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Television Results – No Drama, None PlannedThe business of big-time television has never been without drama, on and off the screen. Add the tensions of disappearing ad revenue, audiences scattering and competitors on the Web and mobile phones and it’s a war out there. And, perhaps, it’s a good time to keep the fighting outside the building.TF1 Chairman and CEO Nonce Paolini reported full year financial results for 2009 last week (February 18). Consolidated revenues were down 9% to €2-365 billion and profits had dropped 30% over 2008, to €115 million. Analysts, stock traders and other gamblers were “disappointed,” punishing the share price for a few hours. The TF1 Group now includes digital channels TMC and NT1, to little avail. Main channel TF1 saw ad revenues fall 13% to €1.429 billion even as 4th quarter revenues were up a whopping 1%. Other revenues streams – pay-TV, teleshopping, et.al. – were off 1%. Over the past two years TF1’s ad revenues dropped by €300 million. One of critics enduring complaints about TF1 is the seemingly endless repeats. It’s cost effective, bringing down programming costs by about 10%. Sports rights are a significant cost, which Paolini addressed saying “We will spend in 2010 €87 million for 27 (football) games. In 2006 we spent €108 million for 24 games.” In total TF1 cut €105 million in programming costs over 2008 and another €50 million in “structural” costs. Some sports rights for 2010 have been sold off to mobile phone operators. Though investors always approve of cost reductions – less for sports rights, lower head-count – TF1 needs a little drama – on screen. To that Paolini focused much of his comments on programming. “We need programs like The Mentalist or Dr. House,” he said. Every hour of TF1 is analyzed with breathtaking seriousness, the channel being Europe’s highest rated by market share, not to forget revenue share. “TF1 keeps the advantage of being able to offer advertisers the most powerful showcase,” said the boss. “TF1 will have days with 22% and others 27%.” “2010 will be the year of rebound,” said the TF1 Chairman, after which he hedged his bets. “It would be unthinkable to give more optimistic forecasts, although I hope that we do better than 2% growth. The economic recovery is fragile.” Ad rates on TF1 suffered double digit cuts in 2009. “The forecast growth in turnover for 2010 is disappointing,” said Goldman Sachs analyst Richard Jones, quoted by Reuters (February 18), “although the group has been overly cautious in its forecast of decline and recovery, so we do not attach high importance.” TF1’s average audience share – by far the most dominant television channel in France – wavered only slightly in 2009, down to 26.1%. Like every other commercial broadcaster, Paolini looks for new revenue opportunities. The Web is the obvious direction, on-line gambling a rather non-traditional choice. In January an agreement was reached with Française des Jeux to develop on-line betting, gambling and gaming. Indeed parent company Bouygues has entered the UK on-line gaming market. “TF1 has yet to monetize its content,” said Paolini, “despite millions of videos viewed on the web around shows like Secret Story.” Paid downloads reached 300,000, not a huge number but a beginning. Top management frictions plaguing TF1 in 2009 have abated, Paolini taking complete control. Between December 2008 and March 2009, TF1’s share value had fallen by half. In June Axel Duroux – RTL France CEO, ex-Endemol - was hired as TF1’s CEO, the ‘content guy’. Paolini remained company chairman saying Duroux would “assist in all functions.” So excited was M6 (RTL owned) CEO Nick de Tavernost at having his former board member (and boss) jumping to the competition Duroux had to sit out his termination notice. Last October, only weeks into this new management arrangement, the wheels came off. First, Duroux threatened to resign. TF1’s principal shareholder Martin Bouygues brokered a truce. By mid-month the two were no longer whistling the same tune. By the end of the month Duroux was out after five weeks on the job, which puts perspective on what, exactly, that job was. “TF1 and Axel Duroux decided to separate by mutual agreement for differing views on the strategic conduct of the business,” said the company statement (October 23 2009). The high drama at TF1 may have ended. The 2009 results showed a slight revenue improvement in the 4th quarter. ZenithOptimedia forecasts a 1.5% rise in television ad spending in France for 1020. If Paolini is gambling, it’s on an eventual rising tide of ad spending mixed with a little gambling. See also in ftm KnowledgeMedia in FranceFrench 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 103 pages PDF (November 2009)
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