TF1 Posts Loss on High World Cup Costs

July 25, 2014 World Screen Top Stories

PARIS: In its second quarter, France's TF1 posted an operating loss of 30 million euros ($40.35 million) compared to Q2 2013, due primarily to costs associated with airing the FIFA World Cup.

For the first half, operating profit fell to 24.2 million euros ($32.5 million) from the 42.6 million euros ($57.3 million) a year ago. This was due mainly to the 55.7 million euros ($74.9 million) in costs associated with the Cup. Second-quarter current operating profile was 13.3 million euros ($17.9 million) compared to the 63.3 million euros ($85 million) in the year-ago period.

The World Cup games did bring in some of the network's best ratings, though, and around 70 million euros ($94 million) in ad revenue, even with the weak French ad market. In all, ad revenue was down just 1.6 percent at 12.6 million euros ($16.9 million).

The TF1 group’s four free-to-air channels turned in a very satisfying performance. The cumulative audience share for the first half of 2014 was 28.9 percent among individuals aged 4 and over. In the second quarter of 2014, the Group’s audience share reached 29.1 percent among individuals aged 4-plus.

Revenue for the pay-TV sector fell by 7.6 percent in the first half of 2014 to 63.1 million euros ($85 million), with competition from an expanded freeview offer and a sluggish ad environment.

In looking ahead, TF1 said that in the absence of "any clear signs of economic recovery in France, advertisers remain wary and visibility on future advertising spend is still very limited. Market fragmentation and the growing volumes of advertising shown on DTT are also ratcheting up the competitive pressure.

"In the second half of the year we will offer programming anchored on major brands, offering advertisers unrivaled exposure. At the same time, we are driving ahead with our policy of innovation in all areas, while maintaining control over our cost base. Under Phase II of our optimization plan, which calls for total recurring savings of 85 million euros ($114.2 million), we are reiterating our target of achieving the 19 million euros ($25.5 million) of recurring savings scheduled for the second half of 2014.

"Building on our solid market position and rigorous management approach, we will remain alert during the months ahead so that we can continue to adapt our business model to changing market conditions, help to drive regulatory change while keeping focused on growth opportunities."