UPDATE 1-TV group TF1 H1 profits fall, keeps cautious outlook

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PARIS, July 31 (Reuters) - TF1 (TFFP.PA), France's leading commercial television company, posted lower first-half profits on Thursday as a global economic slowdown and programming costs from the Euro 2008 soccer tournament hit earnings.

Operating profit fell 35 percent to 171.4 million euros ($267.7 million) while net profit fell 32.7 percent to 125 million euros.

First-half sales fell 4.7 percent to 1.364 billion euros, with advertising sales falling 3.6 percent to 891 million euros.

Eleven analysts polled by Reuters Estimates forecast operating profit of 167 million euros, advertising sales of 895 million euros and total sales of 1.364 billion euros.

TF1 attracts one-half of France's TV ad spending. It broadcasts well-known shows such as "Star Academy" and "Who Wants To Be A Millionaire?".

However, its audience share has come under pressure from free digital terrestrial television (DTT) channels and the Internet.

TF1 maintained its previous outlook for lower 2008 sales and higher programming costs.

"The TF1 Group is reiterating its 2008 full year guidance of a decline of around 3 percent in consolidated revenue and of growth in programming costs of less than 3 percent," it said in a statement.

TF1's profit fall and cautious outlook echoed a similar message from its smaller rival French M6 (MMTP.PA).

Earlier this month, M6 also posted lower first-half profits and said it did not expect any pick-up in the advertising market during the second half of the year.

However, both TF1 and M6 are set to benefit from a proposal by French President Nicolas Sarkozy to scrap advertisements on state-owned public TV channels.

TF1 shares closed down 4.2 percent at 11.06 euros. The stock has fallen around 40 percent since the start of 2008, underperforming a roughly 20 percent decline at M6 and in the broader French SBF 120 index .SBF120.

French conglomerate Bouygues (BOUY.PA) has a 43 percent stake in TF1.

(Reporting by Dominique Vidalon and Sudip Kar-Gupta; editing by Sue Thomas)