France’s TF1 Group plans to focus on the development of thematic channels rather than rely on the advertising pull of its flagship channel, and to develop its production activity as part of a new strategy aimed at returning the group to growth.
The shift in emphasis comes as TF1 saw its operating profit for the full year fall by two thirds, despite uplift in the fourth quarter.
TF1 posted revenues of just over €2 billion (US$2.13 billion) for the year, up 2.9%. Operating profit plunged from €141.2 million in 2015 – a figure that admittedly included €33.7 million from the deconsolidation of Eurosport France – to €41.7 million last year.
The 2016 figure included a number of exceptional items including a €25.4 million hit from a 2015 regulation on coproduction in French drama, a €24.8 million charge on the amortisation of goodwill related to the controversial acquisition of Newen Studios, an €8.2 operating loss from LCI, which migrated to the free-to-air platform, and €25.3 million in charges related to the group’s transformation project.
While broadcasting revenue fell significantly, TF1’s digital activities saw strong growth. MYTF1 attracted 10.7 users on IPTV boxes for its catch-up TV offering, while the platform as a whole saw 1.3 million free-to-view videos watched across the year, leading to uplift in advertising revenues.
Presenting the company’s full year results to analysts this morning, CEO Gilles Pelisson said TF1 was developing a multi-screen strategy, and added that the company needed to extend its activity further down the value chain, develop its own content at competitive cost and expanding its distribution network to better expose its content. He said the group also needed to extend its reach outside of France by making the most of international production partnerships.
Pelisson said that in general the company would also rely more on digital activity to drive growth and make the group more profitable.
He said that by 2019 he expected the profit margin to reach double figures. To achieve this, he said, TF1 would need to maintain its advertising share this year. However, additional revenue excluding that from its five existing free-to-air channels should grow to more than a third of the total this year, he said.
Pelisson said that in addition to improving the profitability of free-to-air services, an extension of digital activity and an expansion of production would also be important. He said the company would use digital platforms to distribute all its output.