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1 construction of a public television group : France Télévisions By Marc SCHWARTZ Deputy Director General International Symposium “Media on the Move” Taipei.

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Presentation on theme: "1 construction of a public television group : France Télévisions By Marc SCHWARTZ Deputy Director General International Symposium “Media on the Move” Taipei."— Presentation transcript:

1 1 construction of a public television group : France Télévisions By Marc SCHWARTZ Deputy Director General International Symposium “Media on the Move” Taipei – Sept 20-21 2004

2 2 France’s leading broadcaster Source MEDIAMAT - 2003 Others 39,5% 4 y.o. and more. 31,5% 10,9% 12,6% 1,8% 3,7%

3 3 premium channels advertising thematic TV channelsproduction other multimedia distribution international France TV Group

4 4 France 2, founded in 1964 is a national general-interest network broadcasting 24 hours a day. France 2 offers a broad range of quality programming and fulfils an ambitious, threefold mission : to inform, entertain and educate all audiences. With an audience share of 20,5 %, it is the leading public broadcaster. Terrestrial networks with distinct identities the general public channel

5 5 France 3, founded in 1973, is a national and regional general-interest network with 13 local stations and 24 local news desks. Its regional programming has made it France’s most acclaimed network (approval rating of 76%). France 3 broadcasts nearly 18,000 hours of programming yearly, including 11,000 hours of local programming. Its editorial guidelines are based on 3 directives : local communities, discovery, and innovation. With an audience share of 16,1 %, France 3 has stabilised its audience. Terrestrial networks with distinct identities the regional and local general-public network

6 6 France 5, the knowledge and educational channel, is a window open on the world and contemporary society. Decode...comprehend...and learn : these are the watchwords of a channel aiming to arouse the curiosity of its viewing audience. With an audience share of 2,9 % (6,3 % on its terrestrial broadcasting schedule between AM 6.45 and PM 7.00), France 5 has been progressing steadily, year by year. Terrestrial networks with distinct identities the resource channel

7 7 Terrestrial networks with distinct identities the overseas network 1500 professionals, divided on three oceans and in 10 stations comb the colors of the world on the televisions and radios of RFO 17 TV channels with 2 TV channel brands Télé- pays and Tempo, and 10 radio stations 24 hours a day Through its stations, RFO broadcasts programs which circulate and exchange thanks to a powerful satellite network, which makes this company the first audiovisual force of French overseas territories.

8 8 financial data

9 9 programming costs 1515,6 M€ breakdown by channels 712,8 M€706,3 M€ 90,2 M€ 6,3 M€ theme channels Documentaries, theatre, spectacles Games, entertainment breakdown by themes News Magazines Drama Sports Cinema Others Youth 110 441 240 232 58 81 41 140 174 financial data

10 10 the French TV advertising market 54,4% 22,2% Others 0,9% 11,7% 8,6% 2,2% Source : SECODIP 2003 21,1% financial data

11 11 key financial data (M€) 20032002 licence fee1 499,51 470,5 2,0% advertising710,5677,4 4,9% total turnover2 372,02 282,1 3,9% ebit40,335,1 14,8% net income14,253,2 -73,3% cash flow from operations 117,0106 10,4% equity345,8331,5 4,3% net cash / (debt)114,8106,7 7,6% Growth % ebitda158,8165,0 -3,7% financial data

12 12 * Including the variation of depreciation on sports rights programming costs Consolidated data (M€) 20032002 news127,2127,10,1% sports *102,293,79,1% programs483,3463,84,2% France 2 - programming cost712,8684,6 4,1% national news 48,7 48,30,9% sports *64,466,5-3,2% local programs306,5294,64,0% France 3 - programming cost706,3688,7 2,6% magazines45,146,2-2,3% documentaries31,427,215,2% others13,711,915,1% France 5 - programming cost90,285,3 5,7% CFI - programming cost4,9- - Other broadcasters - programming cost1,54,9 -69,5% France Télévisions - programming cost1 515,61 463,53,6% national programs286,7279,22,7% financial data Growth %

13 13 terrestrial TV channels : individual accounts (M€)200320022003200220032002 turnover1 049,41 019,81 096,21 077,4163,3148,7 licence fee608,0596,3756,2741,9132,8126,3 advertising396,0378,2277,0268,728,120,3 programming cost712,8684,6705,8688,690,285,1 ebit23,739,45,05,1 3,1 financial income2,50,1-1,6-4,6-0,51,9 exceptional income6,0-9,56,719,51,7-3,8 net income28,827,18,420,54,41,0 consolidated EBIT23,428,79,711,94,85,5 consolidated net income14,017,26,5-1,04,63,1 financial data

14 14 - reinforcement of equity : 345,8 M€ at year-end 2003, + 66% in 4 years - net financial debt : - 67% in 4 years 204 242 277 332 346 245 170 191 126 110 120,1% 70,1% 68,9% 37,9% 31,7% 0 50 100 150 200 250 300 350 400 19992000200120022003 equity (M€)net financial debt (M€)Gearing ratio (net debt / equity) financial data a strong financial position

15 15 constitution of the group

16 16 from ORTF to France Télévisions... (1/2) 1964 Act : creation of the French Radio-Television Office (ORTF) state monopoly on radio and television broadcasting 1974 Act : dissolution of ORTF - setting up of seven public industrial and commercial organizations, including : -4 national program companies (Radio France, TF1, Antenne 2, France Régions 3) -1 organization in charge of broadcasting (Télé Diffusion de France) -1 production company (Société Française de Production) -1 audiovisual archive center (Institut National de l’Audiovisuel) 1984 : end of state monopoly - launch of 2 commercial TV channels : -La 5 (free-of-air TV channel) -Canal + (pay TV channel) 1986 Communication Act : -setting up of CNCL (regulator for audiovisual sector) -privatisation of TF1 -end of SFP and TDF monopoly (now both privatized) Historical highlights

17 17 1989 : « common presidency » for Antenne 2 and FR3 - creation of the Audiovisual Superior Council (CSA) 1992 : Antenne 2 and FR3 become France 2 and France 3 – creation of France Télévision brand name 1994 : La 5, the commercial TV channel goes bankrupt and is replaced by La Cinquième, a public information and educational channel 2000 Act : reinforces the audiovisual public sector establishment of France Télévisions holding company which owns France 2, France 3 and La Cinquième, and 30 subsidiaries 2001: Group financial management first consolidated accounts, tax integration, cash pooling, reinforcement of the information management tools January 2002 : - 5-year contract with the government on « Goals and Means of France TV 2001-2005 » - new visual identity - France Télévsion => France Télévisions - La Cinquième becomes France 5 2004 : RFO’s integration to France Télévisions from ORTF to France Télévisions... (2/2) Historical highlights

18 18 the « organisation charter » of France Télévisions  the channel directors are responsible for the editorial policy and programming choices and the the day-to-day management of their company (eg. Human resource & Budget)  the Chief Executive Officer define the scope of delegation in fixing limits of intervention. In case of divergence, especially about programs, he makes the final choice a large scope of competences delegated to channels directors The holding company  the autonomy of subsidiaries  a strong coherence through common planning and reinforced harmonization  a collegial structure in the management of the group (Executive Committee) three principles the channel directors :  take part in the boards of the holding’subsidiaries when those are in relation direct with them  participate to France Télévisions’ Board of Directors and take part in debates on the strategy of the group  are responsible for transverse missions aiming at controlling joint projects a collegial decision-making in order to maintain the coherence

19 19 France Télévisions’ organisation The holding company Board of Directors FRANCE 3 Board of Directors RFO Board of Directors FRANCE 2 Board of Directors FRANCE 5 Board of directors FRANCE TELEVISIONS - appoints the premium channels’ Director Generals - deasl with all the questions linked with the 5-year contract with the Government -approves the TV channels’ budgets -distribute the licence fee between the channels France Télévisions’ Board of Directors : + all the traditional missions of a holding’s Board of Directors - all the traditionnal competences of a Board of Directors, except those assumed by the holding’s one - especially deal with all the questions linked with editorial content (audience shares, strategy of programming, acquisition of programs…) TV channels’ Board of Directors :

20 20 what does the holding company do ? the holding France Télévisions SA missions  setting the group’s strategic orientations  coordinating and promoting the programs and services offer  carrying the development policy (domestic & international)  managing France 2, France 3 and France 5 common affairs  elaborate and conduct the group financial policy  exert all the shareholder’s competences (appoves budget, financial reports…)  receive and distribute the public funds between the TV channels the holding financial competences The holding company organisation of France Télévisions’ holding  7 specific divisions : programs strategy, diversification, communication, public relations, finance, human resources and internal audit  5 common divisions for the group and the channels : research, international, legal affairs, program acquisition and sports

21 21 financial calendar Organisation de la fonction financière monthly reporting quarterly consolidated management charts board of directors half-yearly consolidated accounts actualised forecasts on year-end financial results yearly Group yearly accounts corporate income tax return budget

22 22 corporate governance audit committee of the board, created in 2001 four to five meetings per year main topics : (1) consolidated accounts, (2) acquisition of programs, (3) news programming costs, (4) advertising and merchandise exchanges, (5) cash management, (6) internal control, (7) human resources procedures Creation of an internal audit direction annual audit plan validated by the audit committee on september 2003 accomplished missions : acquisition of programs, non-core purchasing, advertising and merchandise exchanges, audit of several subsidairies…. application of the French Financial Security Act (equivalent of the Sarbanes Oxley Act) process lead by the internal audit department process : (1) risk analysis, (2) creation of a working group, (3) settlement of an auto-evaluation questionnaire for sociétés anonymes (SA) of the group, (4) delivery of reports (for each SA) and of letters on the evaluation of the internal control on risk management (for each entity) reinforcement of the management tools and settlement of new procedures production of a wide scope of financial information, through monthly, quarterly and half-year reports settlement of actualised forecasts on year-end financial results, within the year settlement of new procedures harmonization of the information management tools : ERP project with a group dimension (Oracle e- business suite) Constitution of the group

23 23 a better use of our resources : the Synergia plan cost-reduction and cost-cutting objectives of 170 M€ between 2001 and 2005, through : creating value through cost reductions program derived from the size of the group and/or derived from mutualization of means) creating value within the channels (cost killing programs) no net increase of staff during the 5-Year contract operational subdivisions : non-core business purchasing diffusion costs non-core business departments sports news acquisition of programs co-productions & management of the stocks of programs production department Growing cost-reduction and cost-cutting results : 15,2 M€ in 2001 24,0 M€ in 2002 48,3 M€ in 2003 A few examples : -30% decrease on mobile phone prices, -decrease of almost all the recently renegotiated sport rights -launch of information tool group projects on financials and human resources The holding company

24 24 Marc SCHWARTZ +33 (0)1 56 22 60 12 France Télévisions 7 esplanade Henri de France, 75907 Paris cedex 15

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