Reports drive up French TV stock

Government may liberalize ownership laws

Shares in French terrestrial webs TF1 and M6 and paybox Canal Plus rose sharply Tuesday following reports that the government plans to change media-ownership laws.

Investors warmed to news in business daily Les Echos that the reforms would allow larger private TV groups to be formed, in line with a recent European Union directive.

The 49% limit on shareholdings in French terrestrial stations may be dropped to help French media entities grow enough to compete with large telcos and Internet groups, said Les Echos.

TF1 stock jumped 12.76% to close at e21.38 ($30.13), while shares of smaller rival M6 rose 8.25% to $32 and Canal Plus gained 7.9% to $12.

Les Echos said the changes may also liberalize the relationship between producers and broadcasters. At present, broadcasters are obliged to invest 16% of advertising revenues in French production.

“Deregulation could prove a material positive in France, which is arguably the most regulated TV market in Europe,” said a Citigroup analyst.

Citigroup added that the changes could put TF1, which is 42.9% owned by French construction group Bouygues, and M6, controlled by Luxembourg-based RTL, which is itself controlled by Germany’s Bertelsmann, into play.

An Oddo Securities analyst said: “If these changes are implemented, they could be strong boosters for TF1 and M6 shares, whose valuations are historically low given the current weakness of the advertising market.”

France’s largest brokerage firm, CA Cheuvreux, called the move “very positive for M6, allowing Bertelsmann to increase its stake. Regarding TF1, even though we do not believe that Bouygues is a seller, this will relaunch speculation around the ownership of TF1.”