Métropole Télévision S.A. - Company Profile, Information, Business Description, History, Background Information on Métropole Télévision S.A.

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History of Métropole Télévision S.A.

Métropole Télévision S.A. is one of France's lea ding television broadcasters and programming producers. Métrop ole Télévision's flagship station is the M6 television channel, which ranks second behind Société Tél&e acute;vision Française 1's TF1 station. Métropole T&eac ute;lévision taps into the under 50 viewing market with over 1 4 themed channels and also has interests in home shopping services, m usic, publishing, rights acquisitions, and film distribution. The com pany also owns 34 percent of digital television provider Tél&e acute;vision Par Satellite (TPS). Métropole Télé vision secured EUR 598.8 million in advertising revenue during 2004, which accounted for just over half of its total sales. RTL Group owns a 48.8 percent stake in the company.

'Little Station That Could' in the 1980s

Until the early 1980s, France's television broadcasting networks rema ined under the tight control of the French government, which restrict ed the number of available stations to just three: TF1, which was pri vatized in 1987, and the government-owned Antenne 2 and Antenne 3. Th e appearance of privately owned television stations marked something of a revolution for the French television viewer. The first of the ne w breed of channels was Canal Plus, a subscription-based service requ iring a set-top decoder, which began broadcasting in 1984. Canal Plus was soon followed by La Cinq, broadcasting on France's channel five. Plans for a sixth channel, TV6, to be operated by radio programmer N RJ and advertising agency Publicis, foundered by mid-decade.

In 1987, however, a new station joined France's airwaves. Called M6, the station quickly became known as the French version of the "Little Engine That Could." Starting on a budget of just FRF 500 million per year--which represented only one-fourth of the budget for La Cinq--M 6 definitely faced an uphill battle. As CEO and founder Jean Drucker told Le Point, "We didn't start from zero. We started from les s than zero." One of the station's largest hurdles was that its broad cast network remained severely limited, with reception assured in les s than one-third of France, in part because of government reluctance to allow the station to expand its network of transmitters nationwide . Industry analysts were also skeptical that the French market could support a sixth television channel. Métropole Tél&eacut e;vision's first year's balance sheet seemed to bear out the skeptics , as the company posted losses mounting to FRF 380 million.

Yet Drucker, who had previously served as president of Antenne 2 (lat er renamed France 2), not only had extensive experience in television , but also the deep pockets of financial backers Lyonnaise des Eaux a nd CLT (Compagnie Luxembourgeoise de Télédiffusion, lat er CLT-UFA), which each held 25 percent of Métropole Té lévision. Drucker put his broadcasting experience to good use, focusing on establishing a strong identity for the new station. The company developed the M6 logo, and a "look" for the station that set it apart from its competitors. Standing apart was also extended to M6 's broadcast schedule as well. In a country where the eight o'clock n ews broadcast was known as the "high mass," M6 dared to be different, offering an array of counter-programming initiatives that increasing ly brought it to the attention of France's television viewers, in par ticular the younger viewing markets.

M6's counter-programming took on various forms, including broadcastin g television series--chiefly American-made--during the traditional ne ws time, as well as a CNN-inspired six-minute newscast presented in t he time slot just before 8 p.m., when all of the other stations were still broadcasting commercials. M6's choice of programming often plac ed the company in difficulties with the CSA (the French television au thority) and requirements that stations devote certain percentages of their broadcast time to French- and European-produced programming. A merican shows such as Cagney and Lacey and The Cosby Show gave M6 an increasing share of the French viewing public. M6 also developed its appeal with the youth market, devoting much of its broa dcasting time to music videos.

Despite a strong showing in its urban markets, where the channel pull ed in as much as 15 percent of the viewing audience, M6 remained the smallest kid on the block. With just 2 percent of the national audien ce--in a system that largely lacked local advertising--M6 remained fa r from its break-even point of 10 percent. This situation began to ch ange early in 1988, when the extension of the company's transmitter n etwork allowed it to triple the number of television households it co uld reach. By then, with remote controls in hand, more and more telev ision viewers were tuning into M6.

Diversifying in the 1990s

By 1991, M6 had captured a 9 percent share of France's viewing public . Although the station continued to rely heavily on music videos and U.S.-imported shows, Métropole Télévision had be gun to show its own programming muscle. M6-produced programs included Capital, a highly respected news magazine with an emphasis on corporate and financial matters, and Culture Pub, a program d evoted to advertising around the world, both of which began to make a mark on the French television scene. Nevertheless, the company conti nued to face industry criticism for its lack of French- and European- made television programming, especially from France's producer's guil d, but also from many political leaders who did little to hide their interest in seeing M6 disappear altogether.

Similar pressures, and viewer disinterest, led to the demise of La Ci nq by 1992, suggesting that the country indeed was not ready for six television stations. However, M6's fortunes continued to rise, gainin g points not only from the closing of La Cinq (which was later replac ed by station Arte, a French-German broadcaster oriented toward cultu ral programming), but also from France's Big Three: TF1, France 2, an d France 3. As the company neared the 10 percent break-even point, it was also moving from net losses toward net profits. By 1991, with re venues of FRF 800 million, the company had cut its losses back to jus t FRF 140 million. Nevertheless, with the end of La Cinq, many in the industry began sounding the death knells for M6, with its total of F RF 1.4 billion in losses during its first five years of business. M&e acute;tropole Télévision turned to its two largest shar eholders for continued financing; in turn, Lyonnaise des Eaux and CLT both increased their shares to 34 percent.

The year 1992 proved to be M6's turning point. With its share of the television viewing audience topping 10 percent for the first time, M6 became profitable, posting net profits of FRF 100 million for the ye ar. The company's fortunes continued to rise. By 1993, as its nationa l share of 12 percent gave it a growing percentage of the nation's to tal advertising expenditures--reaching 14.9 percent that year--net pr ofits topped FRF 230 million on revenues of FRF 1.8 billion. In 1994, Métropole Télévision was ready to go public, po sting just 9 percent of its shares on the Paris Stock Exchange. Price d at FRF 260 per share, the listing was oversubscribed some 38 times, making it one of the year's most successful initial public offerings .

Métropole Télévision invested its new capital in diverse activities. The rollout of satellite television, under prepa ration in the mid-1990s, and the extension of cable television offere d the company new programming perspectives. New channels proposed by the company included Téva, a channel featuring programming for the women's market; M6 Music, taking over the company's music video programming as M6 itself turned more and more toward programming fict ion and news and entertainment magazines; and Série Club, devo ted to broadcasting French and U.S.-made series. Métropole T&e acute;lévision also bought into the TPS satellite network; the company's participation, together with the strong share positions of CLT and Lyonnaise, gave Métropole Télévision a leading role in TPS's operations.

By 1995, Métropole Télévision had succeeded in s hedding its debts. The company continued to post steady gains in prof its, despite its share of the loss-making TPS network, only slowly be ginning to gain momentum. In 1996, M6 faced once again the ire of the CSA. Where M6 had enjoyed the regulatory body's lenience toward the station's disregard of its programming quotas, the company's success now forced it to toe the line, especially during the 5 p.m. to 11 p.m . time slot. The tightening of its requirements led the company to in crease its own production investments. By 1998, Metropole's own produ ctions were helping to drive the company's success, forming the major ity of its top audience-generating programs.

The company's satellite television investments began to pay off in th e late 1990s as well. Growing public interest in satellite broadcasti ng, spurred by sharp drops in the prices for satellite dish receivers and decoders, placed TPS as one of the leaders, alongside CanalSatel lite, for the French market. After increasing its own participation i n TPS to 25 percent, Métropole Télévision quickl y made plans to create more new channels, including Fun TV, oriented toward the youth market, and the Home Shopping Service.

Métropole Télévision was also making advances on other entertainment fronts. The company's M6 Interactions subsidiary made strong inroads with its magazines, video and compact disc, and software products. Métropole Télévision also joi ned the big screen, providing production and financing for a number o f cinema projects, including Quasimodo and Peut-être, among others. The company also began preparations for two new te levision channels, to be launched after the turn of the century, M6 F amille, devoted to family programming, and TV.com, featuring multimed ia and computer-oriented programming. On the multimedia front, M&eacu te;tropole Télévision created a new subsidiary, M6 Web, grouped under its M6 Interactions subsidiary, to govern its Internet and multimedia activities. The growing importance of its multimedia activities was highlighted by M6 Interactions' growing share of the c ompany's annual revenues: some 30 percent of 1998's FRF 3.5 billion.

In 1999 Métropole Télévision extended itself int o a new arena--that of the sports arena. In May of that year, the com pany joined shareholder CLT-UFA in the purchase of the Girondins socc er club of Bordeaux. The purchase not only gave the company an entry into the sports market, it also gave it the possibility to include li ve sports broadcasting on its stations for the first time.

Métropole Télévision in the New Millennium

Métropole Télévision entered the new century wit h the announcement that it had gained the second place position among France's general-programming stations, with a 13.6 percent share nat ionwide. The "little station that could" had certainly proved that it could assert itself as a leader in the French television market. Ind eed, the company's actions over the next several years would solidify its position in the French television industry. One such move came a long in 2002, when Métropole Télévision increase d its ownership in TPS to 34 percent.

Founder Jean Drucker died in 2003 leaving Nicholas de Tavernost at th e helm of M6. Under his leadership, the firm continued to diversifyin g its holdings in order to shield itself from drops in advertising re venue. The strategy worked. By 2003 revenues from its other businesse s had reached EUR 601.7 million while advertising-related revenues we re EUR 575.2 million.

With both sales and profits on the rise, Métropole Tél& eacute;vision was known throughout the industry for its branding abil ity, which allowed it enter and be successful in established markets including music, retail, and publishing. De Tavernost commented on th e company's branding initiatives in a June 2003 Financial Times article claiming, "If the umbrella brand is not good, the diversifi cation would be bad too. We built our brand name very, very carefully . It's a brand that's specifically for young people, for the under-35 s." He went on to comment, "We have an affinity with our audience. Wh en we sell our products with our trademark, people recognize it immed iately."

Suez S.A., a French water and energy conglomerate that held a 37 perc ent stake in Métropole Télévision sold off its i nterest in 2004. RTL Group S.A., owned by Bertelsmann AG, retained a controlling 48.8 percent interest. At this time, government regulatio ns did not allow a foreign company to own more than 49 percent of a t errestrial broadcaster. Previous agreements made with M6, Suez, and R TL kept the latter's voting rights to 34 percent in an effort to pres erve M6's editorial independence.

In 2004, Métropole Télévision looked for ways to expand its soccer coverage. It attempted to purchase the rights to F rance's top-flight soccer matches but lost out to competitor Canal Sa tellite. It also relaunched its shopping channel as M6 Boutique La Ch aine and acquired the television channel Paris Premiere.

During this time period, the advertising market remained in a state o f flux. The French government began lifting certain bans allowing new spapers and magazines to advertise on mainstream terrestrial televisi on channels for the first time in 2005. Large retailers were expected to enter the television advertising scene in 2007. As such, M&eacute ;tropole Télévision set plans in motion to increase its programming spending in an attempt to profit from these changes in t he future.

While the television industry remained highly competitive, Mét ropole Télévision had carved out a defined space as one of top stations in France. M6 was the only national channel to incre ase its viewing share in 2004, a sure sign that the company was on tr ack for success in the years to come.

Principal Subsidiaries: TPS SNC (34%).

Principal Operating Units: M6 Boutique; M6 Music; M6 Music Bla ck; M6 Music Rock; Paris Premiere; Serie Club; Teva; TF6; Fun TV.

Principal Competitors: Canal + Group; Société T& eacute;lévision Française 1.


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