RTL buys YouTube fashion channel in battle for younger viewers

By Harro Ten Wolde and Joern Poltz
A man stands in a window of the headquarters of RTL Media Group Germany in Cologne November 12, 2012. REUTERS/Wolfgang Rattay

By Harro Ten Wolde and Joern Poltz

FRANKFURT (Reuters) - European broadcaster RTL Group is buying control of online fashion channel StyleHaul, stepping up its involvement in Google's YouTube platform in the race to reach younger audiences less attracted to traditional media.

RTL said on Monday it had agreed to pay $107 million to increase its stake in StyleHaul, which has around 900 million monthly views, to 93.6 percent from 22.3 percent.

The move is aimed at tapping the growing trend among consumers to watch videos and listen to music on smartphones and tablet computers via platforms such as YouTube.

Advertisers and media companies are placing big bets on the hugely popular YouTube, which they see as a vital way to reach younger audiences.

These viewers are sometimes referred to as "Millennials", which loosely defines people born between the early 1980s and early 2000s. They are mostly active on online platforms and less likely to access information via traditional media such as television, newspapers and magazines.

Earlier this year, Walt Disney Co agreed to pay as much as $950 million to buy Maker Studios, one of YouTube's largest production and distribution networks.

RTL earlier this year bought a 65 percent stake in U.S. digital video advertising group SpotXchange for $144 million, while German rival ProSiebenSat.1 has bought 20 percent of U.S. online video maker Collective Digital Studios.

RTL is controlled by German media conglomerate Bertelsmann, whose venture capital fund Bertelsmann Digital Media Investment was among the parties that agreed to sell shares in StyleHaul to RTL.

This year, RTL expects to more than double its online video views to around 40 billion. That number is expected to go up next year, RTL co-Chief Executive Guillaume de Posch told Reuters, declining to be more specific.

ProSieben last month said it would reach its 2015 revenue growth target early because its digital business was performing much better than expected.

StyleHaul is expected to generate revenue in the low three-digit million dollars in three or four years, De Posch said, adding he expected it to break even in one or two years.

Last year, RTL made about 236 million euros ($295 million), or 4 percent of its total revenues, from its digital business. "Our goal is to at least double these revenue figures in three or four years," De Posch said.

RTL plans to spend an average of 250 million euros per year on mergers and acquisitions, focusing on content and digital.

($1 = 0.8003 euro)

(Editing by Maria Sheahan and Mark Potter)