Ben Lofthouse, manager of Henderson International Income Trust (HINT), explains why he likes entertainment network RTL. It is the trust's seventh largest holding, accounting for 2.1 per cent of assets at the end of June.
"The US in 2010 was a depressed growth environment with historically low valuations and we found plenty of opportunities in our search for yield there. The market has re-rated somewhat since, which is not to say there isn't still value, but we see the trends of investment theses we employed there coming through in Europe. One area that looked attractive [in the US in 2010] was media. A highly cash-generative but cyclical industry, hard hit by the financial crisis, we found opportunity for capital growth with a healthy yield as gross domestic product (GDP) growth in the US started to pick up once again.
"Now media companies in the eurozone look in a similar position to those in the US some years ago and, as such, earlier this year, we invested in various media companies in Europe, including free-to-air operator RTL.
"This is one of the largest multimedia businesses in the region, has well-diversified revenue streams and operates out of nine countries, with 43 per cent of its revenues non-advertising-related. It was attractively valued relative to its peers and in a good position due to the market strength it retains in Germany."
RTL runs 53 TV channels and 28 radio stations in 10 countries, and creates 9,100 hours of TV programming a year across 62 countries. It is also the world's largest independent rights management business with more than 20,000 hours of content selling in over 150 countries globally. It has licensing operations building brands across multiple platforms, including consumer products, live events, gaming, mobile, online and social media.
The Luxembourg-based company's shares trade on the Frankfurt, Brussels and Luxembourg stock exchanges at around €67 a share.
