Telecinco notches record revs

Ad growth slows a touch

The years of dramatic TV ad growth at Spanish terrestrial broadcaster Telecinco look finished. But the Media-set-controlled network is still pumping margins beyond the reach of most broadcasters in western Europe.

Per today’s early morning trading update, first-half earnings rose 6% to Euros 186.4 million ($235.4 million) off record Janu-ary-June net revenues of $661 million, up 2%, both in line with market expectations. Operating profit (EBITDA) stood at $337.5 million, another record; EBITDA margins reach a robust 51%.

Audience fragmentation hasn’t punctured Telecinco’s bottom line, but it is slowing growth. A 6% drop in audience share to 21.8%, still significantly above Antena 3 (20.4%) and TVE-1 (18.7%) was off set by a first six month hike of 10.7% in the cost of advertising on Telecinco.

That figure is way down on previous double-digit ad growth at the web, as Spain’s TV ad boom begins to cool.

“The days of large ad pricing increases at Telecinco look as if they’re over,” said Javier Marin at Morgan Stanley.

Though slowing, Spanish first half TV ad growth of 7.5% still outpaces France (predicted at a first-half 4%) and Germany (forecast for 2006 at about 2%). Critics carp that Telecinco, a pure play youth-skewing channel, has no real plans on how to offset the slow erosion of its core ad bizz.

That may be true. But with franchise fiction series hits such as “CSI,” new Disney hit “Criminal Minds,” “Central Hospital,” “The Inspector” and “The Serranos,” plus “Big Brother” and “Operacion Triunfo,” Telecinco has a daunting primetime lineup for the summer and 2006/07.

Sustained TV ad growth looks good for a year or two more. For the time being, Telecinco can make hay while the sun shines.

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