The action of the audiovisual group stalled from the first quotations this Friday on the Paris Stock Exchange, under the influence of a deterioration of opinion on the part of Barclays, which is no longer a buyer. The bank puts forward three arguments: the likely failure of the merger with M6, a solitary position that would leave the Bouygues subsidiary unprotected against a possible recession in Europe and a mixed record in the diversification trades, traditional shock absorbers.
Barclays sees three reasons for no longer supporting TF1, which should fail to merge with M6 | Photo credits: Gabriel Jorby / Creative Commons
TF1 lost more than 5% at the opening on Friday at the Paris Stock Exchange. The action was weighed down by a downgrade from analysts at Barclays, who no longer see the case favorably. The broker is revising its opinion from “overweight” to “underweight”, with a price target now set at 6.50 euros. Or an additional drop of 6%, while the action of the audiovisual group has already fallen by more than 20% since the beginning of the year.
Three reasons for this. First, Barclays believes that a merger with M6 is unlikely. In question, serious problems of competition detected by the team in charge of the file within the French authority of this field, key in any operation of reconciliation. At the end of July, the two groups indicated that they had received a preliminary unfavorable opinion from the regulator. And the measures proposed by the Competition Authority to make the merger acceptable ” would make the project irrelevant “Replied with a common voice the two players in the sector. These objections relate particularly to the advertising market. The chains will have to present their arguments during hearings scheduled for September 5 and 6.
Mixed results in diversifications
Second point, which follows from the first, such a failure would leave the Bouygues subsidiary without protection against the probable recession to come », the intermediary evaluating at 75% this economic hypothesis. During the last two recessions, TF1 underperformed on the stock market, suffering from numerous lowerings of earnings forecasts by analysts, underlines Barclays, and the action notably experienced dropouts when the advertising market was at its lowest, like all broadcasters in Europe.
Finally, TF1’s diversification record appears more mixed than for the British ITV or the German Pro7Sat1, thus offering less cushion against a turnaround. At the end of July, the French signed an agreement with Reworld Media with the aim of selling it Unify Adversiting, its digital division in which the Doctissimo, Auféminin, Les Numériques and Marmiton sites are housed. A transaction which had been considered more opportune for Reworld Media than for the group of Martin Bouygues by the analyst in charge of the file at Greensome Finance.