INVESTOR DAY PARIS FEBRUARY 2, 2004

Transcription

1 INVESTOR DAY PARIS FEBRUARY 2, 2004

2 OUTLINE OF THE PRESENTATION 1. Introduction 2. Audiovisual 2.1 Production / Distribution 2.2 Theme Channels 3. Radio 4. Complementarity of Music Media 5. New Media 6. Multimedia advertising brokerage Brigitte Gauthier-Darcet Brigitte Gauthier-Darcet Brigitte Gauthier-Darcet Christophe Sabot Fabrice Sergent Constance Benqué 2

3 Introduction

4 1. INTRODUCTION : Presentation of Lagardere Active A media group focusing on 5 strategic and complementary areas Producer and distributor of TV programs Publisher of theme channels Radio operator in France and 7 other countries Publisher of multimedia services Multimedia advertising rep With a clear management approach Combine growth with tight management Attract talents and promote creation Secure short-term profitability without undermining the long term Net Sales 2002 Prod. Distrib. 17,3% Theme Channels 12,7% New Medias 18,8% 4 Multimedia Advertising Brokerage 19,6% Radio 31,6%

5 Production / Distribution

6 2. 1. Production / Distribution: Presentation of the Businesses 10 stock production companies : GMT Productions (Napoléon, Julie Lescaut, Boulevard du Palais, ) DEMD Productions (Nestor Burma, Joséphine Ange Gardien,, Le Bleu de l Océan, 2003 summer serial on TF1) 168 hours produced in 2002 (revenue 57 M ) drama, documentaries, animation all of them re-usable rights enriching our library 7 one-off production companies : JLR Productions (20h10 Pétantes with Stéphane Bern for Canal +) MAXIMAL Productions (C dans l air for France 5) B3COM (created by Benjamin Castaldi) 680 hours produced in 2002 (revenue 25 M ) ligth drama, magazines, gameshows, celebrity shows, real TV only the formats may be resold after broadcast 6

7 2. 1. Production / Distribution: Business Model Key Elements These companies address the entire market : The 6 French terrestrial TV channels (TF1, France 2, France 3, France 5, M6, Canal +) And some theme channels (Equidia, Match TV,...) Our library : hours mainly fictions, documentaries, animation Although the instant audience measurement Has no direct impact on the financing of the related production, It is a key factor for the broadcasting channel s advertising revenue It helps building up broadcaster loyalty and is a key element of long term business growth One of our skills is the know-how over financing big international co-productions, involving the main developed countries (in Europe, Canada and the United States), and using all existing aids such as tax shelters and tax credits. 7

8 2. 1. Production / Distribution: Competitive Position No. 1 producer of fiction, 23% market share in France No. 2 approximately twice smaller No. 3 producer of one-off programs to be on air in 2003 (No. 5 in 2002) 30 of the most successful 100 audiences in 2003 (14 in 2002) 29 of the 60 most successful audiences for fiction Awards from French and international juries 7 nominations for Emmy Awards in September 2003, 5 awards at the 16ème Nuit des 7 d Or ceremony in November Lagardere Active has become a leader in TV production 8

9 2. 1. Production / Distribution: SWOT Analysis Strengths Depth and variety of top talents High quality programs Good business profitability, due to tight management Weaknesses Still insufficient presence in animations and gameshows Opportunities Changes in regulations (access to TV advertising for the previously prohibited sectors, ) Threats Producer risk 9

10 2. 1. Production / Distribution: Growth Prospects Consolidate the Group s pre-eminence in fiction Strengthen production of one-off programs By a policy aimed at finding young talents Through the search for innovative formats By acquiring companies producing one-off programs in the gameshow field Become a leading distributor in Europe through the acquisition of existing catalogs Be the leading program supplier for French terrestrial TV for both fiction and one-off programs. 10

11 Theme Channels

12 2. 2. Theme Channels: Presentation of the Business Properties: 9 channels broadcast mainly in Europe in 4 editorial categories Music: MCM, MCM TOP, MCM POP, MCM 100% Belge, MEZZO Children: Canal J, TiJi Daily life: La Chaîne Météo People : Match TV 27.4% share in multithématiques (publisher of Planète, Ciné-cinémas, Jimmy, etc.) Distributors: Key figures: cable and satellite operators (CanalSatellite, TPS, Noos, etc.) over 5 M cable and satellite subscribers nearly 28 M subscribers to our channels, incl. 10 M abroad Net revenue : 80% fees (from distribution platforms) 20% advertising 12

13 2. 2. Theme Channels: Competitive Position Children area Canal J No. 2 theme channel, all theme channels viewers combined No. 1 children channel for 4-10 and 4-14 age group (7,9 %), all theme channels viewers combined TiJi No. 2 children channel for 4-10 age group (7,3 %), all theme channels viewers combined Canal J + TiJi combined enjoy a 42,9 % market share (4-14 age group) on children channels Music area 13 MCM No. 1 theme channel for age group No. 1 music channel for 4 + age group

14 2. 2. Theme Channels: SWOT Analysis Strengths Weaknesses Strong presence on key sectors for advertisers (children, music) Complementarity of TV music channels and radio stations Increasing number of subscribers to CanalSatellite Dependence on the distributor Not backed by a terrestrial TV channel Opportunities Opportunities for acquisition (trend towards market concentration) New distribution technologies : digital terrestrial TV, ADSL, etc. Threats Music, etc.) Sharpening competition from other theme channels (Piwi, M6 and from terrestrial channels (development of Star Academy type of formats, etc.) 14

15 2. 2. Theme Channels: Growth Prospects Growth potential : Access to TV advertising for previously prohibited sectors reserved until 2007 for cable and satellite channels Convergence between advertising market share (5%) / audience share (11%) Constant growth of audience share : from 7% in 2000 to 11% in 2003 Spin off new channels from successful ones (Canal J TiJi) Opportunities to acquire one or more channels in order to : Enhance the product range in selected areas such as children, music and daily life Promote the international growth of MCM Become an unavoidable package provider for all pay channel distributors 15

16 Audiovisual Summary Over a 8 year period, Lagardere Active has collected : Strategic assets: Talents: producers, anchors, channel executives Products, brands, catalogs Audiences A range of know-hows: Creator of programming Distributor Producer for theme channels Broadcaster of themes channels Advertising airtime rep 16 Constituting an independent entity, ready to contribute to the success of any new investment in the Audiovisual field

17 Radio

18 3. Radio: Presentation of the Business 3 national radio stations in France: A general-interest News & Talk format A music generation motor for age group A contemporary music station for age group In a very competitive French radio environment (15 private national broadcasters) 16 stations abroad, in 7 countries (Eastern Europe, Germany and South Africa): 25 M daily listeners 18

19 3. Radio: Business Model Key Elements 85% of net revenue from advertising a very cyclical business Most costs are fixed (schedule, broadcast, promotion) More than half of the costs are constituted by payroll charges Program generally set for the broadcast season (from september to june) Cost of dual broadcasting (LW/FM) for Europe 1 Unbalanced distribution of frequencies throughout France : Europe frequencies 51.6 M coverage on LW+FM Europe frequencies 39.5 M coverage on FM RFM 162 frequencies 34.4 M coverage on FM Representing total potential coverage of M < threshold of 150 M Note: NRJ 257 frequencies, France Inter 621 frequencies 19

20 3. Radio: Competitive Position Very competitive environment in a context frozen by regulations 3 main private players: Lagardere Active, NRJ, RTL 3 small ones : Skyrock, RMC Info, Radio Classique, competing for growth A 7th player, on the audience market only: the state-owned stations Market share (source: Médiamétrie Nov. / Dec. 2003): no. listeners/d. Cumulative audience 9.9% for Europe 1 4,909, % for Europe 2 3,314, % for RFM 2,193,000 A total of more than 10 million listeners every day Internationally: No. 1 radio operator in Poland, Czech Republic, Romania, No. 2 in Russia, No. 4 in Hungary Positive operating income for the last 3 years 20

21 3. Radio: SWOT Analysis Strengths countries Weaknesses Opportunities Threats Programming expertise Complementary formats reaching every age group Abroad: strong Group positions in a balanced portfolio of Insufficient coverage of the country by our stations Changes in regulation (categories, threshold, ) Satellite radio broadcasting (XM in the United States) Abroad: opportunity for consolidation (values at cyclical low point) Open access from 2007 to sectors (especially retail) where TV advertising is still prohibited 21

22 3. Radio: Growth Prospects Continue to improve coverage, by obtaining new frequencies Internationally, consolidate our positions in countries where we are already present, while studying the possibility of investing in new countries Develop the complementarity of media between music radio and Music TV channels Downloading Spin-offs Interactivity Concerts 22

23 Complementarity of Media

24 4. Complementarity of Media A Unique Radio Landscape The French radio landscape today: A peculiar French situation that is not found in any other country 15 different national music and/or news stations This situation is unique in the world today. 24

25 4. Complementarity of Media Segmentation of Content Radio is a business sector that is not exempt from the basic rules of marketing: Create desire, be unique, and make it known. Our every day policy: Respect for the genetic codes of the brand Respect for our promise concerning our products Regularity in the production of our programs Evolution, never revolution, in our offer of programs. This is also our competitors policy. 25

26 4. Complementarity of Media Segmentation of Content (continued) To survive and grow in the face of the combined offering of music and entertainment (mornings and evening talk shows) presented by our competitors: Be segmented Be different Be capable of inducing a feeling of ownership making it theirs Europe 2 and RFM, two music stations Positioned in the cycle of the discovery and consumption of music Trend-setters on their own market segment Exploit our brands more intensely So that they become labels And also take on a marketing function. 26

27 4. Complementarity of Media Music Radio and Interactivity An intense listener/radio station relationship through the participatory links that arise from conventional resources, such as: Fixed wire and mobile phones, Text messaging, , The communities that we have developed on our Web sites. Make progress in the commercial use of databases identifying our consumers (useful for downloading as well as for music searches), while emphasizing: The marketing of our games lines, The use of text messaging for gameshows and talk show broadcasts. 27

28 4. Complementarity of Media Music Radio and Spin-offs Strong identifiable brands that are already producing lines of derivative products: CDs and DVDs with Europe 2 with RFM un maxx de bruit the un maxx de frisson collection le meilleur du cinéma or night fever that constitute complementary sources of sales. 28

29 4. Complementarity of Media Music Radio and Downloading The commercial market for music downloads has no choice but to organize itself. We will be a media player in this process through the development of Virgin Méga. Music Radio and Concerts The market for organizing concerts is changing particularly quickly. In this situation, our radio stations could rapidly develop a concert branch : 1st example: Europe 2 Live, The first Radio & TV Show, simulcast on Europe 2 and MCM. 29

30 4.Complementarity of Media Music Radio and Music TV Channels Downloading, Concerts, Derivative products, Interactivity, Are applied on the MCM channels in the same way as in the FM business, And by promoting synergies between the two fields. 30

31 New Media

32 5. New Media : Presentation of the Business Scope of presentation : Géography : LAGARDERE ACTIVE BROADBAND Nouveaux médias rev.2002: Approx. m109 E Mobile Main services and brands : Chat/Dating Lifestyle Pictures Music Internet Minority shareholder : Content Syndication 32

33 5. New Media : Focus on mobile (1) Mobile device accelerate paying content services penetration! logos Single ton ringtones Bingo SMS Voice mail greetings Telegreetings Greeting cards Colored pictures Polyphonic ringtones Premium SMS Real tones Java Games MMS Animated pictures Java applets Karaoke MP3 downloads Jeux Java 2.0 video clip Live dating Fin

34 5. New Media : Mobile Data Market Europe vs USA EUROPE USA Western European Mobile Subscribers MM Internet Enabled Not Internet Enabled Western European Mobile ARPU /Month Voice Data US Mobile Subscribers MM /3G Phones No 2.5/3G US Mobile ARPU $/Month Voice Data Source Morgan Stanley Equity Research Source Morgan Stanley Equity Research Source Morgan Stanley Equity Research Source Morgan Stanley Equity Research Western European Mobile Data Market (1) Bn % CAGR P2P Browsing Premium Western European Market for Ringtones/Logos (2) Bn % CAGR US Mobile Data Market (1) $ Bn % CAGR P2P Browsing Premium US Market for Ringtones $ MM % CAGR Source Morgan Stanley Equity Research Source Notes Numbers include airtime revenue for operators Projections for 2005 in line with recent publications from Jupiter Research and W2F Morgan Stanley Equity Research Source Morgan Stanley Equity Research Note Numbers include airtime revenue for operators Source IDC, May

35 5. Business Models 1) Technical expertise COMMUNITIES COMMUNITIES CONTENT CONTENT 2) Marketing expertise : - mobile operators distribution - advertising on print, TV, radio SUBSCRIBERS PAY PER VIEW STATISTICS BILLING Wap FRONT OFFICES WAP Imode Java BREW MOBILE OPERATORS CONNECTIVITY Magazines 35

36 5. New Media : Competitive Position Match.com Jamba Itouch International Prosodie Publishing Hosting MM AGL ADT Newtech ATS Zingy InfoSpace Local Computel Broadsystem Jet MM

37 5. New Media : SWOT Analysis Strengths Internal mobile expertise Operating practice on the audiotex markets since 1994 Operating presence in 4 key countries Track record in mass market advertising since Club-Internet Direct access to privileged data on music industry (Virgin, MCM, Europe2) and image/pictures businesses (Gamma, Paris Match) Brand ownership and promotion capacity Weaknesses No mobile carrier s ownership No large TV station ownership No music / movie majors ownership within the Group Opportunities New growing and profitable markets Good match with other Group s assets : Virgin, magazines Global markets, centralized technology, R&D and hosting New technologies fosters operators growth as well : UMTS Threats Increase of space/ copyrights costs Fast sector consolidation Need of fast critical mass reach 37

38 5. New Media : Growth Prospects (2) / Conclusion Existing brands, products, expertise and technologies with local presence in 4 countries. Fast growing market overall, with Late US growth Opportunity to consolidate existing businesses in Europe Strong opportunity to strengthen and extend our leading positions as key content providers to mobile users and mobile operators. 38

39 Lagardere Active Advertising Sales Company

40 6. Lagardere Active Publicité The French advertising market 8.6 Billion Euros invested in the French media market in 2003 Outdoor Advertising 11,3% (+) Internet 0,7% Cinema 0,8% National TV 29,0% (+) Other press 17,1% Cable TV 1,5% (+) 40 National Daily Press 15,3% Source : Estimate LAP january 2004 Magazines 16,9% Radio 7,4% (+)

41 6. Lagardere Active Publicité s markets The audiovisual sales company of the Lagardere Group is positionned on both an «historical» market and two «emerging» markets. 1 «historical» advertising market : Radio with a national and local commercialisation 2 «emerging» advertising markets with high growth potential: television thematical channels internet sites Since 1999, Lagardere Active Publicité has experienced a steady rise of its market share. 41

42 6. LAP s position on these different markets Radio On a highly concentrated market (3 major players : LAP, IP, NRJ) Lagardere Active Publicité owns very strong brands and is present on every level. A historical leading role (2nd commercial radio, commercial coverage share) with an innovative format : News & Talk. A musical network composed of and reinforced by the commercialisation of, leading offer ahead of NRJ. A presence on every market with strong positions : on the national market with a leading position in terms of audience (34% of commercial coverage share), on local markets, a challenger position Between 1998 and 2003, on the national market : Turnover +54% while the market is up 30% 42

43 6. LAP s position on these different markets Televison : Large commercial portfolio (26 cable TV and 5 local or regional TV) composed of television channels edited by the group and channels owned by other groups (primarly AB group) which makes LAP the leading sales rep with 30% coverage share. Leading channels targetting the most interesting people : children with Canal J and TiJi, the with the MCM+ offer, the Housewives-50 with RTL 9. Between 2001 and 2003 : Turnover +32% for a market up 6% (estimate) Web sites : A specific positionning : only sales rep which commercialises a portal (Club-Internet) and strong internet brands (Europe1.fr, Europe2.fr, le Routard.com,etc.) A systematic approach of prolonging our TV and Radio actions on our websites (cross-media) Between 2001 and 2003 : Turnover +20% for a market down 10% (estimate) 43

44 6. Lagardere Active Publicité Market conditions Clients media strategies are becoming more and more complex (search of opportunities, simultaneous work on different targets, etc ) Investments based on more and more quantitative criteria ; the effective audience ; with a more and more accurate expertise of the Media agencies (buying agency). Clients expect increased expertise in terms of service : refined target groups with an efficiency that has to be proven. 44

45 6. Lagardere Active Publicité s strengths Owned by a major media company Powerful media brands with very strong added value which can be sold as a global media : cross-media A dynamic team with very ambitious objectives : more turnover and market share A guarantee of efficiency and perfect services A performing back office allowing optimisation of revenues & profits 45

46 46 Annexes

47 6. Lagardere Active Publicité The French advertising market In 2002, companies have invested 29,3 Billion euros for their communication in France which represents a small increase (+0.6%) after the strong increases until 2000 (up to +8%) and the steadiness of % of the national GDP is devoted each year to above-the-line and below-the-line media (direct marketing, promotion,etc). The French advertising market makes up for 4% of the international advertising market and 20% of the european advertising market. The French media have a great growth opportunity since France ranks in the european average with 489 invested by inhabitants. 47

48 6. Lagardere Active Publicité Advertising income of the major media from 1998 to 2003 Millions of euros Mkt share 2003 Var 2003 vs 1998 Var 2003 vs 2001 press % 8% -5% télévision % 23% 6% outdoor % 0% -9% radio % 30% 14% cinema % 28% -7% total % 14% 0% 48 Source : Irep estimate LAP for 2003

49 6. Lagardere Active Publicité Sectorial breakdown of the brutto radio turnover Tourism 4% Food 6% Other 8% Distribution 24% Transport 8% Media 8% Telecom 16% Publishing 8% Culture and leisure 8% Services 10% 49 Source : Secodip janvier-december 2003

50 6. Lagardere Active Publicité Ranking of commercial stations 1,8 1,1 0,8 4,1 3,8 3,5 3,4 2,6 2,5 5,4 5,2 6,9 8,1 12,1 RTL EUROPE 1 NRJ NOSTALGIE SKYROCK CHERIE FM EUROPE 2 RFM FUN RADIO RTL2 RMC R & Chansons MFM R. Classique 50 Source : Médiamétrie November-december 2003 Base 13 years + (commercial coverage share)