(AOF) – The Competition Authority must deliver its verdict on October 17 concerning the proposed merger between TF1 and M6. The organization heard the opinions of the various parties during hearings held on September 5 and 6. As part of the procedure, it also received an advisory opinion from Bercy, via a representative of the competition department (DGCCRF). According to Les Echos, the services of Bercy would lean in favor of a TF1-M6 merger, while suggesting to the two fiancés to make a final concession: the sale of TMC (TF1 group) or W9 (M6 group).
The surrender of either would be a significant sacrifice. Indeed, these two channels are the little sisters of the TF1 and M6 channels.
They perfectly complement their audiences by expanding to a younger audience and make it easier to amortize program purchases by serving as a second broadcast window. To be continued then.
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Key points
– Leading French television group with 29.9% audience share among 25-49 year olds;
– Five free-to-air channels -TF1, TMC, LCI, TFX, TF SERIES FILMS- 4 thematic pay channels -TV Breizh, Histoire, Ushuaïa and SérieClub- and a digital replay platform, MYTF1;
– Turnover of €2.4 billion, 89% generated in France and divided into three sectors: channel advertising (76% of revenue), studio and entertainment activities (17%) with Newen and the “Digital Unify”, bringing together the activities carried out under the brands Aufeminin, Doctissimo, Gamned! Marmiton, MylittleParis, Studio71 and Digital Factory;
– Business model based on 4 strengths: human, intellectual (editorial, commercial and content producer know-how), financial (solid equity and cash flow) and physical capital;
– Capital locked by Bouygues (43.7%) and by employees (9.1%) and by the legislative impossibility of a takeover bid, Gilles Pélisson being chairman of the 11-member board of directors;
– Healthy balance sheet with shareholders’ equity of €1.6 billion and a net surplus of €379 million and free cash flow of €197 million.
Challenges
– Strategy in 3 points: reinforcement of the core business, growth in streaming, production via internal synergies, development of Tech Media;
– Innovation strategy declined upstream with the production of content, downstream with digital based on the FabLab TF1: expansion of Tech Media in OTT, AdTech, open innovation and the cloud / support for start-ups (more than 30), with acceleration program (from creation to distribution) via the One Inno fund, the Media Lab and 3 innovation hubs / focus on database authentication (23 million users) for a targeted offer, including on certain households, via precision and granularity;
– Environmental strategy: for 2030: 30% decline, vs. 2019, in CO2 emissions via co-production, digital sobriety, soft mobility and decarbonization of purchases, for 2025: 35% decline in the electricity consumption of the TF1 tower;
– Leading advertising agency in France, with remarkable multi-media expertise and the ability to maintain its market share;
– Preparation of the Reconciliation of audiovisual activities with those of M6, expected for 2022.
Challenges
– Highly regulated sector with limits to redeployments and external growth, uncertainties linked to the rise of video on demand, connected TV and the entry of new players – Apple TV, Netflix, Amazon Prime, Google TV and, in 2023, HBO Max;
– Reconciliation of television activities, expected for 2023: expectation for October of the opinion of the Competition Authority; after the purchase of France Télévisions’ stake in the audiovisual subscription platform Salto, held with TF1, success of the streaming project;
– Vigilance of costs in a context of slowdown in the European economy;
– Outlook for 2022: strengthening of the Services sector, driven by new services and accretive contribution from Newen Studios;
– 2021 dividend of €0.45.
French players well positioned in audiovisual production
Among the independent players, the Frenchman Banijay is the world leader with an expected turnover of 3 billion euros in 2022 in a market which represents 100 billion in revenue. Mediawan (backed by the KKR fund), whose turnover amounts to 1 billion euros, is the other main French player in the sector. The market is still very fragmented because according to the European Audiovisual Observatory, the top twenty production groups were responsible for only 38% of titles created in 2020. However, experts believe that the sector has entered a phase consolidation. Thus Banijay’s stock market listing aims to enable it to better participate in this movement.