Series of Headwinds for Traditional Televisions

Listening time at its lowest, advertising at half mast and stock market prices in free fall… Televisions have been experiencing a wind of depression for several weeks.

The proof: TF1 has dropped almost 27% since mid-April; M6, almost 17%. And the trend is not Franco-French: ITV has lost around 18% and ProSiebenSat.1 around 13% since their spring highs. That is much more than the stock market in general.

The publication of several quarterly results in April threw a chill on the market, showing a contraction in advertising revenues, against a backdrop of difficult economic conditions. According to the Bump barometer, advertising investments in television fell by more than 7% in the first quarter, over one year, in France. “And the trend is even worse in Germany and Great Britain, notes Jean-Michel Salvador, analyst at AlphaValue. ProSiebenSat.1 had a disastrous first quarter. For Oddo BHF, the gloomy trend in advertising is likely to last into the second quarter. The bank expects a decline of around 6.5% in advertising revenues for TF1 and M6, which will publish their accounts at the end of July.

Low listening time

At the same time, the general public is increasingly turning away from traditional channels. In May, the listening time calculated by Médiamétrie is 3 h 13 (-4 minutes since May 2022), the lowest since June 2022 (excluding summer) and a lowest (still excluding summer) since at least 2006! Worse still, according to initial estimates, this indicator could fall further in June, sinking to new lows.

Certainly, with the exception of the period of health crisis, the small screen knew already a slow desertion for some years, especially the youngest, while the French are more and more subscribers to platforms like Netflix. “What is more worrying is that the new equipment smart TV type, highlighting the giants of streaming, rather encourage diversifying consumption outside television channels, notes a good connoisseur. For the time being, advertisers have not drastically reduced their investments in television, which remains a m medium. But on certain targets such as young people, they will undoubtedly hesitate more. »

The risk ? That the channels are forced to “cut” mively in their programs, against a backdrop of a decline in their main funding, advertising, which would have the effect of diverting even more TV from the living room… “A vicious circle”, continues this professional .

“Televisions are suffering a double penalty: a fairly gloomy economy, which weighs on advertising, and a more structural underlying trend, with increased competition from streaming. And, moreover, as the platforms are obliged to invest in French productions in a much more significant way than in other European countries [avec le décret SMAD, NDLR] they should remove part of the competitive advantage of traditional players, ”summarizes Julien Roch, analyst at Barclays.

Transform their model

For him, as for several analysts, it is difficult to stem the depression in stock prices. “The values ​​of television, by nature cyclical, could go up if the economic situation improves. But the problem of competition will remain and consolidation attempts were nipped in the bud, which prevents a clear rebound. For the time being, we do not yet know if they will succeed in transforming their model into the non-linear,” continues the analyst.

We must therefore expect possible one-off cuts in program costs, depending on changes in results variations, as TF1 did for example in the first quarter. However, most analysts do not foresee layoffs in French groups – unlike ProSiebenSat.1, which could cut up to 30% of its workforce, according to certain estimates (not confirmed by the group).

But all is not black. “Televisions have seen a mive rebound in post-Covid advertising. Admittedly, it is likely that there will be a slight decrease of around 2-3 points in 2023, but we would remain above 2019 levels”, wants to reure Xavier Guillon, general manager of France Pub. The Rugby World Cup at the start of the school year could support the trend. “Some saw television as dead a few years ago, but traditional channels stood out during the health crisis, with significantly increased listening times, reminds a professional. They will adapt by focusing on their own platforms. Digital is a clear growth lever for the future. »