2711 and NYSE Rule 472 restrictions on communications with covered companies, public appearances, and trading securities held by a research analyst account. Nomura Global Financial Products Inc. (NGFP) Nomura Derivative Products Inc. (NDPI) and Nomura International plc. (NIplc) are registered with the Commodities Futures Trading Commission and the National Futures Association (NFA) as swap dealers. NGFP, NDPI, and NIplc 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 International plc research reports are employees within the Firm who are responsible for the sales and trading effort in the sector for which they have coverage. Industry Specialists do not contribute in any manner to the content of research reports in which their names appear. Marketing Analysts identified in some Nomura research reports are research analysts employed by Nomura International plc who are primarily responsible for marketing Nomuras Equity Research product in the sector for which they have coverage. Marketing Analysts may also contribute to research reports in which their names appear and publish research on their sector.

Distribution of ratings (Global)

The distribution of all ratings published by Nomura Global Equity Research is as follows: 43% have been assigned a Buy rating which, for purposes of mandatory disclosures, are classified as a Buy rating; 41% of companies with this rating 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 with this 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 with this 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 management discretion. In most cases, the fair value will equal the analyst's assessment of the current intrinsic fair value of the stock using an appropriate valuation methodology such as discounted cash flow or multiple analysis, etc. STOCKS A 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 that the analyst expects the stock to underperform the Benchmark over the next 12 months. A rating of 'Suspended', indicates that the rating, target price and estimates have been suspended temporarily to comply with applicable regulations and/or firm policies in certain circumstances including, 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 Emerging Markets (ex-Asia): MSCI Emerging Markets ex-Asia, unless otherwise stated in the valuation methodology. SECTORS A '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 that the analyst expects the sector to underperform the Benchmark during the next 12 months. Benchmarks are as follows: United States: S&P 500; Europe: Dow Jones 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
STOCKS Stock 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 that potential 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 price have been suspended temporarily to comply with applicable regulations and/or firm policies in certain circumstances including when Nomura is acting in an advisory capacity in a merger or strategic transaction involving the subject company. Securities and/or companies that are labelled as 'Not rated' or shown as 'No rating' are not in regular research coverage of the Nomura entity identified in the top banner. Investors should not expect continuing or additional information from Nomura relating to such securities and/or companies. SECTORS A 'Bullish' rating means most stocks in the sector have (or the weighted average recommendation of the stocks under coverage is) a positive absolute recommendation. A 'Neutral' rating means most stocks in the sector have (or the weighted average recommendation of the stocks under 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 Price
A Target Price, if discussed, reflects in part the analyst's estimates for the company's earnings. The achievement of any target price may be impeded by general market and macroeconomic trends, and by other risks related to the company or the market, and may not occur if the company's earnings differ from estimates.

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Disclaimers
This document contains material that has been prepared by the Nomura entity identified at the top or bottom of page 1 herein, if any, and/or, with the sole or joint contributions of one or more Nomura entities whose employees and their respective affiliations are specified on page 1 herein or identified elsewhere in the document. 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 including: Nomura Securities Co., Ltd. ('NSC') Tokyo, Japan; Nomura International plc ('NIplc'), UK; Nomura Securities International, Inc. ('NSI'), New York, US; Nomura International (Hong Kong) Ltd. (NIHK), Hong Kong; Nomura Financial Investment (Korea) Co., Ltd. (NFIK), Korea (Information on Nomura analysts registered with the Korea Financial Investment Association ('KOFIA') can be found on the KOFIA Intranet at http://dis.kofia.or.kr); Nomura Singapore Ltd. (NSL), Singapore (Registration number 197201440E, regulated by the Monetary Authority of Singapore); Nomura Australia Ltd. (NAL), Australia (ABN 48 003 032 513), regulated by the Australian Securities and Investment Commission ('ASIC') and holder of an Australian financial services licence number 246412; P.T. Nomura Indonesia (PTNI), Indonesia; Nomura Securities Malaysia Sdn. Bhd. (NSM), Malaysia; NIHK, Taipei Branch (NITB), Taiwan; Nomura Financial Advisory and Securities (India) Private Limited (NFASL), Mumbai, India (Registered Address: Ceejay House, Level 11, Plot F, Shivsagar Estate, Dr. Annie Besant Road, Worli, Mumbai- 400 018, India; Tel: +91 22 4037 4037, Fax: +91 22 4037 4111; SEBI Registration No: BSE INB011299030, NSE INB231299034, INF231299034, INE 231299034, MCX: INE261299034); NIplc, Madrid Branch (NIplc, Madrid) and NIplc, Italian Branch (NIplc, Italy). 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Nomura Group, and/or its officers, directors and employees, may, to the extent permitted by applicable law and/or regulation, deal as principal, agent, or otherwise, or have long or short positions in, or buy or sell, the securities, commodities or instruments, or options or other derivative instruments based thereon, of issuers or securities mentioned herein. Nomura Group companies may also act as market maker or liquidity provider (as defined within Financial Services Authority (FSA) rules in the UK) in the financial instruments of the issuer. Where the activity of market maker is carried out in accordance with the definition given to it by specific laws and regulations of the US or other jurisdictions, this will be separately disclosed within the specific issuer disclosures. This document may contain information obtained from third parties, including ratings from credit ratings agencies such as Standard & Poors. 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