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UPDATE 2-France's TF1 warns TV ad market could shrink again
February 19, 2014 / 7:57 AM / 4 years ago

UPDATE 2-France's TF1 warns TV ad market could shrink again

By Leila Abboud and Gwénaëlle Barzic

PARIS, Feb 19 (Reuters) - France's largest private broadcaster, TF1, said the TV advertising market could shrink again this year after it posted lower sales and flat net profit for the fourth quarter of 2013.

"In a gloomy economic climate with no sign of recovery and visibility still poor, the net television advertising market could see a contraction in 2014," TF1 said on Wednesday.

Fourth-quarter revenue fell 5.7 percent to 724 million euros ($996 million). Current operating profit rose 14 percent to 118.8 million euros, while net profit was stable at 137 million.

Analysts had forecast fourth quarter sales of 756.5 million euros and net profit of 69 million euros, according to Thomson Reuters I/B/E/S.

TF1 shares were down 2.7 percent by 0816 GMT. Analysts at Liberum said market expectations for TF1 this year would need to come down "given the lack of advertising momentum and visibility and rising competition in the French market".

TF1's competitor M6 echoed the downbeat tone on the French advertising market after publishing results on Tuesday. Yet its shares rose 1.7 percent to 16.96 euros because its ad sales were ahead of expectations.

Analysts explained that M6 had been more willing to cut prices on advertising than its larger rival TF1. .

TF1 continued to cut costs, including on programme costs and overhead, to bolster its profits even as advertising sales contracted. Some 41 million euros were taken out of the cost base last year, and TF1 said it was on track to hit a cost cut target of 85 million by year-end.

Philippe Denery, chief financial officer, promised that the efforts to "adjust the company's cost structure" would continue.

The group said it would pay a stable dividend of 0.55 per share for the year.

It stayed silent on how it would use the proceeds of a deal announced in January to sell a controlling stake of TV channel Eurosport to Discovery Communications. An additional stake could also be sold this year under a put option.

"Our first priority is to keep a strong balance sheet, second is to be able to seize opportunities that come up to strengthen the business, and third is returning money to shareholders," said Denery.

"We will need to redeploy some of the cash to develop the business after the Eurosport exit, but that will not impede some return to shareholders."

Media reports have said TF1 could be interested in buying NextRadio, which owns business channel BFM, or online video player Dailymotion, although Denery declined to comment on such targets.

TF1's market capitalisation stood at 2.9 billion euros at Tuesday's close.

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