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Edited Transcript of MMT.PA earnings conference call or presentation 14-Feb-20 7:30am GMT

Full Year 2019 Metropole Television SA Earnings Call

Neuilly-sur-Seine Paris Feb 17, 2020 (Thomson StreetEvents) -- Edited Transcript of Metropole Television SA earnings conference call or presentation Friday, February 14, 2020 at 7:30:00am GMT

TEXT version of Transcript

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Corporate Participants

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* Jérôme Lefébure

Métropole Télévision S.A. - Member of the Executive Board In Charge of Finance & Support Functions

* Nicolás Bellet de Tavernost Abel

Métropole Télévision S.A. - Chairman of the Executive Board & CEO

* Régis Ravanas

* Thomas Valentin

Métropole Télévision S.A. - Vice-Chairman of Executive Board, Head of TV Channels & Content and Director of Programming

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Conference Call Participants

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* Annick Tonie Maas

Exane BNP Paribas, Research Division - Analyst

* Remi Grisard

Societe Generale Cross Asset Research - Equity Analyst

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Presentation

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Nicolás Bellet de Tavernost Abel, Métropole Télévision S.A. - Chairman of the Executive Board & CEO [1]

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Good morning to all. We're going to start, as usual, with a little movie. And then I'll present the group's results through 2019 and the prospects for 2020.

(presentation)

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Nicolás Bellet de Tavernost Abel, Métropole Télévision S.A. - Chairman of the Executive Board & CEO [2]

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So good morning again to all. Regarding the 2019 results you have seen, I'd like to recall that we've had an advertising revenue of EUR 1.108 million; an EBITDA of EUR 284 million, a record figure; and operating margin that has grown, which is now 19.5%, plus 0.8%. Behind those figures, it is the strategy we've initiated 2 years ago that is bearing fruit. This strategy has consisted in, first, reallocating assets to our traditional businesses with the exit of Girondins de Bordeaux and the materialization of one of our diversification activities, monAlbumPhoto, EUR 140 million for those 2 acquisition.

In October 2017, we have bought the RTL Radio division. Promising synergy, we will tell you more about that later on. Continuing the synergies so that we can arrive at an operating result that has been multiplied by 2 -- that will be multiplied by 2, hopefully, because we have delivered the objectives. We've already doubled the EBITA since we have taken over that activity. We have completed our portfolio of channels with the acquisition of the Lagardère channels, and the first integration this year as of September of this activity in our account with a positive contribution to growth of our revenue and to the growth of our margin.

Thirdly, we are continuing to significantly develop and invest in diversification. We'll see it with iGraal. We had the choice between a cash exit or a merging of our activity to have the European leader in e-commerce marketing. This is the solution. We have chosen to continue the development of our activities. We have another successful diversification, Plaza Immobilier. We will continue that to create value for our group.

Finally, third, access production. We have developed internal production tools. Traditionally, we have C. Productions doing all of the documentaries, magazines; Studio 89 for our flow programs; Golden Studio or Golden Network doing the productions for millennials that is going to be part of the drama part, including for external customers; and finally, SND for movies, which has significantly developed last year, and that will continue in 2020.

So this whole ecosystem we're developing, we're developing production companies upstream, buying -- trading rights. We develop traditional activities, and we continue our diversification policy to create value with our portfolio. This has started bearing fruit in 2018. It's confirmed in 2019 because this growth comes from this asset allocation in 2020 and 2021. We'll continue in that direction.

Regarding TV, we'll answer questions later on. But TV is doing rather well. Even though faced with important challenges, the TV remains the most covered media. And the ROI for the companies that trust us show an efficiency that is much higher than for digital. Those are markets that are stable. We have seen minus 1% globally in 2019 on the TV market. We are going to pay attention to what's going on in the U.S., where the uptake of value has much more than offset the drop in linear costs. That could be a model we could use to export this value creation on the TV activity while continuing the development of nonlinear activities. Because oftentimes, I hear say there is a drop, a decrease in TV and an increase in streaming. But streaming is also TV-related. There are a lot of streaming programs coming from TV. That is the reason why we're creating platforms. So you should not say we're giving up TV to do streaming. We're not giving up TV. We're abandoning a part of linear TV for streaming.

And this year, for the first time, Médiamétrie is going to measure, as of next April, the out-of-home activity. And this activity is going to increase the viewing time for TV. And next year, in 2021, we'll be able to measure the full screen activity. Because when a child looks at screen in his room, this activity is not taken into account in Mediametrie. So there are technical aspect to measure audience that should reduce the measures regarding linear consumption of TV.

Regarding what I was saying, the group is well positioned. Upstream. First, we are hoping that this will allow us to develop more this upstream production activity that is not certain yet. Because today, we don't have the specific framework within which dependent and independent production can work. We have to wait for the laws to be voted, but we're going to work in that direction. It's not that we don't want to have any independent production. There are excellent independent format for flow or drama. But we would also take part in this activity, notably for the duration of the rights. It's very important for us to be able to manage systems, guaranteeing operations on all of our media. In the long term, let me tell you that to be independent, the duration is limited to 42 months, and 42 months is too short to amortize drama programs. It's one of the questions asked by platforms to commit into production.

To go back now to our TV portfolio -- now to look at the Radio portfolio. And regarding concentration, we could reinforce this portfolio by one station. We don't have yet a total of 150 listeners for the 3 stations. Maybe the law could change on this point.

Regarding diversifications on the right-hand side, I hear that we might abandon our diversification portfolio. In diversification, we have a lot of upstream or downstream diversification. For example, when we invest in movies, it's not necessarily for antennas when we, for example, work on Astérix or Facteur Cheval. We do have diversification. And the second thing is that we run our portfolio. I will certainly explain more about that regarding iGraal. iGraal is a very successful diversification we have chosen to keep it and not to sell it, but I will tell you more about that later on.

Quickly regarding the 2019 highlights. The audiences of our channels with Thomas, you will see that we have perfectly resisted on the big brands of the M6 Group. And the major brands are still overperforming the market. So those are very solid benchmarks in our activities. We've acquired a number of TV channels, free channels for DTT and pay-TV for cab-sat. We have had a lot of successful movies. You've seen the figures. And we are going to continue in that direction with diversifications. And finally, the deployment of synergies. Régis will tell us about that on our radio activity. All this is beginning to bear fruit.

The key figures, very quickly for last year, before I give you -- give the floor to Jérôme. We have a growth of about 7% of our operating revenue -- of our EBITA. That is due to our increase in advertising revenue and the fact that we've controlled operating expenses, including the Lagardère pole, which was integrated in the accounts in the last 4 months.

The net income has gone down. Why the net profit? Because it was dogged by the sales done in 2018. Notably, the Girondins de Bordeaux, monAlbumPhoto also was still on the accounts of 2018. So an operating margin of 19.5%. We have -- had given a guidance without a date, of 20%. So it is still our objective to rise as quickly as possible at a margin of 20%. Jérôme?

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Jérôme Lefébure, Métropole Télévision S.A. - Member of the Executive Board In Charge of Finance & Support Functions [3]

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A few comments about our segments and their evolutions. As you can see here, the TV segment division has reinforced its contribution revenues up to EUR 47 million and to profit, EUR 9.6 million. All in all, as you can see, this is due to the arrival of the Youth TV division. And as far as EBITA is concerned, we've continued investing, amongst other things, in digital technologies on what we call the nonlinear. As Nicolás said, this is very important for our future. And therefore, the expense was EUR 7 million invested in technological costs.

As far as Radio is concerned, we have shown that the synergies work well, EUR 4 million extra revenues, EUR 2 million in profit or earnings. Therefore, a very good transformation in terms of additional income coming from audience ratings, for instance, in terms of our results. 50% marginal results is something really good. It shows the synergies in the group.

And then Audiovisual Rights and Production. Now this time, it's a different trend. Revenues are down slightly, and yet profit is increasing significantly. And this is the result of 2 items. First, we've had a number of people going to the cinema that has gone down, yet quite many people have gone to the movies. And in terms of our income, the impact is on international sales. We've had fewer sales in 2019 versus 2018 and [2018], with the anticipated part of Astérix's international sales that had an impact in 2018.

And as far as profit is concerned, these films, the movies, are films that have a minimum guarantee that is invested amounts are lower. And therefore, the level of revenue doesn't require a big amortization because the amount that's invested is lower. And therefore, there's a better yield or return on investment for each movie because we have the same revenues with less capital employed for each film.

Then Other Diversification. If you look at revenues first, this impact of monAlbumPhoto, in 2018, the contribution between January and July was visible. And then in 2019, we don't have this contribution yet. If we look at operating earnings or EBITA, sorry, the contribution of M6 Mobile is lower, yet we've strengthened the profitability of iGraal and the digital activities as well. If you look at the digital revenues, they're significantly up this year.

Now that's the general overview. We're going to give you more particulars later on. But more or less, we are up EUR 34.7 million for the revenues; and EBITA, EUR 18 million up this year.

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Thomas Valentin, Métropole Télévision S.A. - Vice-Chairman of Executive Board, Head of TV Channels & Content and Director of Programming [4]

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Hello. A few words about the television audience ratings. This is an overall linear and nonlinear activity which is based, of course, on the M6 channel, plus the DTT free channels, the pay-TV channels, that Nicolás said. Their activities is growing and very positive. And this is not necessarily intuitive for some people several years ago. And the nonlinear activity and the free VOD or AVOD, they're developing nicely with 6play.

Now we're going to start with an overall view. The M6 Group within the television division, we're #2 in terms of our commercial target, and we're improving by the year. As you can see, we have a high percentage of the market.

We'll start with the M6 channel. And audience ratings are good. They were up. For the most important segment, that is the access primetime, that is Scènes de Ménages and [Le19.45] or En famille. The results were excellent last year and primetime as well, that have improved. Now that's the pre-primetime. 19.6% is what we have for M6. And for primetime, in average, 17.5% audience rating with the good positioning of the main brands, the historic brands that are renewing themselves year in, year out, in terms of content, in terms of being appealing. And it's still the case this year, as you can see, even though there are more and more competitors on the TV market. These brands have beaten historic records. Then as you can see, the channels increased between 7:45 and 10:30.

Now a few words about the free channels: W9 and 6ter. These 2 channels did really well last year, as you can see, even though there are fierce competitors. As far as the commercial target is concerned, these 2 channels are up for women responsible for purchase under 50s. And we had programs handled by the main brands, as you can see here. This is how we could describe this channel. We have TV reality programs. The most powerful ones, if you look at W9, for instance, and the magazines produced a lot in primetime Enquête d'action and other programs that are very famous for W9 and the 6ter as well that's invented a new TV reality with the, the moms, Le Mamans, pre-primetime, that's doing really well. And programming is for the family. And they have found the targets. Since it was launched, they found their positioning. These are new DTT channels, and this is the first one.

And then we have Gulli, and it is the #1 channel for children between 4 and 10. And they've improved as well. If you look at WRP, for instance, Gulli during the day, our target is those between 4 and 10 years of age and in the evening. And the situation is improving with contribution of Group M6. We're looking for a target that's more like a family-type of target.

Then if we look at pay-TV, Paris Première and Téva, I was saying before. Today, these 2 channels are competing with many more channels. There are many more competitors, yet these 2 channels are at a very good level and improving. Paris Première is improving for their targets. That is the very wealthy families, and their results are really good. And Paris Première is still the channel, which is a pay channel, which has a very diversified offering with special events and moments that are well marketed each day during the week. And they came to launch the Paris Première mythical films soon, with one major film that everybody remembers and wants to see again each week. And then there's Téva, a channel for women, for female viewers. And they're continuing -- they're producing lots of documentaries that standout. And it's the first channel for WRP under 50s, and quality is still there. So good results for these cab-sat channels.

And finally, within the same framework, since this is also our activity to develop a nonlinear offering which is free of charge and financed by advertising, that's 6play. 6play was up in 2019, and we're going to invest more and more in 6play in this activity, which is AVOD. And we're going to add more and more new programs or programs that are not just a catch-up TV. This is most of what's used on -- or watched on 6play, but we produce for 6play. We consider program acquisitions for 6play. We do that. We have 27 million people who have subscribed, logged in and 110 million worth of -- or million programs rather. These are not short videos that you can see on other platforms. So 110 million videos or programs seen or viewed per month.

And in average, the viewing time is 1 hour and 15 minutes, quite a long period of time. So that's AVOD. This is a market that people don't speak a lot about, but it's a very important market that's progressing, that we bet on, that's part and parcel of our broadcasting policy. And then I think we can continue with radio audience ratings.

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Régis Ravanas, [5]

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Good morning. The radio market did well in 2019. Nicolás was saying that there's a report that's produced that shows the return on investment for TV. This report also looked at ROI for radios. It's very much in line with what we saw for TV trends. So the market has gone up a little. We've outperformed, as Nicolás was saying, on that market.

As far as audience share is concerned, we've maintained our leadership position. We've done even better than that. This is what we did in 2019. As you can see, compared with the second private group, we're at 18.5% of audience share. The next competitor is the NRJ Group, 14.2%. And therefore, plus 4.3 points for us is our cutting edge.

Now RTL has maintained its leadership. RTL is a co-leader in 2019 with Radio France. But as you can see, since the end of the year and beginning of this year, well, we've strengthened our position and we are regaining our leadership against the next competitor that's not really a commercial competitor but a competitor in terms of audience ratings. There are novelties that were launched this year. For instance, (inaudible) were major successes, and we had well-targeted our audiences.

RTL2 is still well positioned, and I was about to say that this is the baby that everybody loves. That's for the urban upper social professionals. It is highly profitable. Fun Radio did also very well, commercially speaking. In terms of audience ratings, it's more complicated, these radios for the youth. And they listen less to radio stations. And just like (inaudible), Fun Radios' audience has gone down a little.

Now Nicolás was talking about synergies earlier on. 2020 for us is going to be the year when we strengthen these synergies. And that's the reason why, as you can see, our growth is up where in revenue is 2.4%, but then it's 8% if you look at profit. And that's due to these synergies. These synergies, of course, are things like support services, and it's working well. When times are tough, we saw that with hacking and hackers. And there are also commercial synergies. We're lucky because we're backed on a group that's very powerful now. It really makes a change. It's very difficult for us because the platforms compete with us, and we need these large groups that support us. And there are 2 that are very strong in France: there's M6 and TF1. This is why we have outperformed on the market. We feel that the market is going to be at plus 0.5% in terms of its growth for us. It's 2.4% up, and that's because we have a strong group that supports us.

We have also content synergies. We're working on this with Thomas' teams. There are programs that come from radio and vice versa that are also projects that are very interesting in that respect. And of course, there are talent synergies that you could see on the different channels and stations Julien Courbet, (inaudible). And this is good for us. It's good for the talents we have with the group. It's good to attract them. I can tell you that because we're discussing the talents. And the fact that we can tell these talents, "Well, look at that. There's a positive outlook for you on the radio or on TV, digital outlooks." This is really great for us to recruit the best talent.

And there are, of course, digital synergies. We get the know-how of M6 in that area, the developers, the display. And therefore, they're an undisputed leader in terms of market technology. There still remains to be done on the market even though our positioning is really good. As Thomas was saying, audiovisual is what's linear and nonlinear. And in the U.S., it's a seamless connection between the 2 worlds. So we have to become an audio group. The M6 Group has to become an audio group more than a radio group in the future, and we're going to work on that. We're lucky because as we speak, we have very good products. I was thinking about Les Grosses Têtes. They are the leaders in podcasting in France and even in Europe. We've got an award for the best podcast in the year, and that's Une Lettre d'Amérique from Philippe Corbé that we have monthly on our sites that's supposed to -- weekly rather, on our site. And yet, a lot remains to be done and since the market for podcast is not yet mature, it's not EUR 700 million we have on the radio. It's only EUR 15 million. We have to use our resources to protect our margins, and this is what we're doing. By resources, I'm saying, technological resources from M6. And of course, we have our programming teams that help us having nonlinear programming, which is, in fact, podcasting. That's what I wanted to share with you.

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Nicolás Bellet de Tavernost Abel, Métropole Télévision S.A. - Chairman of the Executive Board & CEO [6]

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So regarding advertising revenue or growth year because advertising revenue of the group is growing by 3.8%, going from EUR 1.07 billion to EUR 1.107 billion. And you see the contribution of TV and other activities, including radios and our digital portal activities, have had a respective contribution of 4% growth for TV, 3% of the growth for the other activities. And outside of the [youth pole] activity, TV is stable. And as I was saying, all this, and given the context of the end of 2019, the strikes in transportation has have had a very important impact and that was very different from the previous year with gilets jaunes, the yellow vest Saturday. So the end of the year was difficult, and the advertising performance in this context is nevertheless significant.

Regarding this growth and the reinforcement of the media portfolio, we can propose to advertisers. We have a net advertising market share that is increasing by 1.3%, going from 26.1% to 27.4%, given our estimates. Of course, we'll update those estimates. We're going to -- we already have the TF1 figures and the ones also from NRJ.

Regarding the key figures for the group's media activity. TV here, and overall growth of the revenue of 4.9% over the year and growth in the EBITA of 4.5% for all TV activities. And an additional contribution of the youth division, stability of the organic advertising revenue, a decrease in the overall programming costs, thanks to a better turnover of contents between the channels and also a contribution in terms of digital investments. Regarding radio now, a growth of 2.4% of the revenue and 7.6% of EBITA with the different figures you have for the revenue.

Regarding Production & Audiovisual Rights. As we said earlier, the slight decrease in revenue, EUR 75 million, but a very strong growth in EBITA, reaching EUR 14.8 million, thanks to the diversity of the portfolio. By the way, in number of catalog acquisitions we've done in the last 10 years that are a big asset for us to be able to sell those movies to the world of linear and nonlinear TV. Here, again, this is a very important growth factor for us.

Regarding the other diversifications, Nicolás has presented the main elements of, on the left-hand side, the scope differences between '19 and '18. MonAlbumPhoto was sold. Regarding the rest of diversifications, if you restate, in yellow, 2019, outside of MonAlbumPhoto, ex MonAlbumPhoto, you have a slight decrease in the overall revenue and the stability of EBITA, which reflects several effects.

First, this decrease in the contribution of M6 Mobile, EUR 10 million in 2019 only. And in 2020, we will no longer have the contribution of M6 Mobile, hence, the difference of EUR 10 million. So the efforts were continued, both for streamlining and the choice of products sold through Best of TV. In 2019, Best of TV had had a loss related to bad choices of products, maybe, whereas this year, the choices were corrected. The year has been profitable, and that has helped offset M6 Mobile. And finally, the very good performance of iGraal. We're going to continue the development of iGraal. We're the main shareholder there.

Regarding the financial statements. I'm not going to insist on EBITA. Just one comment. We have an expense of EUR 9 million, which means that we have an increase in the cost of EUR 6 million. That's only an accounting goodwill entry. It is only retracing the opportunity we had to amortize goodwills on film catalogs we had bought. We no longer have goodwill. This investment was totally -- or almost totally amortized at the -- will be totally amortized at the end of 2020.

Regarding the financial results. First, the group has used its debt leverage. We have introduced funding line of EUR 75 million, generating some interest. We've also increased our lines with our banking partners that has allowed us in the second half of the year to draw those lines on part of the half year since cash generation is always seasonal. At the end of the year, we had already canceled those drawing and reduced our net debt to EUR 100 million at the end of December.

In the same line, in 2019, we've all adopted IFRS 16 regarding renting contracts. So from an accounting point of view, to include a rent or a lease, when you put a debt on the balance sheet, you have to have noncash expense representing a little million -- x million euros.

Regarding -- finally, the results regarding the joint venture, profitable of EUR 4.5 million. Here, one significant fact presented by Nicolás, the very good performance of Stéphane Plaza France, a series of real estate franchises that is developing very quickly in France and making a positive contribution.

The tax is slightly higher. Last year, we had lower taxes on goodwill, the capital gains. The fact, this year, we have slightly more tax because of the fact that we don't have 4 -- an extra EUR 4.4 million. The significant element are the continued activities. Past decisions are treated with IFRS 5. And the net income of continued activity, given those accounting entries and goodwill, all this is stable this year at the end of 2019.

If you look at the group's financial structure, the balance sheet, we have an increase of EUR 200 million. Here, we have the impact of the acquisition of Lagardère channels, translating in a goodwill of EUR 193 million. We have reallocated iGraal's goodwill on the line of assets to be sold, hence the variation of EUR 173 million -- plus EUR 173 million. That's important because this goodwill is a historic acquisition goodwill. It's going to find all of its value in the investment of iGraal. The rest are working capital requirement changes. You have the IFRS 16 and the financial debt and long-term debt.

Finally, in terms of cash flow statement. In this year, we've had the stability. With an increase in our ability to self-finance and more taxes since, like a lot of French companies, we have had a reimbursement in 2019 of the tax on dividends. Now, this year, we're at a normal level of tax disbursement.

Regarding investments. You see the difference between 2019, where we sold, and the following year, where we invested, in terms of funding, the ability to increase our dividend last year, an extra EUR 6 million. But also, we were able to make a few repayments last year and go and get more financial resources this year. So much for 2019 in our accounts.

And finally, as I just said, we will propose to the general meeting the payout of the dividend of EUR 1 per share, representing a yield of 6%, given the last share price in line with today. The coupon will be paid on May 13, and the money will be paid on the 15th of May.

Regarding the main challenges of 2020. Of course, we are going to be continuing our historical activities, TV and radio. We want to develop our brands and regarding, notably, Gulli and the youth TV division. We will continue the synergies of the Lagardère channels. We will have also to talk with some Internet service providers about the agreement regarding the distribution of our channels on the platforms. You will have the launch of Salto.

Salto will be better tested in June and commercial launch will be in September. It is an important activity that is important for us. And this -- bringing together of those 3 companies, finalizing the iGraal, you know that simple. The project represents, on the one hand, a sale with cash, with EUR 35 million and a participation in the merger of some up to 38%, GSG and iGraal, couponing and cashback. It is the mixture between those 2 activities that will give rise to the new entity. We'll be the shareholder #1 of that new entity.

As Régis said, we will be continuing the integration of the radio and audio activities. And we have to rebalance the competition conditions between international and French players. From that point of view, we have developed an activity. We have invested substantially in Bedrock. Bedrock is a technical platform activity that is based in Lyon, by the way. It is now a registered company that operates the streaming technology for 6play. It's the origin. And for a number of RTL channel laws in Europe.

And finally, Salto, given the competition that they have won. We are ready to open the share capital of this platform. Why? Because we think that there will be major technological investments to be made in the next few years on streaming and nonlinear for what we call ultra customizations for all devices for addressable advertising for the HDV TV standard. And we have 200 employees in the group or contractors working on that activity. We think that the requirements should be 600 people in the next 4 years, if we want to remain abreast of this technology in terms of the technology, given the quality of international platform. If we don't want to dedicate too much through important means to the program offer, we are in favor of the regrouping.

As soon as we've developed 6play, we have decided to develop a number of brands of private label, which we have developed for Salto. We're discussing to have wider partnerships in Europe on this technology. It is an indispensable element because the nonlinear consumption is going to increase for SVOD and AVOD. If there isn't a strong technological medium, the technological costs will increase. So we have to pull the cost. There is no way we have -- we're going to avoid that. We have to pull the costs, either directly or through contractors. Given those technologies, we have to pull the cost. We have taken measures in order to be able to propose those platforms, including to European partners.

A few words about diversification. Of course, we're not giving up on diversification. We rotate our diversification. Here's an example. When we took a position, that was in the year 2000, to have a license, not a full MVNO and not a light MVNO, which is what some players did in France. We developed an activity that lasted 13 years. And the profit for the group was between EUR 370 million to EUR 400 million cumulated.

When we develop activities, such as Plaza Immobilier, whilst today we have 500 branches, we are looking -- or targeting 800. So to beef up Plaza Immobilier, the property agencies and branches were not consolidated. This -- consolidating this in the group, it's a net profit, but it will be consolidated in the years to come. And also, we're going to consider other sectors that we're studying at present. So the objective is to rotate that, and we hope we'll do this successfully. We rotate our investments in these industries. There are many industries that we could initiate.

Our business model is quite simple. We look at all activities for large audiences, so the general public that might need marketing and promotion that would require our tools. Our tools are not just like TV and radio but also digital tools and also addressed advertising in the framework of partnerships. So this is an industry, thanks to which we've managed our group to rotate them. Later on, that was a special diversification, to some extent.

We were targeting football rights to be acquired. It is difficult for us to acquire these football rights this year. We share this with our TF1, the Euro event, also the men's matches for the French team, and we have exclusive rights for female football. So we've succeeded a bet with the right path in investing in this football club, and then we resold it at the right moment. We disposed of it.

Now a few words about our governance structure. The Supervisory Board met yesterday, and they renewed all of the members of the Board. So my colleagues, Jérôme and Thomas -- Thoma, are renewed for a period of 3 years. As far as I'm concerned, there's a limit in the Articles of Association set on the 22nd of August -- or no, 20 -- no, I'm kidding. 22nd of August to 2022. Yes, 2022. This is the end date, if you will. And even though our subsidiary is producing cinema films asked me to the film being called (inaudible). I still have some time to spend to work on the group changes. And what I'll do as well during this period of time is that I'll find the necessary people for future renewal.

So now if you have any questions, please don't hesitate. We're here to answer all of your questions.

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Questions and Answers

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Annick Tonie Maas, Exane BNP Paribas, Research Division - Analyst [1]

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Annick Maas from Exane BNP Paribas. I've a question about advertising. Could you perhaps tell us more about the strikes in France? Is there an impact on Q1? Are there advertising segments that are more appealing? And the comparison between this year and last year? Now there's a change with media mix here. When you discuss with agencies, do you see any impact on the volumes of TV that are bought or not? And thirdly, could you tell us more about 6play? First, what about their growth percentage? And could you tell us more about the pricing policy for 6play, that is last year but also over the past 3 years?

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Nicolás Bellet de Tavernost Abel, Métropole Télévision S.A. - Chairman of the Executive Board & CEO [2]

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Very clear questions. Thank you. As far as media mix is concerned, integration in audience ratings will be on the 31st of March. Therefore, it's going to be calculated in our total costs in what we call the GRP costs. When there are nonhome costs, then viewing is free because it's not measured for our clients. They will be integrated as of April in the calculation of the GRP costs that we have for that market. So this is satisfactory news.

Now what's the order? Well, it all depends on the channels. It all depends on the programs. When there are football matches, there are more home viewers than when we have a long drama. So our assessment is between 4% and 5% growth of TV audiences, but I'm very conservative. There were tests made on that. We will see. It all depends -- the period of the year. Sometimes the percentage is up. It all depends on the weather conditions and many other factors.

Your second question has to do with the advertising markets and what they need to do. Well, we have no worries about the advertising market. And of course, there was a slowdown in January due to -- well, that's for TV -- due to the strikes. That sets the case for the radio stations. And for the quarter, the quarter is not yet over. So we have no worries, in particular, about the TV market for that quarter. But here, again, I'm always conservative. There's no direct impact, that's true, on us. But nobody expected the coronavirus. There are many other factors as well that might happen.

We keep an eye on the car-making industry as well. And we look at all sectors -- all industries, rather. But we have no special worries to express concerning Q1. And our forecasts for the full year would be -- by the way, that's how we produce our budgets. We said that the TV market would be flat. And these orientations have not been challenged. They've not been changed.

Here, again, however, we have to be quite careful about our pricing policy. And we feel that there's room for maneuver on the TV market. You asked also about pricing policy for 6play and the income. Well, we have a 2-digit growth for 6play. And 6play has distribution income. They are distributed on platforms, just like our signals are. And they have advertising income per se. They have 2 categories. There's inflows coming from OTT. And in this case, we control all data and other inflow on the Internet providers. And we are currently discussing with Internet service providers the ASPs on that.

And there's something we can't -- we're working on is the portals. We have to be on the watch out with portals. Portals are sites such as Passeport Santé or Cuisine AZ, et cetera. We have to be very careful about this activity. For us, it's quite limited, though. On the RGPD (sic) [GDPR] regulation and privacy, the authorization of cookies and also -- sorry, GDPR, and also on the number of subscribers. We will have to look for people to consent more carefully in the future. So all the different players in this industry, that is the portal industry here, again.

And by the way, this is not a high percentage of our activity. But in terms of the future development of addressed advertising, this is something we're paying attention to very carefully. This is why, in our budgets, we've not factored in extra inflows of addressed advertising in 2020 for 2 reasons. The first reason is that from the operations point of view, we need to have an executive order or decree, which is not yet the case. We could have this in the form of OTTs in situ, but we can't have that as a linear service. And apart from the past decrees, we have to agree with the ISP providers so that we have a policy to access data. It's not going to be that easy with the Internet service providers.

And thirdly, we need to have a market for that. And well, it all depends how far we can go in terms of addressing. And the regulation shouldn't go against the objectives that seed desired objectives that is -- that would oblige us to have an explicit content, a complex approach, if you will, and therefore, we would have no authorizations. And all of this is happening at present. The French Privacy Agency, the CNIL, is working on its regulation in France. And therefore, the different Internet players are all mobilized. Here, again, we're less exposed -- a little less exposed on that topic.

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Annick Tonie Maas, Exane BNP Paribas, Research Division - Analyst [3]

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I have 2 other questions, if I may. Now you have a guidance of 20% for the operating margin. And are you going to increase your guidance? You've almost reached your target, and Salto is going to be launched in September. Do you have more information about the number of users that you want to acquire? And how quickly? And subscription prices as well, please?

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Nicolás Bellet de Tavernost Abel, Métropole Télévision S.A. - Chairman of the Executive Board & CEO [4]

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Well, first, let's meet the 20% target, and then we'll see if we up our objectives at present. Our objective is a 28% operating margin. There's 2 things you can do for operating margin, either reduce your revenues and choose the ones that have the best operating margin. What we want is to grow both revenues and EBIT or operating margin. These are the 2 levers and engines in the group.

As far as Salto is concerned, those in charge of Salto will tell you what they intend to do. But I think they're all mobilized to launch Salto. Things are underway. Everything is going on smoothly. And we have a full team, highly skilled, and they work together. They have a very good project. Everybody is mobilized on the project. Their objective is to test that on the market, technical test. That will be in June and commercial launch will be in September. And then they'll have plenty of time when the date's gone to set objectives.

And what we recalled is that Salto would invest EUR 216 million in content in the 3 years to come. And number two, we said that the shareholders committed to investing EUR 135 million, that is, they will finance the activity up to a level of EUR 135 million for the 3 shareholders. This is a contribution in cash. Yes, the 3 players. Any more questions, please? Yes, please.

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Remi Grisard, Societe Generale Cross Asset Research - Equity Analyst [5]

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Remi Grisard, Societe Generale. As far as Médiamétrie audience ratings are concerned, you told us about the digital activity. And the ratings, say, 10 minutes more each year, that is 4.5% for the full year. And there's no growth between 2019 and 2018. So could you tell us more about this? Could you tell us what's missing in this measurement or rating? What's different for M6 now?

I have a second question about radio channels or stations. For the EBITA of radio, you said the objective is EUR 38 million for 2020. Will you maintain your objective? Or could we go from EUR 30 million to EUR 38 million before next year? And then as far as Internet service providers, now considering the current negotiations, last time, you gave them more services such as replay, more quality for some programs. What are the levers that you're going to use when you negotiate? And I was thinking mainly about the fact that you're going to launch Salto.

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Nicolás Bellet de Tavernost Abel, Métropole Télévision S.A. - Chairman of the Executive Board & CEO [6]

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Well, the objective was EUR 37 million, the objective for radio. Well, there's no reason to think that Régis is not going to meet his objective. So we mentioned it this morning, and this is our objective. It all depends on the radio market. Should it really go down, then it's going to be difficult to meet the objective. Well, they might also outperform. Régis is going to change his objective, if need be. This is our guideline. We're going to do our efforts to meet the objective.

And as far as the Médiamétrie audience ratings are concerned, their calculation, I told you the extra audience that we got compared to the linear existing audience if we look at people who view at home.

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Remi Grisard, Societe Generale Cross Asset Research - Equity Analyst [7]

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Was it published today? That's the question because what's been published is the digital activity, that is 3 screens with mobile, et cetera. That is 4.5% is what you said for the nonhome activity?

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Nicolás Bellet de Tavernost Abel, Métropole Télévision S.A. - Chairman of the Executive Board & CEO [8]

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No. Well, 1 of 2 things, you see. To start with, in 2020, we'll only add the nonhome activity. We will not add the 4-screen activity in 2020. By the way, the 4-screen activity has to be tested. It's not yet technically finalized. And what's likely is that it will not be included at the beginning of 2021, which is what we said earlier on. Therefore, at present, we're still aggregating the data. These are hybrid measurements or ratings. They come from the traditional tools. We didn't get rid of the audimat, the audience ratings. And we add other tools, that is [bowl] individual audience in French AIP. And we hybridize the 2 measures, and this is what gives you the figure I gave you. So this is hybridation, and we're working on that.

We're working on hybridation to understand what's happening. We want the same audience ratings that have bone system, like a watch, like a necklace so that they can collect all the data at home. Well, to do this, you need to have repeaters, WiFi repeaters at home, so that you capture the data from your teenager in his room, in her room, looking at Les Masies or Les Prés de la Mer on the secondary screen. So to capture individual audience, well, the bedroom has to be accessible to collect data. So hybridation is what we're still working on. It deserves more work.

And your other question had to do with extra services to provide when we negotiate with the ISPs, the Internet service providers. Well, we're not renegotiating all of our contracts. That's to start with. And number two, we constantly improve our services, as Thomas told you before. And we do this with 6play, and Salto will be proposed as well. But this is an SVOD service, not AVOD. So it will be proposed as well. It will be included for the Internet service providers. So we really intend to maximize our distribution resources.

Any other questions?

By way of conclusion, I would say that the group's activity and, more generally speaking, traditional media are resisting well to a complex competition environment. This complexity includes a lot of positive factors, the strength of TV and radio that resist and Lagardère media for advertising; second thing, the quite fast adaptation to nonlinear from a technological plan, from the point of view of AVOD or SVOD. Thirdly, the diversifications must be continued, reworked. Some should be abandoned in order to keep creating value for the group. We have the example of the -- GHG (sic) [GSG] is a good example. And finally, the competition of platforms in terms of view time or program access is strong. Of course, it's not as strong from the point of view of advertising, but this competition should be translated into simpler and more equal rules.

And what we have today -- today, even in the announced projects, for example, we're very surprised to see that we are again talking about the chronology of media. The chronology of media protects the French cultural exception, protects French traditional media. And changing the chronology of media is a way of giving positive answers to requests made by unbalanced competitors, i.e., the major international platform.

So we're very vigilant on these points that are going to be discussed this year. But we have to pay attention to the fact that we should not take hasty decisions in this universe, whereas, today, I'm very surprised to see, for example, that it takes a lot of time to open a number of projects to improve programming at the level of the law. I'm convinced that Disney+ or Netflix are not going to close the access to movie theaters on Saturdays. So it would be normal for M6 to access movie theaters on Saturdays without any other constraints, only free access. Of course, there are always people opposing, but I think that we can't have too strict a position on that.

And the support of traditional actors go through a number of measures. And the challenge -- the stakes are very high at the moment because Europe is being attacked by international platforms with huge investments, very powerful lobbying on the part of those platforms that do not create many jobs, as you probably know. So I think that we have to be aware of the fact that our audiovisual control is based on traditional actors.

So we're asking that the rules be adopted to rebalance this competition. We want these laws to be enforced. And we should not just promote short-term interests at the detriment of sound traditional actors able to meet the challenge when we propose Bedrock, Salto, when we develop our production activity or production of the movies or drama. I think that we're showing that French AV groups with the satisfactory results are able to meet those challenges. And it is while they have satisfactory results that we should carry out the mutation. It's not a question of waiting until results are bad that we need to change the structure. So it's -- it would be good to -- for you to be able to see a movie on Saturday evenings on M6.

See you next July for the presentation of H1 results. Thank you.

[Statements in English on this transcript were spoken by an interpreter present on the live call.]