$237.3 million support will offset advertising fall

The European Commission approved Thursday a French government one-off bailout of pubcaster France Televisions E150 million ($237.3 million).

The aid approval comes as the broadcaster’s board revised its budget for this year, incorporating expected losses of $158.2 million, due to an expected fall in ad revs of $240.5 million.

France Televisions justified the state aid, saying ad revs are being hit by President Nicolas Sarkozy’s plans to ban advertising on public TV and radio.

The European Union buys into the argument. “The E150 million capital injection should enable France Televisions to fulfill its current tasks while the reform measures are under discussion,” said EU competition commissioner Neelie Kroes.

In the first step in the total removal of direct advertising, starting in January, France Televisions channels will not be able to sked commercial breaks after 8 p.m., Sarkozy announced in June.

The ban is already dissuading advertisers from placing full 2008-09 primetime campaigns with France 2 and France 3, France Televisions’ main TV channels.

Larger forces are at work, however.

France Televisions’ plunging ad sales are also driven by escalating market fragmentation in France, as cable, satellite and DTT channels erode incumbent broadcaster auds.

According to Jean-Dominique Seval, marketing and commercial director at French consultancy Idate, total TV ad revs in France rose 7.1% to $10.6 billion last year. But France’s “historic” channels saw only a 0.5% ad rev increase, to $8.7 billion.

France Televisions set itself an ambitious full-year ad sales target of $1.3 billion, but it was reportedly already $58.1 million below guidance through Feb. 12.

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