Market Watch

Spanish Broadcasters Continue Strong Recovery


Display Driver IC Forecast


Spanish free-to-air broadcasters Telecinco and Antena 3 have continued a double-digit recovery in Q3 2010. Telecinco increased total net revenues by 44.9 per cent to €161m. TV net advertising revenues (NAR), contributing 94 per cent or €152m to total revenues, grew by 52.4 per cent. Competitor Antena 3 grew total revenues in its TV division by 13.1 per cent to €125m. Advertising also outperformed other revenues and was up 18.1 per cent to €118m.

Analysis
After a disastrous 2009, in which both broadcasters saw revenues drop steeper than those of any other Western European broadcaster (Telecino: -33.9 per cent; Antena 3: -16 per cent), the 2010 rebound exceeds that of its international peers. Despite initial scepticism concerning the effectiveness of scrapping advertising on public channel TVE for 2010, private broadcasters are benefitting from a strong migration of TV ad budgets. Such a model failed to trigger growth for commercial broadcasters in France, but approximately 90 per cent of previous TVE adspend is being absorbed by the commercial TV advertising market. After strong Q1 and Q2 performances by both Antena 3 and Telecinco, Q3 2010 growth was further accelerated by increased advertising spending during the World Cup. Especially Telecinco, holding the broadcasting rights for the event, benefited. Both broadcasters also succeeded in limiting audience losses due to digital fragmentation. Analogue switch-off in Spain was completed in April and the audiences' new consumption habits have settled, slowing audience erosion in core channels.

At the same time, both Antena 3's and Telecinco's DTT channels have reached a critical mass and help offsetting revenue losses triggered by fragmentation. We expect Antena 3 to increase its DTT channel NAR from €48m in 2009 by 134.6 per cent to €113 in 2010. For Telecinco, we forecast DTT NAR to grow by 283 per cent from €16m in 2009 to €62m in 2010.

After a strong Q3 performance, we forecast a slow-down in Q4 as comparatives get tougher. TVE already reduced its advertising airtime by 50% in Q4 2009. Therefore, the boost-effect from ad-scrapping will be lower than in the preceding three quarters.

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