Télévision Fran

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Télévision Française 1

1, quai du Point du Jour
92656 Boulogne Cedex
France
(33) 1 41 41 21 23
Fax: (33) 1 41 41 20 23
Web site: http://www.tfl.fr

Public Company
Incorporated: 1987
Employees: 2,081
Sales: FFr 10.167 billion (US$1.9 billion) (1997)
Stock Exchanges: Paris
SICs: 4833 Television Broadcasting Stations; 4841 Cable and Other Pay Television Services

Télévision Française 1 is a diversified multimedia producer and broadcaster, centered around TFI, France’s oldest and market-leading television station. Since its privatization in 1987, TFI has nearly quadrupled its revenues and expanded into a network of subsidiaries and partnerships with interests in nearly every media and related category. Principal shareholder in, and de facto leader of, TFI is France’s communications giant Bouygues, which holds approximately 40 percent of the company’s shares. The company’s primary revenue generator is its sales of advertising space, through subsidiary TFI Publicité, for TFI and the company’s cable and satellite television stations Eurosport, LCI, and Odyssée. Despite growing pressure from cable television and France’s emerging satellite television market, TFI continues to capture the leading audience share (35 percent of persons aged four years and older) among the five French generalist broadcasters. Although this market share represents a drop from the company’s late 1980s high of 40 percent of the French viewing audience, the company nevertheless has enjoyed consistent—and profitable—revenue growth, capturing more than half of the total French television advertising market. In 1997 advertising sales represented more than FFr 7.6 billion of the company’s total FFr 10.2 billion in revenues.

In addition to TFI, the company’s activities include the following: cable and satellite broadcasting, through the pan-European sports channel, Eurosport, broadcasting in 14 languages to an audience of some 72 million people in 43 countries; Europe’s first pay-per-view broadcaster, Multivision; and the theme channels Odyssée (documentaries) and LCI Le Chaine Info (24-hour French-language news). In partnership with CLT, Lyonnaise des Eaux, France Telecom, France Télévision, and broadcaster M6, the company has also entered the satellite broadcasting market with the TPS (Télévision Par Satellite) service. TFI’s share of 25 percent in TPS makes it that broadcaster’s largest individual shareholder.

Complementing its primary broadcasting operations, TFI has built a strong portfolio of film, television, video, and other production and distribution activities. The company’s production subsidiaries include TFI Films Production, Banco Production (made-for-television movies and magazines), Protocréa (audiovisual), and Glem Production (variety, musical, and theatrical events), which produce primarily for broadcast on TFI. The company is also engaged in the acquisition and exploitation of film and other audiovisual production rights, through subsidiary TFI International and 34 percent holding in TCM DA in partnership with M6 and CLT. Rounding out TFl’s offering are its music recording and publishing subsidiary, Une Musique, and its book publishing subsidiary, TFI Editions. Together, the company’s diversification activities contribute more than 25 percent of the company’s revenues.

Privatizing in the 1980s

“La Une” occupied a venerable position in the French television market long before its privatization as TFI. Established in 1947, TFI was France’s first television broadcaster. As in many European countries, television broadcasting was placed under the control of the French government, which had, in the post-World War II period, placed a ban on private ownership of radio, and then television, broadcasters. Funding for the new commercial-free television service came primarily from required subscription fees placed upon the French viewing audience, while operations were placed under the Radio Television Francais (RTF) agency. TFI remained France’s sole television broadcaster until 1964, when it was joined by Antenna 2 (later, France 2). A third broadcaster, France 3, was added in 1972. Production and diffusion activities remained under the RTF (which had become known as the ORTF).

In the 1970s, however, the French television landscape began to undergo a transformation. In 1974 the ORTF was abandoned. A new system was put into place, separating the agency’s former activities into seven independent operations, including the three television broadcasters. Although broadcasters remained public bodies and continued to receive funding from subscription fees, each station was now required to operate on a for-profit basis. Operations of TFI were conducted under a new enterprise, the Société Nationale de Programmes de Television Française 1 (changed to Television Française 1 in 1981). The new company quickly established itself as an ambitious programmer for its own productions—leading, despite the introduction of advertising, to losses by the beginning of the 1980s.

The new decade would see a fresh expansion of the French television market. In 1981 the way was cleared for the arrival of the first private radio stations in nearly half a century. Three years later the country’s first private television broadcaster, Canal Plus, an encrypted, subscription-based service, was granted the country’s fourth television channel. Two more privately held commercial channels were added in 1986. By then movement had been made to privatize one of the three government-run broadcasters—a development that nonetheless met with reluctance among both the viewing public and the government. The move toward privatization, however, came during a period in which the government, led by Francois Mitterand and the Socialist Party, began to dismantle its nationalization experiment (which had seen much of France’s industry placed under government ownership in the late 1970s and early 1980s). Debate focused on which broadcaster would become private, the profitable Antenna 2, or the money-losing TFI. The arrival of a new nonsocialist government, under Jacques Chirac, would end the debate. Privatization of the country’s oldest and leading broadcaster, TFI, served the symbolic purpose of announcing the end of an era of Socialist Party dominance of the French political scene. The principal of TFI’s privatization was signed into law in September 1986.

Debate next focused on who would be allowed to take a majority share in the privatized country. Suitors for the station included French media powerhouse Hachette. Yet, leery of creating what would become in essence an information monopoly, the government’s choice finally went to the industrial and telecommunications giant, Groupe Bouygues. Led by Francis Bouyges, the group would pay some FFr 3 billion to take a 25 percent share in TFI (while representing as well the interests of a core shareholder group representing another 25 percent); an additional ten percent went to TFT s employees and the remainder was sold on the Paris stock exchange. TFI became a private company in April 1987. Francis Bouygues assured the company’s direction; in 1988, however, Bouygues (who retired the following year) named Patrick Le Lay to succeed him as TFl’s CEO.

Diversification in the Late 1980s

TFI initially faced a difficult transition, including the walkout of a number of its most prominent on-air personalities. Yet the company’s share of the French viewing audience would remain strong through the end of the 1980s, reaching more than 40 percent, while its share of television advertising revenues topped 55 percent of the total French market. Nonetheless, the company faced a changing market. The appearance of private broadcaster M6 gave TFI direct competition for its primary target audience (the so-called “under-50 housewife”). Cable television, while slow to penetrate the French market, promised an expanded choice of channels for the French viewer. The future satellite broadcasting technology, capable of reaching even non-cabled areas of the country, at the same time promised still more competition for the French viewing audience.

TFI immediately set out to diversify its operations. In 1987 the company created two subsidiaries. The first, TFI Publicité, took over operations of the company’s advertising sales activities. The second, Télé-Shopping, introducing the home shopping concept to the French morning viewer. The company also began an aggressive content drive, investing some FFr 640 million in new television productions. These moves proved successful: by the end of the year the company had topped a 40 percent share of the television viewing audience and the company’s broadcasts captured 37 of the top 50 most-watched programs for the year. Revenues, meanwhile, had more than doubled since the early 1980s, nearing FFr 5 billion.

By 1988 the company had become profitable. TFl’s expansion continued, with the formation of a music recording and publishing arm, Une Musique, as welí as a book publishing wing, TFI Editions. The company’s television programming was boosted in that year by a deal with the Walt Disney Company to include more than four hours of Disney programs per week in the TFI schedule. At the same time TFI was developing an important on-air personality, its news anchorman Patrick Poivre d’Arvor, who would take the top audience rating for the year. Committed by law to guaranteeing a specific proportion of French-produced broadcasts, TFI stepped up its investment in its in-house production activities, spending nearly FFr 1 billion in that year. Joining the company in that year was Francis Bouygues’s daughter Corinne, who took charge of the company’s communications activities (a position she had previously held in the Bouygues group).

With investments of more than FFr 1.2 billion in 1989, TFI continued to build its production portfolio, while diffusion operations (video, program rights sales, and other services) were boosted with the creation of its TFI Entreprises subsidiary. The creation in 1990 of two new production subsidiaries, Banco Production (made-for-TV movies and magazine programs) and TFI Publicité Production (advertising films), was complemented by the acquisition of audiovisual programming producer Protécrea.

New Competitors for the 1990s

In the 1990s TFI began looking beyond its own broadcasts. In 1991 the company agreed to take over operations of the struggling Eurosport channel, the first European-wide sports broadcaster, principally to the cable market; in that year TFI added a French-language version of Eurosport. By then revenues from the company’s diversified activities had more than doubled over the previous year, topping FFr 1 billion of the company’s total sales of FFr 6.5 billion. Net profits had continued to grow as well, reaching FFr 341 million in 1991. That year saw the appointment of Corinne Bouygues to the leadership of the company’s TF1 Publicité subsidiary.

Yet 1991 would also form a turning point for TF1. From that year, its audience share began a slow decline that would last into the late 1990s. Chiefly responsible for this development was the growing competition for the French television viewing audience. The maturation of M6, as well as the arrival of the dual sender Arte/La 5, the increasing competitiveness of the two remaining public broadcasters, and the growth of cable television services were beginning to take their toll on TFl’s audience numbers. At the same time TF1 was to be criticized for the seeming decline in the quality of its own programming—symbolized by a “false interview” scandal, in which anchorman d’Arvor pretended to conduct an in-person interview with Cuba’s Fidel Castro.

Despite its shrinking viewership, TF1 retained a comfortable lead in the French market. The company also continued to post revenue gains, driven by its advertising sales, as well as by its increasingly profitable diversification activities. A new subsidiary, formed in 1993 and later renamed as TF1 International, was formed to develop the company’s international audiovisual rights and distribution activities. TFl’s library of programs would reach more than 8,000 hours by 1995, making it one of the world’s leading rights distributors. Meanwhile, TF1 prepared to counter the growing competition represented by cable and the soon-to-emerge satellite television services by launching, in 1994, its own cable television channel, La Chaine Info (LCI), which became the first 24-hour French-language news programmer. In that same year TF1 also took a leading 24.5 percent share in the new Multivision channel, the first pay-perview television provider in Europe. The company also looked again beyond television, acquiring a 60 percent share of the variety, musical, and theater show producer Glem Productions.

By the mid-1990s satellite television was beginning to enter the French market. TF1 quickly moved to create a position for itself in the new technology, starting with satellite broadcasts of LCI in 1995. True satellite television service, however, had not yet reached the French consumer. But by December 1996, TF1, in partnership with M6, France Telecom, France Télévision, Compagnie Luxembourgeoise de Télédiffusion (CLT), and Lyonnaise des Eaux, launched the TPS (Télévision par Satellite) satellite service. TF1 ’s investment in the launch, of FFr 625 million, gave it a 25 percent share of TPS. It also provided an outlet for the launch of a new TF1 subsidiary, the Odyssée channel, devoted to documentary programming. Boosting TPS’s offering, TF1, CLT, and M6 joined to form TCM DA, a partnership for the acquisition of film and audiovisual broadcast rights. In 1996 TCM acquired the right to broadcast the films of Paramount Studios. The following year TF1 also introduced its Video on Demand service, the first in Europe, with hotels as a target market.

TFl’s diversification had successfully enabled the company to overcome its flagship station’s declining viewership numbers. While TF1 itself had seen its viewership drop to 35 percent of the broadcast market, its continued popularity with the “un-der-50 housewife” segment (more than 37.5 percent) and its development of new advertising sales outlets, provided the company with steady increases in advertising revenues. At the same time, by the end of 1997, its diversification activities had grown to nearly 25 percent of its total revenues. For the future, TF1 looked toward rebuilding its image as a quality programmer, while enjoying a continued dominance of its domestic market—a unique leadership position among the Western television markets.

Principal Subsidiaries

TF1 Publicité; TF1 Enterprises; Une Musique; Tele-Shopping; TF1 Films Production; Protécrea; Banco Production; Glem Productions; Studios 107; TF1 International; Eurosport; La Chaine Info; Odyssée; Television Par Satellite (25%); TCM DA (34%).