Sat wars hurt TF1 profits

$16 mil drop in profits, but rev up to $1.7 bil

PARIS — France’s leading terrestrial broadcaster, TF1, announced its 1997 results Wednesday night, posting a net profit decline of 16.2%. This is largely attributable to the group’s ongoing investments in the TPS digital platform, of which TF1 is 25% owner.

According to a company statement, profits fell to 482 million ($80 million), from about $96 million last year. Revenues, however, are on the upswing overall by 6.5% to $1.7 billion. Contributing to the rise were a 3.6% hike in ad revenue despite a widely felt malaise in the ad market, and a 16% increase in revenue from TF1’s diversified activities including distribution, publishing and the Eurosport net. TF1 owns a third of the all sports channel, which had a 20% jump in revenues and a healthy dose of profits.

The negative after tax impact of TPS was $23 million, while the increase in French Corporation Tax (from 36.6% to 41.6%) cost the company a further $13 million. Excluding these two factors, TF1 profits would have grown by 17.6%.

Thanks to startup costs, and the ongoing battle between TPS and rival Canal Satellite digital platform, the losses incurred by TF1 were expected, and losses for 1998 will likely be lower. TPS currently has some 350,000 subscribers — well above first year predictions of 175,000.

TF1 chairman Patrick Le Lay had moved to offset the startup costs, as well as the slow advertising market, by keeping programming costs for 1997 at the same level as 1996. A TF1 statement said they would remain stable for 1998, excluding exceptional sporting events like the Winter Olympics and World Cup Soccer.

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