UPDATE 1-Publicis sees limited risk of French TV ad change

(Adds details)

By Dominique Vidalon

PARIS, Jan 10 (Reuters) - The head of advertising group Publicis (PUBP.PA) said on Thursday there was a risk France's plan to scrap advertising on state-owned TV channels could slow the growth of the French ad market.

But Publicis Chairman and Chief Executive Maurice Levy also told Reuters in a phone interview this risk could be limited if the plan was executed over several years.

Levy, who believes the buoyancy of French Internet advertising could help limit the negative impact of the plan, said the government should also keep at a minimum level a proposed tax on the revenue of new communication means such as internet access and mobile phones.

"This decision could slow the growth of the French advertising market," Levy said.

"I am not very pessimistic particularly if the government does two things: if there is a transition (implementing the measure over time) and if the tax (on Internet access and mobile phones) is as 'infinitesimal' as has been said," he added.

On Tuesday President Nicolas Sarkozy proposed scrapping commercials on state-owned televisions.

The proposal, which would bring France closer to the British model, is to make up for the public channel ad revenue shortfall with a tax on the advertising revenues of private channels and a small tax on Internet and cell phone users.

Officially the plan, branded by some observers as the biggest change for the French TV advertising market in 40 years, is aimed at encouraging good quality programming.

It is also widely seen as a boon to private broadcasters TF1 (TFFP.PA) and M6 (MMTP.PA), which could grab the bulk of the estimated 800 million euros ($1.17 billion) in advertising revenue that would exit public channels.

The proposal has already drawn concern from advertisers and ad space buyers who fear that reduced competition for TF1 and M6 would free their hands to hike TV ad space prices, possibly hitting advertising growth in some sectors.

France has not given much detail on the proposed plan or its timetable.

Levy said implementing the change over several years from 2009 would give time to advertisers to find solutions and notably allow other media including radio and the print press to benefit from the future ad budget shifts.

"The risk (of a slowdown in ad spending) is not with a specific sector but it's more with small advertisers," he said.

France's advertisers association, Union des Annonceurs (UDA), said on Wednesday it feared the plan could wipe out 25 percent of TV ad space, hitting small and medium-sized advertisers who could not match the "inevitable explosion of ad fees on commercial channels". (Editing by Sudip Kar-Gupta and Sue Thomas)