France's early exit pummels stock
Team USA may be through to the next round of the FIFA World Cup tournament, but the sport known around the globe as the beautiful game has just turned ugly for Gallic broadcaster TF1.TF1 shares dropped 3.26% Tuesday after France’s national soccer team lost to World Cup host South Africa and made an ignominious exit from the competition. Stock has dropped 6.1% over the last week, which included Mexico defeating France and French players refusing to train after striker Nicolas Anelka was sent home for abusing trainer Raymond Domenech. Prices rallied slightly Wednesday, regaining 0.85% to close at e11.81 ($14.50). Despite rampant market fragmentation, ratings for France’s World Cup games underscore the fact that live soccer is still a huge audience draw. Almost 15 million watched France-Uruguay on June 11, when France labored to a goaless draw, and 15.2 million saw France-Mexico on Friday. Both games topped a 50 share of the TV audience. TF1′s bottom line is helped by the fact that it had sold on 37 of the 64 World Cup games to paybox Canal Plus and pubcaster France Televisions for a combined $40.5 million. But TF1 had been gambling on Les Bleus making some headway in the World Cup. It was offering 30-second commercials for games not involving France in the next round of the tournament at between $29,500 and $110,500 — and almost double those prices when France played.And one of the French team’s five sponsors, Gallic bank Credit Agricole, retired its World Cup ad campaign after Anelka’s rant. TF1 hadn’t expected to turn a profit after paying FIFA a whopping $147.4 million for 2010 World Cup rights, regarding it as a loss leader. “Rights costs have increased faster than ad revenues in the last 10 years,” pointed out Vincent Letang, at Screen Digest. Despite France reaching the World Cup final in 2006, rights holder TF1 admitted it had not recouped on investment in terms of direct short-term incremental money on ad sales during and around games Letang estimates that TF1′s World Cup coverage will only bring in $39.2 million-$49.1 million in incremental ad revenues. Of that, TF1 could now lose an estimated $12 million due to France’s early exit, according to ad agency Vivaki.That said, “When you’re the commercial leader in a market, you can’t afford to pass on events like the World Cup,” said Letang. “It has other positive effects, on brand equity, on new media (mobile, online video) and so on. So the bigger picture is not that bad,” Letang added.