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ANDRE LANGE Head of Markets & Financing information Department

ANDRE LANGE Head of Markets & Financing information Department. STRUCTURE AND FINANCIAL SITUATION OF THE EUROPEAN TV MARKET. OBJECTIVES OF THE PRESENTATION. TO PROVIDE A GENERAL SURVEY OF THE TV INDUSTRY IN THE EUROPEAN UNION (STRUCTURE OF THE INDUSTRY, FINANCIAL ANALYSIS) 1. TV BROADCASTING

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ANDRE LANGE Head of Markets & Financing information Department

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  1. ANDRE LANGEHead of Markets & Financing information Department STRUCTURE AND FINANCIAL SITUATION OF THE EUROPEAN TV MARKET

  2. OBJECTIVES OF THE PRESENTATION • TO PROVIDE A GENERAL SURVEY OF THE TV INDUSTRY IN THE EUROPEAN UNION (STRUCTURE OF THE INDUSTRY, FINANCIAL ANALYSIS) • 1. TV BROADCASTING • 2. TV PRODUCTION (PROGRAMMES MARKET, COMPANIES SITUATION) • 3. COMPARISON WITH OTHER BRANCHES OF THE INDUSTRY

  3. POPULATION OF TV COMPANIES IN THE EUROPEAN UNIONNumber of companies for which data is available (1997-2000)

  4. GROWTH OF PUBLIC BROADCASTERS (Radio & TV) 1996-2000 EUR ThousandAverage Annual Growth : 4,9 %

  5. AVERAGE ANNUAL RATE OF GROWTH OF PUBLIC BROADCASTERS INCOME (1997-2000)

  6. GROWTH OF REVENUES OF PRIVATE BROADCASTERS (1996-2000)EUR Thousand

  7. AVERAGE ANNUAL RATE OF GROWTH OF PRIVATE BROADCASTER INCOME(1997/2000)

  8. RESULTS OF THE TELEVISION BRANCH IN EUROPEAN UNION (1997-2000) EUR MillionSource : OBS / AMADEUS

  9. FINANCIAL PERFORMANCE RATIOS OF THE TELEVISION BRANCH IN THEEUROPEAN UNION (1997-2000) (in %))

  10. PROFIT MARGIN OF TELEVISION COMPANIES IN EUROPEAN UNION (1997-2000) (in %)Source : European Audiovisual Observatory

  11. PROFIT MARGIN OF NATIONAL TV SYSTEM (1996-2000) (in %)Source : OBS / AMADEUS

  12. IS BROADCASTING STILL A LICENCE TO PRINT MONNEY ? • European consolidation still uncertain (withdraw of Canal+, national solution to the KirchGruppe failure) • Few companies remains with offensive European strategies (RTLGroup, News Int., CME, SBS) • Public sector still fighting but financial situation is deteriorating • Crisis of TV advertising market in 2001 (-6,3 %) may continue (0,5 % in 2002 ; 4,5 % in 2003 ?) • Transition to digital has dramaticaly increase competition and costs, at the detriment of the financial stability of the branch • Premium pay-TV (Canal+) have lost their high level profitability and are looking for new programming formula • Mergers of digital satellite plateforms progressively accepted by EC and national authorities • Digital terrestrial television at high risks – Has accelerated concentration process in UK • Home Shopping will probably be more and more challenged by Internet e-commerce • Interactive television still a marginal business (except BSkyB)

  13. ANALYSING THE THE TV PROGRAMMES MARKET:METHODOLOGICAL DIFFICULTIES • Limited number of national studies • Great heterogeneity of TV landscapes, business models, industrial structures and accounting practices • Vertical integration / Horizontal integration • Lack of transparency • Fragmention, high level of micro-entreprises or one-production enterprise • No breakdown of revenues by genres • No accessible database on TV programmes • Opacity of the rights market

  14. TRADE BALANCE IN AUDIOVISUAL PROGRAMMES BETWEEN EUROPEAN UNION AND NORTH AMERICA (film, TV, video)(1998-2000)Millions USD

  15. ORIGIN OF IMPORTED FICTION (feature films + TV Fiction) BROADCAST BY 101 LEADING TV CHANNELS IN EUROPEin hoursSource : ETS / OBS

  16. ORIGIN OF IMPORTED EUROPEAN FICTION (feature films + TV Fiction) BROADCAST BY 101 LEADING TV CHANNELS IN EUROPE(1994-2001) in hoursSource : ETS / OBS

  17. VOLUME OF TV FICTION PRODUCTION (1996-2001)(in hours)Source : Eurofiction

  18. THE 10 LEADING TV PRODUCTION GROUPS IN THE EUROPEAN UNION (2000-2001)Operating revenues in EUR millionSource : OBS 2000 2001 ENDEMOL ENTERTAINTMENT (NL) 519 914 RTL Group (Content) (DE) 883 897 - Thames Television (GB) 114 n.a.- Grundy France 81 n.a. - Grundy UFA 75 n.a. MEDIATRADE (IT) 654 746 BAVARIA FILM (cons.) DE 284 n.a. EXPAND (FR) 304 270 ITN (GB) 153 n.a. REUTERS TELEVISION (GB) 81 n.a. TV LOONLAND (DE) 75 78 TELFRANCE (FR) 73 n.a. NDF (DE) 72 n.a.

  19. POPULATION OF TV PRODUCTION COMPANIES INDEXED IN AMADEUS AND AVERAGE OPERATING REVENUES OF (1997-2000)

  20. GROWTH OF THE TV PRODUCTION COMPANIES IN EUROPE (1997-2000)EUR million

  21. GROWTH OF THE VARIOUS BRANCHES OF THE FILM & TV INDUSTRY IN THE EUROPEAN UNION (1997-2000) Operating revenue in EUR millionSoure : OBS

  22. PROFIT AND LOSS OF TV PRODUCTION COMPANIES IN EUROPE (1997-2000)EUR millionSource : OBS

  23. PROFIT MARGIN OF VARIOUS BRANCHES OF THE FILM & TV INDUSTRY IN EUROPEAN UNION (1997-2000) – in %Profit before Taxation / Operating RevenuesSource : OBS

  24. PROFIT MARGIN OF THE TRANSMISSION COMPANIES IN EUROPE (1997-2001) in %

  25. TOWARDS A CRASH OF THE AUDIOVISUAL EUROPEAN INDUSTRY ? • US INDUSTRY STILL DOMINATING THE EUROPEAN MARKET • THE COST OF THE TRANSITION TO DIGITAL IS VERY HIGH • DIGITAL WILL MAKE CAPTATION OF THE VALUE MORE DIFFICULT (PIRACY, PRIVATE COPY) • MATERIAL RETAIL (DVD) MORE PROFITABLE THAN SERVICES DISTRIBUTION (BROADCASTING, EXHIBITION) • THE PERIOD OF FINANCIAL PROFITS SEEMS OVER (TV PRODUCTION, EXHIBITION,…) • WILLINGNESS TO INVEST DECLINING (POOR RESULTS, SPECTACULAR GROUPS CRASH, BANKS CAREFULNESS…) • BACK TO A CREATIVE / INDUSTRIAL APPROACH ? • PRODUCTION ACTIVITIES GROWING FASTER THAN OTHER BRANCHES BUT FINANCIAL SITUATION REMAINS WEAK • NECESSITY TO REVIEW THE REALLOCATION POLICIES BETWEEN THE BRANCHES (INVESTMENT QUOTAS IN TV, IMPLEMENTATION OF DIGITAL CINEMA, TAXING VIDEO PUBLISHERS/DISTRIBUTORS,…) • TRANSMISSION SECTOR TO BE INVOLVED IN THE FINANCING ?

  26. MORE… http://www.obs.coe.int

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