TV ad ban creates no windfall for webs

TF1 and M6 report declining revenues

It’s a Gallic mystery that would confound author Georges Simenon’s much-loved Parisian cop, Inspector Maigret.

When the French government banned primetime advertising on public service webs in January, the major private broadcasters were expected to suck up the displaced ad revenue.

Recent financial results suggest the coin is going elsewhere — but where, exactly, is the question.

The ban removes advertising from the four France Televisions channels between 8 p.m. and 6 a.m. This is just the first step on the way to entirely ad-free broadcasting in 2012, which French president Nicolas Sarkozy argues will give the pubcaster more room for creative programming.

France Televisions is being compensated for its lost income — estimated at €450 million ($620 million) in the first phase — with cash collected through a new tax on fixed and mobile telephone operators and ad revenue at commercial broadcasters.

In advance of the change, analysts predicted a windfall for TF1 and M6, the dominant commercial webs, and Sarkozy’s critics argued the real aim of the scheme was to benefit his private sector friends. But things turned out differently.

This month TF1 reported a 27% drop in first quarter ad revenue compared to the same period last year, to $442 million. With audience levels “satisfactory,” the company blamed the plunge on the deteriorating advertising market, strong downward pressure on prices, and the compensation tax.

M6 reported an 11% fall in ad revenue to $202 million in the first quarter, blaming the drop on low ad volumes. It expects to see no change in the market in the coming months.

“We’re in some sort of negative feedback loop,” says Francois Godard at Enders Analysis. “There’s less inventory on sale, and the prices are collapsing, whereas you would expect lower inventory to sustain prices.”

The one major that seems to be riding the storm is paybox Canal Plus. It reported first quarter ad revenue up 3% to $48 million, attributed to growth in viewers and an affluent audience profile that is attractive to ad buyers.

But with most of its advertising scheduled in the early evening when it is free-to-air, Canal Plus is unlikely to be taking too much coin previously flowing to France Televisions after 8 p.m.

Commentators think advertising agencies are either holding back this business, or pushing it toward the digital terrestrial TV (DTT) channels which are increasing their audience share.

Reliable figures on first-quarter DTT performance are hard to find, but a pointer comes from the M6 group.

While revenue at its flagship channel was plunging, its digital channels W9 and Teva, and other new media operations, reported a 22.5% rise in first quarter ad revenue to $34 million.

“Indications are that (DTT) net revenues have increased, but we don’t know for sure the exact balance of the market,” Godard says. “There is still some fog around exactly what has happened.”