Market Watch

M6 Advertising Sales Up 12 Per Cent in Q2



M6 group revenues grew 9.4 per cent in the first half of 2010, driven by the advertising recovery on the French TV advertising market, and non-advertising activities that did equally well.

Net advertising revenues of the core channel M6 grew 7.4 per cent to EUR 338.5m, while other advertising activities (mostly on digital TV channels) increased revenues by 25 per cent to EUR 69.3m. Non advertising revenues were up 8.7 per cent to EUR 407.8m. Recovery accelerated in the second quarter as core M6 channel ad revenues increased by 12 per cent year-on-year to EUR 188m, following a modest 2.1 per cent in Q1.

Consolidated EBITA amounted to EUR 132.5m in the first half, compared to 107m in H1, 2010.

Analysis
M6 core channel advertising sales increased by 12 per cent in Q2 (Screen Digest was expecting 11 per cent). This is much stronger than M6's Q1 growth (+2.5 per cent) and slightly stronger than TF1 in the second quarter (9.9 per cent). The uptake comes despite the fact that M6 was the only big channel not showing any World Cup football in June. It was partly caused by a tougher comparison for M6 in the second quarter of last year (-16.7 per cent) and partly to the fact that M6 was successful in attracting women who were repelled by football on other channels - and women still are the main target of television advertisers.

M6 channel average audience share was 10.4 per cent in the first half of 2010 (audience 4+, source Médiamétrie), with an 11.2 per cent audience share on the 12am-12pm slot, down from 11.8 per cent last year. Taking into account M6 group's main free digital channel W9, which reached a 2.9 per cent average national audience share over the period (compared to 2.3 per cent last year), and other digital channels (0.9 per cent combined), M6 group reached a national audience share of 14.2 per cent. This is the same as in 2009 and higher than from 2005 to 2008 (between 13 and 14 per cent). This means that the growth in digital viewing is compensating for the erosion of the core channel and viewing fragmentation is neutral for the group.

Digital channel revenues (advertising and distribution) rose by 16 per cent in H1. M6 group does not split the revenues of digital channels but Screen Digest modeling suggests growth was mostly driven by advertising revenues, which represented 75 per cent of total revenues and grew by 26 per cent in Q2 after 16 per cent in Q1.

M6 management did not provide any quantitative guidance for the rest of the year but suggested Q3 trading will be in line with H1. Screen Digest expects a slow-down in year-on-year growth due to a tougher comparison effect in H2: M6 group NAR was back to positive as early as 3Q09 (+2 per cent) and M6 channel was back to growth in Q4. We currently anticipate the core channel to grow by 7 per cent in Q3 and 5.7 per cent for full year, while digital channels will grow 16 per cent full year. M6 group's TV NAR will therefore grow by 7.3 per cent.

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