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Industry Analysis

Free To Air (FTA) Broadcasting in Europe

Peer Group Analysis / Competitor Intelligence 10th December 2011

Š Heernet Ventures Limited 2011


ABOUT THE AUTHOR This report is published by Heernet Ventures Limited. The company provides research, analysis and advisory services to the global media industry and operates the media industry research website, G2Mi.com. For further details on Heernet Ventures, please visit the company website, heernet.com.

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Notes

2


Table of Contents

1.

Summary

6

2.

Sector Analysis and Themes

8

3.

Peer Group Analysis – key metrics

14

Revenue and Profitability Growth Diversification Operating Costs Analysis Efficiency Financial strength Capital Expenditure Cash Returns to Shareholders

4.

Peer Group Analysis - competitive responses TF1 ITV Mediaset Antena 3 RTL Group

15 16 17 18 19 20 21 22

23 24 25 26 27 28

3


Table of Contents

1.

Appendix

32

-

Key financial ratios and data

33

-

Share price performance

34

-

Selected deals and partnerships

36

-

Company Profiles

37

TF1 ITV Mediaset Antena 3 RTL Group

37 38 39 40 41

4


Methodology

This report analyses the financial and operational performance of a peer group of leading European Free to Air (FTA) broadcasters. The peer group includes ITV Plc, TF1, RTL Group, Antena 3 and Mediaset Below is a summary of key areas of analysis included in this report:

Financial Performance Indicators

Core indicators

Financial strength

Revenue growth

Interest coverage

Profitability

Net Debt / EBITDA

Earnings growth

Revenue segmentation

Investment

Operating costs analysis

Strategic Analysis

Industry Trends

Efficiency 

Operating Costs/Revenue

Revenue per employee

Identification and analysis of key industry trends

Historical data on industry drivers

Analysis of future prospects

Capital Expenditure / Sales Company Developments

Shareholder returns  

Cash Returns to shareholders

Analysis of company responses and strategic initiatives

Notes

5


Summary

Company

Key data points

View point

Revenues (LFY): EUR 5,591 million Core channel audience share: 18.9%

Europe’s largest FTA broadcaster with strong pan-European presence (all major markets except UK). Major player in content production and distribution

Content assets (Freemantle) are a major positive

Good, stable position in German market

Heavily exposed to potential advertising downturn in the Eurozone region

UK’s largest commercial FTA broadcaster

Large content production and distribution business

Most important channel (ITV1) for advertisers seeking national audience

Has undergone a major restructuring in the last 3-4 years

Relatively weak online strategy

Heavily exposed to UK market

Leading French FTA broadcaster

Launched a number of niche channels targeting important audience segments

Acquired/Partnered in online media/service space

Faces increasing competition from a strong No.2 (M6) and Pay TV

Digital and niche channel strategy is still work in progress

Largest media company and broadcaster in Italy (controlled by former PM, Berlusconi)

Strong offering of channels with cumulative audience share of 33%

Highly profitable with EBITDA margins well above industry average

Berlusconi’s exit from government may see the regulatory environment change to reduce Mediaset’ s powerful position

Potential risks include its exposure to Europe’s weakest economies (Italy, Spain)

A leading FTA (and radio) broadcaster in Spain

Spanish economy has been very weak and future prospects are negative

Focus on cost cutting to maintain profitability

Heavy expenditure of programming to maintain audience share may not be sustainable.

Revenues (LFY): GBP 2,064 million Core channel audience share: 14.8%

Revenues (LFY): EUR 2,622 million Core channel audience share: 23.2%

Revenues (LFY): EUR 4,293 million Core channel audience share: 15.3%

Revenues (LFY): EUR 631 million Core channel audience share: 16.8%

Notes

Company data, Audience share data from key industry sources LFY: Last Financial Year

6


Summary

Current macro-economic environment in Europe creates some uncertainty regarding TV adspend in 2012/13; even on an optimistic basis, major European economies will be lucky to achieve GDP growth of 1% in 2012 and there is no evidence of a potential recovery beyond that

Structural trends such as migration of adspend and consumption to digital media and the ongoing move of premium content to Pay TV platforms continue to create a significant amount of ‘strategic complexity’ for FTA broadcasters –

Investing in high quality content does help to maintain and in some cases grow FTA audience share, but it is expensive (especially in an environment where a return on investment through adspend growth is uncertain)

FTA’s digital strategies, in our opinion, remain relatively weak. There is limited visibility on revenues from online services (as broadcasters typically don’t report these figures separately), but they are likely to be low. Developing interactive services in areas such as gaming, shopping and content remains a good opportunity

The big strength of the FTA broadcasters remains their ability to deliver a national audience to advertisers and we don’t see any alternative to do this in the next five years or so.

Other opportunities remain in creating quality content which can be delivered via emerging distribution platforms such as social media and video streaming services.

7


1. Sector Analysis and Themes

8


Country Perspective

Europe’s five largest markets have a combined population of 315 million, 131 million TV households and TV advertising revenues of close to EUR 20 billion.

Country

Population / TV HHs (millions)

Average TV viewing minutes per day

TV Adspend (million, 2011)

TV Adspend (USD million, 2011)

% Growth in TV Adspend (07-11)

Average Annual GDP Growth (2007 11)

GDP Growth (2011 – 12)

FTA players

Pay TV players

United Kingdom 62.7 / 25.5

225

GBP 3,461

5,650

-0.28%

0.1%

0.5%

ITV; BBC, Channel 4, British Sky Broadcasting; Virgin Channel 5 Media; BT

63.3 / 26.3

222

EUR 3,555

5,110

0.68%

0.5%

0.3%

TF1; M6; Groupe Hersant Media

France

Groupe Canal; TF1, RTL Group; Lagardere

Germany

81.8 / 37.4

223

EUR 3,960

5,692

-1.20%

1.1%

0.6%

Sky Deutschland; Deutsche ProSiebenSat1 Media Telekom AG (Entertain unit); AG; RTL Group Kabel Deutschland AG; Premiere AG

Spain

46.2 / 17.1

234

EUR 2,415

3,472

-8.74%

0.3%

0.3%

Grupo Antena 3, Mediaset Espana

Liberty Global, Chello Media Programming; Sogecable SA, Prisa SA

Italy

60.8 / 24.4

247

EUR 4,775

6,684

-1.66

-0.5%

-0.5%

Mediaset, RAI

Mediaset Premium, AirplusTV Group, Centro Europa 7

Notes

Company data, industry estimates, GDP data from OECD forecasts TV viewing per day figures are 2011 (except for UK, Germany and Spain which are 2010)

9


Economic context

All major European economies experienced a severe recession in 2009 and the outlook for 2012 is also quite poor. The economies are closely linked due to the high value of intra-EU trade and a common currency (except the UK) % Change in GDP The German economy rebounded very strongly after the 2009 crisis – primarily driven by strong growth in exports

Italy’s economy has gone into recession twice since 2007 and over the last ten years, has had very low GDP growth.

Notes

OECD GDP figures (market prices). Updated November 2011

10


Audience share trends

FTA broadcasters have seen a constant decline in the audience share of their core channels over the last 10-15 years. This has been driven both by audience fragmentation as the number of channels grows – but also by the loss of key demographics to new media. Trends in audience share for core FTA channels

TF1 has experienced quite a significant decline in audience share from 35% in 1998 to 23% in 2011.

ITV is showing some signs of improvement due to a stronger prime time schedule of light entertainment and quality drama

Mediaset’s Canale 5 has experienced a significant decline in audience share in 2011, following major changes in the programming schedule

Notes

Audience share data sourced from relevant media measurement services

11


Adspend trends - % change in TV advertising

TV advertising spend has closely followed trends in the economic cycle. A significant question is whether TV adspend will rebound very strongly again – given the amount of media usage that has now migrated online. % change in TV advertising spend

The outlook for 2012 is poor as Europe’s key economies face the prospect of no and possibly negative growth

Spain has suffered particularly badly with a 23% decline in TV adspend in 2009

Notes

GroupM data (Summer 2011 forecasts)

12


Adspend trends - % share of total adspend

Television has been relatively successful at maintaining its share of total adspend. The growth of online adspend has mostly been at the expense of print media.

TV adspend as a share of total adspend

The high point for television’s share of adspend was 2005. The medium then went into some decline – but in recent years, it has staged a revival as broadcasters have improved their content offering and their offer to advertisers. The next big challenge it faces is the economic crisis.

The UK has arguably seen the largest migration of adspend away from print and TV to online media. But in recent years, the FTA and Pay TV broadcasters have started to regain some share through improving their offer for national advertisers

In France, the government has relaxed some rules on TV advertising in order to assist growth in the sector.

Notes

GroupM data (Summer 2011)

13


2. Peer Group Analysis – key metrics

14


Revenue and Profitability

Revenue growth in the last three years has been heavily impacted by the poor macro-economic conditions in Europe.  RTL showed the least decline (a -3.3% CAGR in advertising was offset by +2.8% in programming sales)  Mediaset has margins well above the industry average – reflecting its dominant position in Italian media

% Revenue growth

CAGR Revenue (08-10)

Notes

TF1 0.5%

EBITDA Margins

ITV 0.9%

RTL -1.6%

Antenna 3 -2.3%

Mediaset 1.1%

Company data

15


Growth

The economic rebound in 2010 allowed most all the peer group to register revenue growth. In terms of earnings, RTL Group was the best performer whilst Antena 3 experienced a 25% decline in Earnings Per Share. EPS Growth (2009-10) vs. Forward P/E Multiple

Revenue growth (2009-10) vs. Forward P/E Multiple

LFY Revenue Growth

Notes

TF1 10.9%

ITV 9.8%

RTL 8.4%

Antenna 3 13.6%

Mediaset 10.5%

LFY % EPS Growth

TF1 -7.5%

ITV -1.4%

RTL 12.1%

Antenna 3 -25.9%

Mediaset -6.5%

Bubble size represents revenues (LFY). Data sourced from company reports. Forward P/E multiple based on recent analyst estimates.

16


Diversification

RTL is arguably the most diversified company among the peer group – it has the broadest geographic coverage, largest content production and distribution business and the least exposure to advertising. Antena 3 is effectively a play on the Spanish TV advertising market. Given the poor state of the Spanish economy, this is not an attractive market position.

Geographic breakdown (LFY)

Notes

Exposure to advertising market

Diversification – by offering (LFY)

Based on company reports and published data. RTL Group have assumed Germany is domestic market. For diversification (by offering), we have made assumptions about which category the broadcasters revenues should be allocated to. Content/Facilities covers TV and film production and distribution and the provision of broadcast facilities to third parties. Antena 3 and TF1 do not report online revenues separately. For RTL Group, we have assumed all revenues from French radio are advertising revenues.

17


Operating Costs Analysis

The common trend among broadcasters has been a focus on reducing employee costs – and in some cases, increasing investment in programming to compete more effectively for audiences in prime time.

Operating Costs Analysis (LFY) ITV saw a substantial reduction in employee costs from 2008-10 (–12% CAGR). Employee numbers declined from 5,597 to 3,947

Antena 3 also reduced its employee costs aggressively during the 2008-10 period. Antena 3 also substantially increased its programming spend in 2010 in order to drive up its audience share.

Notes

Variations in treatment of programming costs and the share of in-house/third party programming makes benchmarking operating costs difficult. For RTL group, external cost of live programmes is accounted for under ‘Other’.

18


Efficiency

Antena 3 and ITV have both undertaken substantial headcount reduction programmes (annualised reductions in head count of 42% and 16% (2008-10) respectively)

Efficiency (Operating Costs / Revenues))

Revenue per Employee

+1%

LFY Efficiency Ratio

Notes

TF1 88%

ITV 83%

RTL 81%

Antenna 3 79%

Mediaset 81%

LFY Headcount

TF1 3,789

-16%

ITV 3,947

-0.7%

RTL 10,883

-42%

Antenna 3 787

+3.2%

CAGR No. of employees (2008-10)

Mediaset 6,285

Company data. Antena 3 employee numbers and revenues are for Antena 3 de Television SA only

19


Financial strength

FTA Broadcasters are not highly leveraged and their core operations continue to generate substantial cash. For 2010 EBITDA, Mediaset generated close to EUR 2 billion and RTL Group achieved EUR 1.3 billion. Interest coverage ratio

Net Debt / EBITDA

Mediaset has close to EUR 3 billion in cash

Antena 3: 60% decline in EBIT RTL: Interest earned in 2008,10 Mediaset: 76% decline in Interest payments

2010:

Notes

TF1 16.8x

ITV 5.4x

RTL 64.3x (09)

Antenna 3 33.2x

Mediaset 54.4x

2010:

TF1 4.16x

ITV 3.63x

RTL 1.83x

Antenna 3 3.53x

Mediaset N.A.

Interest Coverage Ratio (EBIT/Net Interest Paid). Interest is net interest expense, i.e. Interest expense less interest earned. Net debt includes short- and long-term borrowings less cash and cash equivalents. EBIT is adjusted to exclude exceptional / non-recurring items.

20


Capital Expenditure

Peer Group average capex has declined from close to 5% of revenues in 2008 to below 3% in the following two years. RTL group has the highest level with over two thirds of it accounted for by its French interests (M6) and its content operation (FreemantleMedia) – the latter made a number of acquisitions in 2010

Capital Expenditure as a % of Revenues

2010:

Notes

TF1 1.9%

ITV 1.4%

Antena 3’s capex declined by 90% in 2009

RTL 5.2%

Antenna 3 2.0%

Capex / Sales

2008

2009

2010

Groupe TF1

3.0%

4.1%

1.9%

ITV Plc

2.8%

1.4%

1.4%

Mediaset

2.8%

3.3%

3.5%

Antena 3

9.3%

1.0%

2.0%

RTL Group

6.0%

4.7%

5.2%

Mediaset 3.5%.

Capital Expenditure here is as defined in company reports (under Capital Expenditure) and typically includes expenditure on plant, property and equipment. Typically excludes investment in intangible assets and programme rights

21


Cash returns to shareholders

RTL Group and Mediaset have been in the strongest positions to pay dividends, given their strong balance sheets. ITV suspended dividend payments during the recession and plan to pay a dividend for 2011

% of Net Income Returned to Shareholders as Dividends and Buybacks (LFY) Bertelsmann owns a 90% plus stake in RTL Group Mediaset has a very strong balance sheet and has been in a position to pay dividends even during the 2009 economic crisis

Notes

Data sourced from company financial statements and earnings releases. Dividends and share buybacks are calculated against adjusted net income (excludes exceptional / non-recurring items)

22


3. Peer Group Analysis - competitive responses

23


Key industry themes

Industry themes

Challenges 

Audience fragmentation

Challenge of retaining audience with general entertainment offering (in the face of niche channels)

Broadcasters are having to work harder in terms of content and scheduling to retain audiences (in the face of competition from Pay TV and online media)

Key audience segments such as young adults are a major challenge

Price inflation in premium rights such as sports has forced FTA broadcasters to partner with Pay TV operators – in order to retain some live sports

Loss of audiences and advertisers

FTA broadcasters have made some limited moves into the Pay TV space

Typically this has been through distributing channels via other Pay TV platforms

Increasing competition for premium content

In most markets, FTA broadcasters are better placed to focus on bolstering their FTA operations than attempting to compete in the Pay TV space

Cost of premium talent is rising

Cross-platform content development is expensive and complex

Broadcasters with a substantial position in content production and distribution are better placed to restructure their FTA operations and benefit from the broader growth in demand for content

There are increasing opportunities to monetise content through format licencing, repackaging for digital platforms and internet-related ancillary offerings

High speed home and mobile broadband platforms create new opportunities and also threats for broadcasters

In addition to online Catch-Up TV services, a number of broadcasters have expanded into areas such as online gaming, shopping and social media

In our view, broadcasters have yet to fully leverage the opportunities presented by the Internet

High growth markets are attractive, but costs of repurposing content and regulatory regimes are a potential obstacle

Given the structural challenges in Europe, there is no compelling strategic case for expanding outside core domestic markets

Whilst emerging markets present better growth opportunities, few European broadcasters have made any attempt to expand into such markets (except in content distribution and format licencing)

Restructuring FTA offering

Development of Pay TV services

Content creation and monetisation

Digital media

International growth

Detail

Notes

24


Competitive responses – Key observations

The companies have been placed in three categories, based on our view of their medium to long term prospects and the likely success of their current strategy

Prospects

Out performers

RTL and Mediaset represent the most attractive companies in our peer group and have the potential to outperform the heavily challenged television advertising market

RTL has a strong broadcasting franchise with pan-European exposure and it owns very attractive production assets (FreemantleMedia)

Mediaset’s pre-eminent position in the Italian market – whilst under threat from Pay TV - is unlikely to be eroded in the short to medium term. The company has attractive operations in content, broadcast operations. However, 2011 is proving to be a challenging year.

Both of these broadcasters are likely to perform in line with the wider FTA television market – which is

ITV is a more attractive business than TF1 in that it we believe its core FTA offering is better positioned for the future (have gone through a major restructuring) and it has extensive content creation/distribution assets which have better international growth potential

Canal Plus’s move into the FTA market in France potentially creates a more competitive environment for TF1

Antena 3 faces a very challenging market, given the economic crisis in Spain

The company has invested heavily in content and achieved some audience growth, but sustaining this strategy would be expensive

Its investment in radio is also challenged by structural trends and economic factors

The company has highly exposed to the Spanish advertising market – given its reliance in TV and radio advertising.

In line

Under performers

Notes

25


Peer group initiatives – Scoring analysis

We have scored the Peer Group on their initiatives/actions in five key areas of growth strategy.

Strategic Initiatives Restructuring FTA offer

Entering Pay TV market

Content creation and monetisation

Develop Digital media offer

Enter International markets

Aggregated Score





9

Groupe TF1





x

6

RTL Group







12

Grupo de Antena 3



x

x

x

3

Gruppo Mediaset









11

ITV Plc

 - Effective  - Satisfactory / Not yet proven - Weak / Limited x – No evidence / not present Notes

26


Peer group initiatives – Groupe TF1

TF1 is a leading French broadcaster. The company has started to expand its presence in online services through a number of partnerships and acquisitions. The company faces increasing competition with Canal Plus’s entry into FTA TV. Competitive Responses FTA

Raised its stake in NT1(100%) and TMC (80%) to consolidate its position in key women’s and young adult segments (June, 2011) Deal with France Télévision and Canal+ for broadcasting rights for the FIFA 2010 World Cup, (TF1 granted the partners live broadcasting rights to 37 of 64 matches)

Pay TV

Rebranded Odyssee as Stylia - a luxury and lifestyle programming channel

Content creation and monetisation

Digital media

International

Launched MyTéléfoot, the first dedicated multi-screen football platform for younger audiences

Launched social Video-onDemand (VOD) service on Facebook

Eurosport, part of TF1, launched Eurosport Asia-Pacific HD (Sep, 2011)

Entered into a co-production deal with EuropaCorp, a movie production company, for jointly developing English TV series (Sep, 2011)

Partnered with mobile operator, Orange to offer its subscribers access to the MyTF1 portal on Livebox and on Orange mobiles

Eurosport opened a subsidiary in Lisbon to produce a Portuguese version of Eurosport (Sep, 2011)

Launched new version of video platform, WAT.tv

Raised its interest in SPS, operator of EuroSportBET.com, to 100% (bought out 50% stake held by Serendipity investment fund)

The company is actively involved in distribution of films and theatrical acts in the international markets

Formed an exclusive movie distribution joint venture with UGC Images(2009)

Participated in co-production of films and over 18.3 million viewers watched movies which were co-produced by the company

3 year partnership with La Francaise des Jeux to integrate their gaming zone to the TF1.fr website

Partnered with Assurland SA for a insurance comparison site AutomotoCompare.fr (Sep, 2011)

Notes

27


Peer group initiatives – ITV Plc

ITV is the UK’s leading FTA broadcaster and has been going through a major programme of restructuring. The company is particularly keen to pursue international opportunities in content production, format licencing and distribution. Competitive Responses FTA 

Launch of ITV HD (on Freeview); Launch of ITV1+1 (Aug, 2010);

Launch of ITV Player (catch up TV)

Joint deal with Sky Sports for 3 yr UK TV rights for UEFA Champions League for £400 million (April, 2011)

4 yr deal UK TV rights for Indian Premier League (March 2011)

Acquired Channel Television, owner of Channel 3 franchise for the Channel Islands (now owns 12 of 15 UK franchises (March, 2011))

Content creation and monetisation

Pay TV 

Entered into an agreement with Sky for launch of HD version of its ITV2, 3 & 4 channels on the pay - TV platform of Sky

Acquired 25% stake in Carbon Media Ltd for a consideration of GBP 1.1 million (November, 2009); The company operates international production offices in various countries including US, Germany, Australia; Sweden, Spain & France

Recently entered in to a coproduction deal with HotSauce TV Ltd for a chat show series hosted by Jonathan Ross (July, 2010)

ITV Studios Global Entertainment concluded new commissions for reality format "May the Best House Win" in Europe and Canada

Digital media 

Improved ITV.com website

Partnered with 3 UK, to provide ITV content to mobile users

Has recently launched mobile applications of ITV Player; iOS Catch-up application etc for iPad and iPhone (July 2011)

Entered into a joint venture partnership with BBC, Channel 4 and Channel 5 for developing 'Youview', an internet connected television platform - the JV also includes communication companies like Arqiva, BT and Talk Talk (The complete version is expected to be launched by Feb, 2011

International 

Acquired controlling stake in US based tele-films and mini-series production company Jaffe Braunstein Entertainment for USD 5.8 million

ITV Studios America acquires rights for producing and telecasting uMan game format in USA from Dori Media Group and Indiemedia (Feb 2011)

Notes

28


Peer group initiatives – Gruppo Mediaset

Gruppo Mediaset is a leading Italian diversified media group. The company has made substantial investments in Pay TV and digital media. It faces challenging economic conditions in Italy and Spain (where it owns a stake in Mediaset España) Competitive Responses FTA

Pay TV

Launched La5, channel targeted at females aged 15-44 (March, 2010)

Purchased rights to first-run films on its ‘Premium Gallery’ platform from Medusa Film SpA (2009)

Launched Mediaset Extra, a thematic DTT channel, which rebroadcasts Mediaset content (Nov 2010)

Agreement with RAI Cinema for purchase of rights for films to be broadcasted on the pay TV channels (May,2010)

Reduced light entertainment shows by 10% in prime time slot; Increased ‘high end’ drama and sports content

Long term agreements with major American producers & distributors including Universal, 20th Century Fox, Fox International DreamWorks, Walt Disney & Warner Bros. International

Accelerated migration to DTT

A total of 2,542 program title rights were exclusively purchased for the Pay TV channels (2010)

Content creation and monetisation

Digital media

RTI SpA acquired 25% stake in Med Due, owner of Medusa Film SpA and Taodue Srl, to raise its stake to 100% in the company (Mar, 2011)

Launched Enfinity, a technologically advanced ecommerce platform, to enable handling of a wide product catalogue (July, 2010)

RTI SpA merged its joint production operations with Ares Film Srl, which specializes in making Italian television drama and television series (2010)

Entered into a five-year contract with Hasbro for purchase of popular brands such as Monopoly, Trivial Pursuits and Subbuteo and the cartoon series Transformers

While sites like TGCOM & SportMediaset were already available on mobile platforms, the company modified Videomediaset, a video portal, to make it accessible through mobile phones as well.

Developed various applications for iPhones and iPads including Chi vuol essere milionario, Cotto & Mangiato, Amici and Grande Fratello

Developed Mediamond, grow advertising for the web properties of Mediaset & Mondadori (2010)

International 

Mediaset has a major stake in the listed Spanish FTA broadcaster, Mediaset Espana

Notes

29


Peer group initiatives – Grupo Antena 3

Grupo Antena 3 is a leading Spanish FTA TV and commercial radio group. The company faces a challenging economic situation in Spain; it may find it increasing difficult to sustain its investment in content which has to date helped to stabilise its audience share. Competitive Responses FTA

Launched Nitro, its third digital channel, a DTT free-to-air TV channel with content from US dramas and movies (Sep, 2010)

The company has collaborations with about 23 companies

Pay TV

Enters into an agreement with La TV d'Orange, which is owned by France Telecom, for broadcasting Antena 3 in France (2010)

Enters into an agreement with the national pay-TV platform of Switzerland, Netbox, for broadcasting in Switzerland

Content creation and monetisation 

No major intiatives

Digital media

Launched Defconplay.com – a games platform providing information and tips on social games (June, 2010)

Launched seestrena.com, a channel focused on news, interviews and digital video encounters (June, 2010)

Launched Objectivo TV – an online portal with television market news and reviews (Nov, 2010)

International

The company has limited activities in global market and in 2010 only about 1.7% of the revenues were generated from the international markets

Notes

30


Peer group initiatives – RTL Group

RTL Group has attractive assets such as its German FTA TV operation and its world leading content production and distribution business, FreemantleMedia.

Competitive Responses FTA

Divested its interest in Five, a UK broadcaster, by selling its 100% stake to Northern & Shell company for EUR 118 million (July, 2010) Acquired rights to the FIFA World Cup (2010) through Premiere for broadcasting 9 live world cup matches. Launched a catch-up TV service: Super RTL Now (August, 2010)

Pay TV

• Acquisition of additional 31% stake in Hungary based TV station, RTL Klub to raise its stake to 98% in the company (Jul, 2011); The company also acquired a portfolio of seven cable channels Cool, Film+, Film+2, Reflektor, Prizma, Sorozat+, Muzsika TV to broaden its pay TV offerings in the country

Content creation and monetisation 

Formed a co-production joint venture with Reliance Broadcast Network of India for owning and operating its TV channels – the JV would initially provide content and services to Reliance (Mar, 2011) Acquired worldwide distribution, brand licensing and home entertainment rights for Grojband, an animated musical comedy series, a Teletoon Original Production (Oct, 2011) Fremantle Media acquired licensing rights to a popular British design brand ‘Bang on the Door’ in Germany, Austria, Switzerland and eastern Europe (Aug, 2009) • Super RTL (Children program broadcasting arm of RTL) acquired free TV rights for Leon, a CGI animated comedy series (March, 2009)

Digital media

Acquisition of 51% stake in Ludia, Canada based developer and publisher of interactive games (total stake: 80%) (Oct, 2010)

International

Fremantle Media has made number of overseas acquisitions: −

Original Productions of the USA (Feb, 2009)

M6 launched IPhone and IPad apps offering live broadcasting (Oct, 2010)

62.5% stake in US company, Radical Media (Oct, 2010)

Acquisition of Germany based online marketer, netzathleten.net (Aug, 2011)

Four One Media, a Dutch production company (April, 2010)

25% stake in Nordic production company Blu (total stake: 100%) (March, 2010)

26% stake in RTL Hrvatska, the Croatian TV unit, from Atlantic and Agrokor – now owns 100% (July, 2011)

Acquired SlamFM and SlamTV from Lex Harding in Netherlands (April, 2011)

Notes

31


Appendix

32


Key Financials and Ratios

Company TF1 Group ITV Plc Mediaset Antena 3 RTL Group % Change TF1 Group ITV Plc Mediaset Antena 3 RTL Group

Currency Year-end EUR GBP EUR EUR EUR

December December December December December

Revenues (millions) 2008 2009 2010 2,595 2,029 4,200 661 5,774

2,365 1,879 3,883 555 5,156

2,622 2,064 4,293 631 5,591

-8.9% -7.4% -7.5% -16.0% -10.7%

10.9% 9.8% 10.5% 13.6% 8.4%

EBITDA (millions) 2008

2009

319 247 2,141 150 835

EBIT (millions) 2010

215 240 1,782 74 971

418 438 1,989 135 1,303

-32.4% -2.8% -16.8% -50.8% 16.3%

94.2% 82.5% 11.6% 83.4% 34.2%

2008

2009

177 145 984 136 500

101 143 602 57 707

-42.8% -1.4% -38.8% -58.3% 41.4%

Net Profit (millions) 2010 313 345 816 123 1,041

2008

2009

163.8 211.0 565.3 91.0 296.0

209.2% 141.3% 35.6% 116.4% 47.2%

Dividend Per Share

2010

114.5 202.0 305.2 60.7 298.0

229.3 408.0 386.7 109.1 730.0

-30.1% -4.3% -46.0% -33.3% 0.7%

100.3% 102.0% 26.7% 79.7% 145.0%

2008 0.47 0.01 0.38 0.72 3.50

2009

2010

0.43 0.22 0.20 3.50

-8.5% -100.0% -42.1% -72.2% 0.0%

0.55 0.35 0.20 5.00

27.9% NA 59.1% 0.0% 42.9%

Key ratios % EBITDA Margin TF1 Group ITV Plc Mediaset Antena 3 RTL Group Average

% EBIT Margin

% Net Margin

Dividend Payout Ratio

12.3% 12.2% 51.0% 22.6% 14.5%

8.3% 11.8% 42.4% 11.1% 16.8%

16.1% 21.6% 47.4% 20.4% 22.6%

6.8% 7.1% 23.4% 20.6% 8.7%

3.9% 7.0% 14.3% 8.6% 12.2%

12.1% 17.0% 19.4% 18.6% 18.0%

6.3% 10.4% 13.5% 13.8% 5.1%

4.4% 10.0% 7.3% 9.2% 5.2%

8.8% 20.1% 9.2% 16.5% 12.6%

0.3% 0.0% 0.1% 0.8% 1.2%

0.4% 0.0% 0.1% 0.3% 1.2%

0.2% 0.0% 0.1% 0.2% 0.7%

22.5%

18.1%

25.6%

13.3%

9.2%

17.0%

9.8%

7.2%

13.5%

0.5%

0.4%

0.2%

Notes

33


Share Price Performance

Share Price Perform ance Com pany

TF1 Group

Currency

Current Price

3 m th

-13.0%

6 m th

-10.1%

12 m th

-6.0%

P/E Multiples

52 w k low 52 w k high

8.37

15.18

Trading

Forw ard

7.6

8.3

EUR

8.18

ITV Plc

GBP

0.659

15.2%

3.5%

-10.6%

0.51

0.96

9.6

9.7

Mediaset

EUR

2.25

-11.8%

-26.2%

-11.8%

2.04

5.46

7.3

7.8

Antena 3

EUR

4.67

17.6%

8.4%

-11.0%

3.90

7.87

8.6

11.7

RTL Group

EUR

67.15

1.0%

9.5%

7.4%

57.17

79.80

16.9

15.1

1.8%

-3.0%

-6.4%

Average

Notes

34


Share Price Performance – Last Twelve Months

RTL Group

ITV Plc Eurostoxx Media Index

Antena 3 Groupe TF1 Gruppo Mediaset

2011 Notes

35


Selected deals and partnerships

Date

Company

Summary

% Stake

Consideration

29-Nov-11

ITV Plc

ITV acquires FTA broadcasting rights for a range of movie titles from Warner Bros

31%

N.A.

28-Oct-11

ITV Plc

ITV Plc acquires three-year broadcasting rights of French Open from Federation Francaise de Tennis

26%

N.A.

18-Oct-11

ITV Plc

ITV Plc acquired UK-based commercial TV broadcaster Channel Television form Yattendon Group

100%

N.A.

22-Sep-11

Gruppo Mediaset

Sky Italia and RTI acquire three year domestic broadcasting rights of Italian football league Serie A for a total fees of EUR 2.49 billion

N.A.

EUR 2.49 billion

09-Aug-11

RTL Group

RTL Deutschland acquires German online marketer netzathleten.net

100%

N.A.

28-Jul-11

RTL Group

RTL Group SA acquires additional 31% stake in Hungary based TV station RTL Klub

31%

N.A.

25-Jul-11

RTL Group

RTL Group acquires additional 26% stake in its Croatian TV unit RTL Hrvatska from Atlantic and Agrokor

26%

N.A.

30-Jun-11

Groupe TF1

Television Francaise 1 SA acquires additional 65.7% stake in newspaper Metro France from Metro International

6570%

N.A.

15-Jun-11

RTL Group

Russian media company National Media Group (NMG) acquires additional 30% stake in Ren TV from RTL Group SA

30%

N.A.

24-May-11

Gruppo Mediaset

Mediaset SpA acquires Spanish broadcasting rights for 31 matches of EURO 2012 from UEFA

N.A.

EUR 75 million

28-Apr-11

RTL Group

RTL Nederland acquires Netherlands based SlamFM and SlamTV from Lex Harding

100%

N.A.

27-Apr-11

ITV Plc

ITV Plc and Sky Sports win three year UK broadcasting rights of Uefa Champions League from Uefa Events SA for GBP 400 milllion

100%

GBP 400 million

22-Apr-11

Groupe TF1 / RTL Group French television broadcaster M6 Group acquires 50% stake in film rights company TMC DA from French television group TF1

50%

N.A.

14-Apr-11

Groupe TF1

French online gambling company Solfive SAS acquires online gaming and betting company SPS Betting (EurosportBET) from TF1

100%

N.A.

30-Mar-11

Gruppo Mediaset

Mediaset SpA merges mobile tower business into DMT SpA

N.A.

N.A.

29-Mar-11

ITV Plc

ITV Plc acquires four year UK broadcasting rights for Indian Premier League starting from IPL`s forth season from Nimbus Communications

N.A.

N.A.

28-Mar-11

Groupe TF1

TF1 acquires exclusive broadcasting rights for the Rugby World Cup 2011

100%

N.A.

18-Mar-11

Groupe TF1

TF1 partners with catch-up TV operator and set-top box manufacturer Freebox

N.A.

N.A.

12-Mar-11

RTL Group

Reliance Broadcast Network partners RTL Group to form a JV for owning and operating television channels

50%

N.A.

14-Feb-11

ITV Plc

ITV Studios America acquires rights for producing and telecasting uMan game format in USA from Dori Media Group and Indiemedia

N.A.

N.A.

Notes

36


Company Profile - Groupe TF1

Key Financials EUR Revenues (millions)

Revenue Segmentation - by Geography 2008 2,595

% change EBITDA (Rptd, millions)

319

% change EBIT (Rptd, millions)

177

% change Net Income (Rptd, millions)

163.8

% change Earnings Per Share (Rptd, adjusted)

0.77

% change Dividend Per Share (Rptd, adjusted)

0.47

2009

2010

2,365

2,622

-8.9%

10.9%

215

418

-32.4%

94.2%

101

313

-42.8%

209.2%

114.5

229.3

-30.1%

100.3%

0.54

1.07

-29.9%

98.1%

0.43

0.55

-8.5%

27.9%

12.3%

8.3%

16.1%

EBIT Margin

6.8%

3.9%

12.1%

Net Margin

6.3%

4.4%

8.8%

Efficiency (Oper. Cost / Revenue)

93%

96%

88%

Leverage (Net debt / EBITDA )

7.3 x

8.0 x

4.2 x

Interest Coverage (EBIT/Interest)

5.8 x

3.6 x

16.8 x

% change

Revenue Segmentation - by Product Broadcasting (International) , 14%

International, 14%

Audiov isual Rights, 6%

Broadcasting (Domestic), 80%

Domestic, 86%

Key ratios EBITDA Margin

Capex as % of Revenues Cash Returns to Shareholders

3.0%

4.1%

1.9%

61.2%

80.2%

51.2%

Share price performance

% Change

Source: Annual reports and regulatory filings

3 mth

6 mth

12 mth

-13.0%

-10.1%

-6.0%

Notes: All figures are adjusted for non-recurring and exceptional

Notes

37


Company Profile - ITV Plc

Key Financials GBP

Revenue Segmentation - by Geography 2008

Revenues (millions)

2,029

% change EBITDA (Rptd, millions)

247

% change EBIT (Rptd, millions)

145

% change Net Income (Rptd, millions)

211.0

% change Earnings Per Share (Rptd, adjusted)

0.66

% change Dividend Per Share (Rptd, adjusted)

0.01

% change

2009

Revenue Segmentation - by Product

2010

1,879

2,064

-7.4%

9.8%

240

438

-2.8%

82.5%

143

345

-1.4%

141.3%

International, 5%

5.3%

2.8%

202.0

408.0

-4.3%

102.0%

0.02

0.07

1.2% 1.8%

-96.5%

200.0%

-

SDN (DTT Multiplex)

2.3% 2.6%

NA

Minority Revenue

4.6%

3.9%

-100.0%

Net Advertising Revenue Sponsorship

11.2%

EBITDA Margin

12.2%

11.8%

21.6%

7.1%

7.0%

17.0%

Net Margin

10.4%

10.0%

20.1%

Domestic, 95%

Efficiency (Oper. Cost / Revenue)

93%

92%

83%

Leverage (Net debt / EBITDA )

8.5 x

8.9 x

3.6 x

Interest Coverage (EBIT/Interest)

2.3 x

1.9 x

5.4 x

Capex as % of Revenues Cash Returns to Shareholders

Notes

2.8%

1.4%

1.4%

58.3%

12.4%

1.5%

Share price performance

% Change

Other online Other income 64.3%

Key ratios

EBIT Margin

ITV.com

UK Production and facilities International Production Distribution and Exploitation

Source: Annual reports and regulatory filings

3 mth

6 mth

12 mth

15.2%

3.5%

-10.6%

Notes: All figures are adjusted for non-recurring and exceptional items

Company data

38


Company Profile - Gruppo Mediaset

Key Financials EUR Revenues (millions)

Revenue Segmentation - by Geography 2008 4,200

% change EBITDA (Rptd, millions)

2,141

% change EBIT (Rptd, millions)

984

% change Net Income (Rptd, millions)

565.3

% change Earnings Per Share (Rptd, adjusted)

0.40

% change Dividend Per Share (Rptd, adjusted)

0.38

% change

2009

Revenue Segmentation - by Product

2010

3,883

4,293

-7.5%

10.5%

1,782

1,989

-16.8%

11.6%

602

816

-38.8%

35.6%

305.2

386.7

-46.0%

26.7%

0.24

0.31

-40.0%

29.2%

0.22

0.35

-42.1%

59.1%

Other 9%

International, 20%

Netw ork Ops 5%

Premium 19%

FTA TV 67% Domestic, 80%

Key ratios EBITDA Margin

51.0%

42.4%

47.4%

EBIT Margin

23.4%

14.3%

19.4%

Net Margin

13.5%

7.3%

9.2%

77%

85%

81%

Efficiency (Oper. Cost / Revenue) Leverage (Net debt / EBITDA ) Interest Coverage (EBIT/Interest)

NA

NA

NA

16.3 x

41.8 x

Capex as % of Revenues

2.8%

3.3%

3.5%

Cash Returns to Shareholders

77%

83%

103%

Share price performance

% Change

Source: Annual reports and regulatory filings

3 mth

6 mth

12 mth

-11.8%

-26.2%

-11.8%

Notes: All figures are adjusted for non-recurring and exceptional items

54.4 x

Notes

39


Company Profile - Antena 3

Key Financials

Revenue Segmentation - by Geography

EUR

2008

2009

Revenues (millions)

661

555

631

-16.0%

13.6%

% change EBITDA (Rptd, millions)

150

% change EBIT (Rptd, millions)

136

% change Net Income (Rptd, millions)

91.0

% change Earnings Per Share (Rptd, adjusted)

0.44

% change Dividend Per Share (Rptd, adjusted)

0.72

% change

Revenue Segmentation - by Revenue type

2010

74

135

-50.8%

83.4%

57

123

-58.3%

116.4%

60.7

109.1

-33.3%

79.7%

0.30

0.54

-31.8%

80.0%

0.20

0.20

-72.2%

0.0%

International, 0.2%

Adv ertising Sales 100%

Domestic, 99.8%

Key ratios EBITDA Margin

22.6%

11.1%

20.4%

EBIT Margin

20.6%

8.6%

18.6%

Net Margin

13.8%

9.2%

16.5%

78%

91%

79%

Efficiency (Oper. Cost / Revenue) Leverage (Net debt / EBITDA )

3.8 x

7.2 x

3.5 x

18.0 x

0.8 x

33.2 x

Capex as % of Revenues

9.3%

1.0%

2.0%

Cash Returns to Shareholders

164%

84%

106%

Interest Coverage (EBIT/Interest)

Notes

Share price performance

% Change

Source: Annual reports and regulatory filings

3 mth

6 mth

12 mth

17.6%

8.4%

-11.0%

Notes: All figures are adjusted for non-recurring and exceptional items

Company data

40


Company Profile - RTL Group

Key Financials EUR Revenues (millions)

Revenue Segmentation - by Geography 2008 5,774

% change EBITDA (Rptd, millions)

835

% change EBIT (Rptd, millions)

500

% change Net Income (Rptd, millions)

296.0

% change Earnings Per Share (Rptd, adjusted)

1.26

% change Dividend Per Share (Rptd, adjusted)

3.50

% change

2009 5,156

Revenue Segmentation - by Product

2010 5,591

3%

6%

-10.7%

8.4%

971

1,303

16.3%

34.2%

707

1,041

Freemantle Media

41.4%

47.2%

RTL Nederland

298.0

730.0

0.7%

145.0%

1.33

3.98

5.6%

199.2%

3.50

5.00

0.0%

42.9%

4%

RTL Deutschland 33%

7%

Groupe M6

RTL Belgium

22%

RTL Radio France

Shopping and consumer 11%

Professional services 3%

Programme sales 25%

Other segments

Advertising 61%

25%

Key ratios 14.5%

16.8%

22.6%

EBIT Margin

EBITDA Margin

8.7%

12.2%

18.0%

Net Margin

5.1%

5.2%

12.6%

Efficiency (Oper. Cost / Revenue)

91%

86%

81%

Leverage (Net debt / EBITDA )

3.2 x

2.9 x

1.8 x

NA

64.3 x

NA

Interest Coverage (EBIT/Interest) Capex as % of Revenues

6.0%

4.7%

5.2%

Cash Returns to Shareholders

184%

182%

106%

Share price performance

% Change

Source: Annual reports and regulatory filings

3 mth

6 mth

12 mth

1.0%

9.5%

7.4%

Notes: All figures are adjusted for non-recurring and exceptional items

Notes

41


For further information on how to obtain a subscription, visit G2Mi.com Email:

service@g2mi.com

Phone:

+44 (0) 208 180 7223 (Monday – Saturday, 8am – 8pm, UK time) +91 (0) 9811 501538 (Monday – Friday, 9am – 6pm, India time)

Address:

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42


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