Another Digital Dividend: Competitors Circling

Michael Hedges December 15, 2011 Follow on Twitter

It’s a new golden age for commercial television broadcasters. The TV ad share is robust, running away from nearly all other sectors. Digital TV arrived and people are watching more, anywhere, all the time. So why all the long faces?

“Bad news” is how Canal+ chairman Bertrand Meheut views Qatar-based broadcaster Al-Jazeera buying up sports rights in its bid to establish the Al-Jazeera Sport channel. Speaking at a media conference (December 13), M. Meheut called the reported €61 million acquisition of the biggest part of Champions League football rights “economically irrational.” Part of entertainment giant Vivendi, Canal+ Group owns and operates pay-TV channels in France including Canal+ and Sport+.

The biggest digital dividend, it seems, is more competitors. And some of them have lots of money, experience and drive. And more than a few have really big teeth.

There are, essentially, three commercial television broadcasters in France: TF1, Canal+ and M6. Each operates a variety of free-to-air, cable, satellite and pay-TV channels. Groupe TF1 reported first half 2011 ad revenues of €905 million, up 4.7% year on year. First half 2011 ad revenues for M6 (RTL Group) were up 5.3% to €356.5 million. Canal+ reported subscription revenue of €818 million for the first half 2011, up from €798 million in the same period 2010.

But recent ad revenue trends are troubling. While television ad spending in France for November was up 1.5% compared with the same month in 2010, legacy channels TF1 and M6 saw no benefit with big increases going to new digital channels. In mid-November TF1 issued guidance warning to investors saying 2011 profits could be soft.

The French legacy broadcasters are scrambling for space on every platform. TF1 re-entered the pay-TV market (December 6) with Lib’Télé offering news channel LCI and sports channels Eurosport and CFoot. That followed Canal+ entering the free-to-air TV market on the acquisition of Direct 8 and Direct Star from Bolloré (December 2). The big French TV broadcasters, including public broadcaster France Télévisions, are heavily invested in IPTV and video-on-demand services. France Télévisions looked at entering the pay-TV market, too.

Analogue television disappeared in France at the end of November. All went reasonably smoothly and the French media regulator Conseil supérieur de l'audiovisuel (CSA) plans to license six new free-to-air digital channels. At one time the legacy commercial channels expected to receive one each, “bonus channels” because of their investment in the digital build-out. That plan fell foul of the European Commission on State aid grounds (September 28) and the CSA was asked to reconsider. The “bonus channel” plan was dropped two months later.

The CSA rejected (December 6) applications from TF1 and M6 to move pay-TV channels LCI and Paris Première, respectively, to digital terrestrial TV because of “technical and economic consequences.” The decision, which was expected, will have little of no bearing on the six new free-to-air channel allocations.

Applications for the new free-to-air channels are in process. Broadcasters NextRadioTV and NRJ Group are front-runners along with publisher L’Equipe. NextRadioTV wants to offer a sports channel as does L’Equipe. The CSA is expected to make an announcement mid-March and the new channels could take to the airwaves by summer.

The big legacy television operators find themselves surrounded by competitors. Indeed they are seeing competitors everywhere. “Everyone says digital television has shaken the networks,” remarked Canal+ CEO Rodolphe Belmer, quoted by telobs.com (December 12). “But what is coming on the internet is digital television times one hundred.”

There are always, it seems, bigger competitors. “Google’s market capitalization is one hundred time that of TF1,” said TF1 CEO Nonce Paolini. “Apple’s is fifty times. Facing them, protectionism serves no purpose.

“This situation puts us in a position of chronic weakness,” he continued. “Everything between the internet and TV…a world where there are no rules and another extremely regulated…and both will be competing in the living room.”

See also in ftm Knowledge

Media in France

French audiences are moving fast to every new platform. Mobile and Web media challenges the old guard while rule makers seek new directions. Media life in France... and a few secrets. includes updated Resources 140 pages PDF (November 2011)

Order here