Tough times ahead for European FTA TV
March 24, 2020
The Coronavirus might be helping stay-at-home folk improve viewing ratings, but European commercial TV free-to-air broadcasters are expected to have a tough time for the upcoming quarter year, at least. For example, ITV said they will cancel their Dividend and scrubbed their previous guidance for 2020 revenues.
As previously reported France’s TF1 issued a profit warning. Investment bank Exane/BNPP said: “[The TF1 warning] suggests that despite a rise in content consumption on its channels and platforms, it had seen a significant negative impact on its advertising revenues in March and would expect a worse scenario in April.”
TF1 reported that advertisers in the tourism, entertainment and transport sectors have either moved or cancelled their campaigns.
“Similar trends are observed for Unify, TF1’s digital activities, with the exception of the e-commerce box subscription which is held up slightly better.” Exane’s note adds that TF1’s Studio business has been impacted with productions having gradually stopped. For example, 30 per cent of Newen’s productions are produced on weekly basis which will impact the group’s FY results as well as the absence of cultural events.
ITV is in the same boat, and says that it is seeing increasing deferrals for March and April ad-bookings and in sectors beyond travel. It has also suspended production on its top shows, not least Coronation Street.
Exane/BNPP reminded investors that broadcasters such as TF1 and the UK’s ITV (which also issued a profits statement cancelling their earlier guidance for the year) are “early cycle” businesses and have in the last two crises been disproportionally negatively impacted vs other media plays. “On the flipside they were also among the quickest to rebound after crises. We note that since 2007/08 the competitive dynamics have changed significantly (for example Netflix streaming offer only launched in 2007) which may lead to a more challenged rebound post the crisis,” adds the bank.
Returning to ITV, Exane says that the non-payment of the Dividend together with some other cash and capex measures put in place will allow the group to retain £300 million of cash.”
“At ITV Studios’ film production capability is now severely impacted as well which had the group to pause a range of productions in the UK and internationally. The group underlines though that a large part of its cost base is variable and expects to somewhat benefit from the increased demand for library sales,” says Exane’s note.