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Edited Transcript of TFI.PA earnings conference call or presentation 30-Oct-19 8:00am GMT

Q3 2019 Television Francaise 1 SA Earnings Call

Boulogne Cedex Nov 1, 2019 (Thomson StreetEvents) -- Edited Transcript of Television Francaise 1 SA earnings conference call or presentation Wednesday, October 30, 2019 at 8:00:00am GMT

TEXT version of Transcript

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Corporate Participants

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* Philippe Denery

Télévision Française 1 SA - Executive VP of Finance & Procurement

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Conference Call Participants

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* Adrien de Saint Hilaire

BofA Merrill Lynch, Research Division - VP & Head of Media Research

* Annick Tonie Maas

Exane BNP Paribas, Research Division - Analyst

* Christopher Johnen

HSBC, Research Division - Analyst

* Conor O'Shea

Kepler Cheuvreux, Research Division - Head of Media Sector

* Julien Roch

Barclays Bank PLC, Research Division - MD & European Media Analyst

* Lisa Yang

Goldman Sachs Group Inc., Research Division - Equity Analyst

* Richard Eary

UBS Investment Bank, Research Division - Executive Director and Head of European Media Team

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Presentation

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Operator [1]

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Ladies and gentlemen, welcome to the TF1 conference call for the first 9 -- for the 9 months 2019 financial accounts. I'll now hand over to Mr. Philippe Denery, CFO. Sir, please go ahead.

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Philippe Denery, Télévision Française 1 SA - Executive VP of Finance & Procurement [2]

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Thank you. Good morning, ladies and gentlemen. Thank you for joining us. So I will start, as usual, with the main key points and a summary of our results for the first 9 months, and then I will be happy to take questions.

So after Q3 of '18, which has been a very exceptional moment due to the success of the French football team at the World Cup, we are, for this quarter, Q3 of '19, back to a more usual trend regarding TV advertising revenues. That being said, if we look at the big picture and compare to what has been delivered, the group has reached the best marking rate for the first 9 months since more than 10 years at 11.4%. This good performance for this period leads the group to be confident in its capacity to face and overcome its challenges and to reach its guidance.

As a summary, I would point out the performance of our 3 main activities for the first 9 months as follows. First, an increase on revenues of EUR 13 million year-on-year in the Broadcasting segment, despite the men's football World Cup last year. Additional sources of revenues coming from nonlinear and the agreement signed with the telcos offset this tough basis of comparison.

Second point, thanks to the continuous evolution of our model and a good monitoring of our programming costs, the margin of the Broadcasting segment reached 12.6% for the first 9 months, plus 5 points year-on-year, contributing significantly to the improvement of the margin rate of the group.

Third point, seasonality impacts the business of Newen in Q3. However, the book of order is progressing significantly. We remain fully confident to deliver in the following months, performances in line with targets.

Fourth, the transformation of the different Unify activities is expected to deliver better performances from Q4 '19. The first 9 months of the year were focused on gathering, restructuring and identification of synergies. All those steps are now well advanced.

The fifth point, after a good H1, the group has maintained a double-digit level of margin for the first 9 months, even if we had a higher basis of comparison in the Broadcasting segment as well as a seasonal trend of both production and digital activities.

Q4 will benefit from a higher contribution of both Studios and Unify and sustainable ratings on the Broadcasting segment.

Let's now get into the details of our activities. I will start commenting on the performance of the Broadcasting segment for the first 9 months of '19. Revenues are up by EUR 13 million year-on-year, with programming costs down by EUR 66 million altogether, leading to an increase of the current operating margin rate for this segment at 12.6% versus 7.7% last year, as I already mentioned.

Well, first, regarding the Broadcasting revenues, the trend reflects a 1.7% decrease in the advertising revenues, EUR 18 million year-on-year, as explained before. This figure is more than compensated by the positive contribution of nonadvertising revenues among which TF1 Premium, the resale of Women's World Cup football rights and the good performance this quarter of interactivity, leading to an increase of total broadcasting revenues of 1.1% year-on-year.

The second point is regarding the programming costs. The group demonstrates, once again, its capacity to monitor closely its investments in programs in order to cope with the advertising market, seasonality, yet maintaining higher ratings. In this respect, the fourth quarter will see strategic reinvestments in programming like the Rugby World Cup, with 2/3 of the games, which were broadcasted in October in Q4, attractive French drama and world-famous entertainment show like Le Bazar de La Charité or Mask Singer. For the first 9 months, the audience share of the TF1 group among key targets remained high at 32.1% on women below 50 and 29.1% on individuals aged 25 to 49 years old.

Viewing figures were particularly strong for the first 9 months of '19 in access and prime time, which are the advertisers preferred slots, as you know, with 34% on women below 50, up by 1.8 points over the last 3 years. This performance demonstrated the high attractiveness of our grid, thanks to flagship program like Danse avec les Stars, new original dramas, such as Le temps est assassin and relevant decision in broadcasting with the Women's Football World Cup, among others.

Current operating profit for this segment stands at EUR 157 million, up by EUR 62 million year-on-year.

Now moving to the Studios & Entertainment segment. The revenues are down by EUR 36.5 million year-on-year, mainly due to the consolidation of our own shopping business divested from April '19. Revenues at Newen was in line with seasonal trends for the third quarter of '19. Newen has signed deals with new clients, both in France and abroad that will strengthen its production output in the coming months and its book of orders. The recent acquisition of Reel One, the Canadian producer and distributor of TV movies, will also contribute to diversify the Newen catalog by adding genre very attractive to many broadcasters.

Finally, revenue continued to grow at TF1 Entertainment, driven by its PlayTwo music level, offsetting a weaker performance from TF1 Studios since the start of the year. This segment posted a current operating profit of EUR 25 million, down by EUR 2.3 million year-on-year, and generating an operating margin of 10.2%.

Let's now comment on Unify. I'll remind you that the Aufeminin group has been consolidated from May '18. So the comparison between the 2 years is not relevant on the 9 months basis. But that being said, the restructuring of these activities is still ongoing. A new management team has been appointed to build a clear road map and identify internal synergies between the different businesses. Unify advertising, our one-stop advertising sales house, has been launched to offer high-power digital solution that complements those offered on the group's TV channels. Unify revenues for the first 9 months totaled EUR 124 million. Current operating profits amounted to EUR 3 million, still impacted by restructuring costs.

Just a quick word on the EBIT and net profit. As we have already mentioned, from now, the group won't account noncurrent charges linked with Newen's audiovisual rights anymore. The net results attributable to the group stands at EUR 118 million for 9 months of '19, representing a 45% increase year-on-year.

If we go and comment on the cash situation, excluding lease obligations as defined under the IFRS 16 norm, the TF1 group had net debt of EUR 53 million at end of September '19 compared with net debt of EUR 27.5 million at the end of '18. The cash flow generated by operating activities was higher year-on-year at EUR 277 million, enabling the dividend payout as well as funding the expansion of our production activities and our acquisitions. The net debt at the end of '19, we'll take into account the acquisition of Reel One and the increase in our stake in PlayTwo. We don't expect on Q4, a significant impact for our stake in the SALTO project.

A few words to talk about our extra financial performances. We have been recently reconfirmed in the DJSI and the MSCI, which are 2 major indexes highlighting the group's commitment to corporate social responsibility. We're also ranked 24 in the Equileap top 100 companies for gender equality, and first among media companies for the second year in a row.

Let's conclude with our traditional guidance, which we reiterate. In '19 a double-digit current operating margin rate, an average total cost of program of EUR 990 million for the '19 and '20 period. In 2021, revenue of the digital segment Unify of at least EUR 250 million and an EBITDA margin of at least 15% for this segment.

Still into '21, an improvement in TF1 group return on capital employed compared to what it was in '18.

That concludes my review of TF1 Group results for the first 9 months of '19. Please note that our full year results presentation will take place on the 14th of February '20. Thank you, again, for having join us this morning, and I will be very pleased to take questions, if any. Don't hesitate to ask questions.

I just want to remind you that a recording of this conference call will be available. You will find all the connection details on our website.

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Questions and Answers

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Operator [1]

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(Operator Instructions) We have one first question from Mr. Adrien de Saint Hilaire from Bank of America.

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Adrien de Saint Hilaire, BofA Merrill Lynch, Research Division - VP & Head of Media Research [2]

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I have a few questions, please. First of all, Philippe, can you discuss a bit the outlook or your sense on Q4 advertising trends? I presume visibility is low, but any color you could give here would be helpful. Second question, you said there won't be any impacts or meaningful impact from SALTO in your Q4 numbers. I'm just wondering if you can give us some color about the 2020 impacts in the P&L, especially as there were reports recently that players would treble their investments in SALTO. And then lastly, more of a long-term question around your programming costs. So you keep it flat or you keep it -- kept it unchanged at EUR 990 million. Some of your peers around Europe have raised that number. So why do you think that level is the right one? I'm just curious.

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Philippe Denery, Télévision Française 1 SA - Executive VP of Finance & Procurement [3]

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Yes. Thank you, Adrien. On the first question, outlook for Q4, I would say that, as you mentioned, we are all with a very limited visibility and, of course, it's difficult to give a clear outlook. The only thing I can say is that, of course, the basis of cooperation is more favorable than what it was in Q3, of course. So that's one positive point. Difficult to take into account or to see what kind of macro social impacts we may or may not have during November and December. At this stage, there is no negative sign. The market is tough, but as usual during this period of time. And I would say that we can have -- and end benefit from a better basis of comparison than what we had in Q3. So that's what I can tell you today on the outlook for Q4.

On the SALTO project. Well, I would say that Q4, we don't -- we won't have a significant impact or a limited impact. On 2020, it's probably too early to give you any kind of figures, but I would say that we will invest more than what we originally thought, all of us, just because of the competitiveness of the market and the need to invest a bit more on content. It's too early to give any kind of clear impact because the SALTO team is working, of course, on the offer and what they want to offer and launch. And of course, we need a bit more time. I'll just remind you that the Competitive Commission has given the clearance on August 12, so meaning that we have 2 months only to work on the project. And of course, we need a bit more time, all of us, to analyze and look at what kind of impact it might have. But globally, I would say that on 2021, we expect that we'll deliver value for shareholders.

Now concerning programming costs and why EUR 990 million? We think that we have reached a level of programming cost, which is in line in order to get a sustainable rating. We can -- and we have more flexibility than others to play with multichannel and with a very strong ratings on our core channel as compared to others. We may have some better leverage to play with multichannel. We think that we should, of course, go on investing and with such an amount of budget, we will monitor this amount in order to take into account seasonality of the advertising market as well as to optimize our rights, linear or nonlinear, in a global view of what the Broadcasting segment should deliver in terms of improving their profitability, in line with what has been delivered during the first 9 months, meaning that with such an amount, and you can look at what has been delivered during the first 9 months. With ratings which are broadly stable, it will be better if you expect the World Cup and with an amount which of investments, which were lower than last year, but better optimized as long as we can do it in the following months and years. And we think that, that is on the TF1, and we're talking about the TV programming costs in a range, which is satisfactory in order to sustain our ratings.

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Operator [4]

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This next question is from Annick Maas from Exane BNP Paribas.

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Annick Tonie Maas, Exane BNP Paribas, Research Division - Analyst [5]

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My first question is on Newen. And if you could just tell us what Newen did organically in Q3 or the 9 months. And second question, the audiovisual reform, if you could give us the latest update? And what do you think will impact numbers in the near term? And then just -- okay, so this is the cost guidance for '19, '20. Beyond that and excluding major sports events, how should we think about the cost guidance going forward?

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Philippe Denery, Télévision Française 1 SA - Executive VP of Finance & Procurement [6]

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Thank you, Annick. On the nonorganic growth on the first 9 months, we have limited organic growth rather flat altogether with some growth in different activities is compensating the slowdown in the broadcasting advertising segments. So that's what I can say.

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Annick Tonie Maas, Exane BNP Paribas, Research Division - Analyst [7]

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My question was with regards to Newen. If you could give us the organic revenue growth for Newen. Just Newen on the stand-alone, that would be great.

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Philippe Denery, Télévision Française 1 SA - Executive VP of Finance & Procurement [8]

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As you know, we don't disclose specifically Newen figures. What I can say is that on the first 9 months, we are with Newen rather flat as well, but that was clearly expected just because to remind you, we had last year in Q1, a high level of delivery, including some specific drama like Versailles, which was the end of a long tail and that we didn't have this year, but we expect to have a Q4 which will deliver in line with the growth trend we have given and will remain with in terms of around 5% organic growth. So just to be clear, the cyclicity of the delivery of what they produce this year is -- has a consequence, which is, Q4 will be significantly higher than both last year and previous quarter, which would deliver on an organic basis, a growth which remain with what the trend we had around 5% in terms of organic. So that's what I can say on Newen.

Second point on the audiovisual reform. I would say that we're still on -- the process is on track, where -- of course, with some back and forth situation on different topics. I would say that the -- we are still on the planning, even if probably we try a few weeks, whether it will be November or December, but that should be on the -- presented to the ministry or council before the end of the year. As you know, there is a huge decree which could take -- be decided without any specific law or without any implication of the parliament. That's for the planning in terms of what we can expect. We are still focusing on addressable TV. The cinema topic is progressing. So that's not necessary to be in the low, but can be taken in terms of change through the decree, which we're expecting for, and we are still expecting for beginning of next year. So that's the only thing I can say. Well, that's how we see it. And we are, of course, working with different partners and parties in order to proceed with the agenda and the different topics, which have been given in September prior to next year.

Now concerning the cost of program. I will not give you a guidance for the next 5 years, but has -- I give the framework to Adrien, we think that roughly for the 5 free-to-air channels, we should be roughly in the same framework. We have to invest in content, and that's, of course, something which is very important. But what we are working on and what we are delivering, as you can see the different figures, is, first of all, based on how we can better leverage through 2 or 3 main points. One is multichannel, and that is delivering. Second point is how we can better monitor and reduce the write-off we have. I'll remind you that, of course, we have been out of those global deals with U.S. studios now for a few years, and that should have some positive impact in order for us to reinvest in the following years because, as you know, those deals are long-term deals. And of course, the impact we may have from going out of those volume deals will be more significant year after year, which will give us an opportunity to reinvest with the same global amount of EUR 990 million. So monitoring both the capacity to leverage write-off globally and multichannel should give us an opportunity to reinvest in specific program and to keep on going with the same global budget on the 2 years' basis because, of course, the other leverage we have or elements or monitoring we have is to take into account the advertising market as well as the seasonality, and of course, the competition in terms of programming. So basically, that's the way we monitor it. And we will go on monitoring in the next few years.

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Operator [9]

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Next question is from Mr. Conor O'Shea from Kepler Cheuvreux.

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Conor O'Shea, Kepler Cheuvreux, Research Division - Head of Media Sector [10]

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Just a couple of questions on the market again, Philippe. Just on the programming costs and understanding the timing of the costs. But I think for -- specifically, just looking for the fourth quarter, understanding more costs in for Rugby World Cup and some new major formats. But if you were to do EUR 990 million, the average for the next 2 years in 2019, I think it means about a 15% growth year-on-year for Q4 this year. Is that possible? Or should we expect a lower number for overall programming costs this year versus the two-year average? And then the second question, again, on the margins, this time for Unify. You said in your remarks that you expect Q4 to step up significantly in terms of contribution. Just compare -- if we could compare it with last year's contribution, which I think was around EUR 7.3 million of EBITDA from Unify. Would you expect this year the contribution to be more or less than that and significantly more or less than that post restructuring and the synergies that you've done in the first 9 months?

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Philippe Denery, Télévision Française 1 SA - Executive VP of Finance & Procurement [11]

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Well, thank you, Conor. On the first question, yes, we will reinvest. We've made some savings as compared to last year in the first 9 months, which were EUR 66 million. We should reinvest probably half of it, around half of it or a bit more, as compared to last year, Q4. So yes, that will be the range, and we will adapt this through different reinvestments according to -- for a few millions, but according to the advertising market because now we monitor our investments over the last 3 weeks of the year up to the 3 last weeks of the year, depending on what we see on the advertising market. So the capacity to be more agile and to monitor it gives us a opportunity whether to invest a bit more than EUR 33 million or around EUR 33 million, we'll see. But yes, that's the range.

Now on your question concerning the margin of Unify as compared to last year. We should [run] with last year because of restructuring costs, very specific cost and nonrecurrent, we will have this year profitability, which will -- which should not be significantly or which should not progress, but that is in order to deliver more on the mid, long term and from next year. And we've made it because, of course, if you take the first 9 months to our [company] profitability of Unify minus EUR 2.8 million, which is not so much significant out of the EUR 184 million. We prefer to make it now. And when we could deliver profitably in line with what our shareholders are expecting. And now we are in a situation where we can deliver more value from now in Unify.

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Conor O'Shea, Kepler Cheuvreux, Research Division - Head of Media Sector [12]

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Great. And just one follow-up on SALTO. At what stage do you think you will be able to give the full cost, expected costs on SALTO? Do you think by the fourth quarter results in February you will be able to, at that stage, give a complete estimate of the cost?

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Philippe Denery, Télévision Française 1 SA - Executive VP of Finance & Procurement [13]

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Well, it's difficult for me to answer just because we have partners and we have, of course, a global view. But I would say that we probably won't have a clear view of the global investment and how we will share those investments before beginning of next year, which makes sense, and in the same time, as you know, there are specific information that, of course, are and will be kept by SALTO, and in a certain way, we are shareholders, but there are rules of the competition -- given by the competition, which are limiting some information we can have. Nevertheless, I don't think that before beginning of next year, we could give a very precise figure and information.

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Operator [14]

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Next questions is from Lisa Yang from Goldman Sachs.

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Lisa Yang, Goldman Sachs Group Inc., Research Division - Equity Analyst [15]

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I have a few questions, please. Firstly, on the regulatory change. I mean you mentioned, potentially, there might be a decree on allowing [hourly] advertising and also cinema advertising on television. Could you maybe share your thoughts in terms of how we should think about the impact if one of those 2 measures or both measures would be implemented from next year? The second question is on the trends in the telemarketing in general. I understand for TF1 fund comes from the world cup was obviously very tough. But could you comment on the underlying trends you're seeing, excluding that -- the sports events? How -- what changes are we seeing in terms of the categories, in terms of prices, volume, just to see whether there's been any change compared to the first half this year? And then the last question is on Unify. Could you maybe quantify how much restructuring or nonrecurring costs we should expect for this year? And how much benefit we should see for 2020? I mean do you think we could get to something around maybe 10% margin for 2020 already compared to your guidance of 15% in 2021?

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Philippe Denery, Télévision Française 1 SA - Executive VP of Finance & Procurement [16]

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Thank you, Lisa, for your questions. On the first question, I would say that the impact of the change in the regulations should generate on the fulcrum revenues coming from the cinema, if the decision is taken beginning of next year in order to open advertising to the cinemas sector. It's not a huge amount. We don't expect too much, and the market probably is between -- around EUR 15 million to EUR 30 million. And depending on our market share, that will generate additional few millions, which is rather positive for all of us, not very significant. What is very important for us is and should create, on the longer term, more value is the addressable TV and that will generate additional value, as you probably have seen, whether in the States or in Germany, that ad create additional value around from 2% to 5% of the global TV advertising market. And that's the range we have in mind, which means according to different studies, capacity to increase or to extend the market from EUR 150 million to EUR 300 million, depending on what we can develop in terms of addressable TV, the limits in terms of the use of data and so on. Nevertheless, that's something which is important for all TV in the world in the new context with technology and the capacity to enlarge their traditional historical market.

In terms of trends for advertising, I would say that -- I'll just remind you that those minus 5.6% has to be compared to plus 7.4%, everything being the same. On the same parameters, which are advertising on the Broadcasting segment. So we've made plus 7.4%. We were down on the Q3. Nevertheless, in terms of trend, we see a market which is probably from what we hear from media agencies around flat, 0 plus. We don't have any kind of negative sign, and there is still a strong demand for high rating program from advertisers. And that's -- and the demand remain rather strong with the capacity for us to, step-by-step, I would say, recapture some value on strong ratings program, which explains how we invest and why we capitalized on access and prime time in terms as well of investment we made.

Now concerning Unify. Yes, in order to cope with our guidance, the assumption you've made in terms of '20 makes sense.

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Operator [17]

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Next question is from Julien Roch from Barclays.

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Julien Roch, Barclays Bank PLC, Research Division - MD & European Media Analyst [18]

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First question is on online advertising. MYTF1 video were up 33% in Q3 to EUR 432 million. Did you also have a price increase in online video advertising? And if you have, can you quantify? That's number one. Number two, you said you were not commenting on Newen, but you are commenting on Studios & Entertainment and the content side of that. So content within Studios & Entertainment was down 12% or EUR 21 million over the first 9 months. You said you were on track for about 5% growth for the full year, it was fading production. Last year, you had EUR 253 million. So if I put 5% on that, that's EUR 265 million, which would indicate 48% increase in revenue in Q4, which seems very punchy. So if you could come back on that. Third question is you very helpfully gave us an impact on addressable TV in terms of market, but how much do you think the telcos should get from that, should it be a 50/50 split? Or should they get far less? And could you go around them with HbbtV 2 like ProSieben is doing in Germany? These are my 3 questions.

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Philippe Denery, Télévision Française 1 SA - Executive VP of Finance & Procurement [19]

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Okay. Thank you, Julien. On the first question, which is relating to MYTF1, I would say that we have, of course, the high basis of comparison with the Football World Cup as well. So that is something, of course, to take into account in what has been delivered. We have made some significant improvement in terms of client experience during the last few months on MYTF1. We have reviewed completely the [slide] and MYTF1. So apart from, it gives us comparison. I would say the underlying trend is positive, and we expect to improve -- increase as compared to what has been delivered in Q3, where, again, the basis of comparison is rather high. So that's what we can say on MYTF1, and (inaudible) as well which were already improving month after month.

Concerning Newen 2 and Studios & Entertainment. Just in terms of top line for this segment. Again, I'll remind you that we had the deconsolidation on this segment of teleshopping. And of course, if you look at globally, parameter, yes, we have consolidated additional companies with, of course, Unify. But on this specific segment, of course, teleshopping deconsolidation explain partly the top line.

Now the second point is to say that on the top line of Newen, you have to take into account the fact that Newen is working more and more for TF1. And of course, on the top line, it doesn't generate. Because of the consolidation method and rules, you don't get additional top line, I mean the revenues. In the same time, it normally improves or it's part of the improvement of their activity and the ratings, but which doesn't impact the revenue line for Newen as such because when they produce the Demain nous appartient, for instance, no impact on the consolidated contribution of Newen, but it has some impact in terms of margin for Newen activities and book of orders and so on. So just keep that in mind. And in terms of what you have given in terms of figures. Yes, it makes sense. And it's true to say that the expectation and what we can -- what they deliver in Q4 will be significantly higher than last year. But in this activity, we have more visibility, and we can be more confident than in others just because what they produce or they are producing in the previous months will be delivered. Now the question is whether you'd deliver it on the 25th of December or the 5th of January, which could make a slight difference. At the end, yes, we will have more significant as compared to the other quarter for Newen.

Now addressable TV, difficult to answer your question in terms of what we're going to share. The SALTO, of course, the experience in Germany is very interesting, and we'll probably be part of the kind of approach we can have on the French market as well because there have been advances compared to what we are in France and what we have and because of the situation in terms of regulation. Nevertheless, it's really too early to be very clear on this question. But definitely, it's one of the next steps for TV, subject to change in the regulation expected through the next few months and in '20 in order to deliver additional value through addressable TV in '21, probably not before.

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Julien Roch, Barclays Bank PLC, Research Division - MD & European Media Analyst [20]

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Okay. Coming back on my first question. My question was specific on pricing in Q3. So was pricing down, flat or up for online advertising in Q3?

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Philippe Denery, Télévision Française 1 SA - Executive VP of Finance & Procurement [21]

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Slightly up. The pricing was slightly up. But again, basis of comparison, including price linked with World Cup and so on play -- I mean explain the slightly up, and we -- in terms of trend, we can have a good pricing recovery or increase due partly to the link with the data we sell with a combination of data and inventories we sell on the web, on our MYTF1. As you know, the pricing of the combination of inventories and data is around 35% more than the traditional inventory without complementary data. So that is something we're speaking a lot in order to -- for the benefit of advertisers on the web to include in our offer inventories combined with data and capacity to sell data is underway.

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Julien Roch, Barclays Bank PLC, Research Division - MD & European Media Analyst [22]

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Okay. And then just going back on content, just to make sure. So you said my assumption of Q4 content revenue or as you officially call it production and sale of audiovisual rights, close to 50% up, so that the full year is up 5%. You said that was illogical?

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Philippe Denery, Télévision Française 1 SA - Executive VP of Finance & Procurement [23]

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Yes.

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Operator [24]

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Next question is from Mr. Chris Johnen from HSBC.

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Christopher Johnen, HSBC, Research Division - Analyst [25]

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First one, coming back to pricing. Could you comment on TV and what you are seeing currently or what you have seen in Q3 that you're awfully interested? Then on the comment you made earlier or at the very beginning about the nonexisting negative signs in the market. So is that an October comment or is that a Q4 comment? If you could specify a bit on that, that'll be great. And also, if you could break down the TV and non-TV performance in Q3. I know you're not great fans of that, but I think we're still early in the restatement of the advertising figure that you can give some color, that'd be interesting.

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Philippe Denery, Télévision Française 1 SA - Executive VP of Finance & Procurement [26]

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Thank you for your question. First question on pricing, Q3 TV, we can't have some significant improvement on the pricing during Q3 just because the demand is very low, as you know, in July and August. And so that's not the best timing of the year in order to recapture more value to have the increase in pricing. So we've not seen. But that's natural, I would say, any kind of pricing, better pricing on Q3. And of course, not in July because at the end, again, the pricing of an event like the World Cup is quite significant in terms of pricing. We didn't have the same, even if we had some games for the female World Cup. Nevertheless, not the same pricing. So basically, that's not the right quarter in order to have some sense in terms of pricing for the advertising on TV.

Now your second point is a negative sign. No negative sign. No negative sign is for October. And at this stage, I can't comment without such visibility -- there is a limited visibility we have on November and December. But from, I would say, what we've seen in October, we have no negative sign. Again, of course, we are very cautious, and I think that we are not the only one being cautious just because we don't know exactly what's going on with the social environment in France and the global economy in France and what we can expect for the next few weeks. We are confident. And of course, again, the basis of comparison we had is more favorable for this quarter, the next quarter than it was for the previous one. But we will monitor it, depending on the global environment and the situation in the French market.

Now concerning TV and non-TV performance on advertising. I would say that we don't make a split anymore just because we think that it's not relevant anymore. Nevertheless, I would say that, of course, TV represents a very significant portion of the global amount. So I would say that in terms of trend. And if you just leave the real figure after the cover. And just globally, the trend is more or less the same.

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Operator [27]

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Next question is from Mr. Richard Eary from UBS.

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Richard Eary, UBS Investment Bank, Research Division - Executive Director and Head of European Media Team [28]

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Just sort of 3 quick questions, which are sort of more clarity on some numbers that you've been giving out during the call. Just the first one in terms of the content costs or programming costs. You were saying that obviously, there was a saving of EUR 66 million in the first half. You're going to reinvest half of that in the second half. So are we assuming then if we're taking EUR 33 million off the full year cost last year, that programming costs this year should be EUR 980, which is obviously slightly below the EUR 990 million, given the sports numbers are weaker this year than previous year? So that's the first question. The second question is just on, in the other broadcast revenues, you talked about and raised about better contributions from interactivity. Can you just sort of try and give us a magnitude of that in terms of the dollar impact that had on the third quarter? So you can see how that happened and what the change was. And then just the last thing, going back to the numbers, if we look at the Studios & Entertainment as a whole, even if we're stripping out the loss behind shopping numbers year-on-year, given the strong performance in Newen in the fourth quarter that you outlined, should we assume Studios & Entertainment as a total category are up year-on-year in the fourth quarter?

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Philippe Denery, Télévision Française 1 SA - Executive VP of Finance & Procurement [29]

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On your first question, well, you're right in terms of calculation. I can't deny, except that what I've said is that we will reinvest EUR 33 million or a bit more depending on what will be the market and our capacity to generate the right ratings. So what I would say simply is that you're right to say that if we take the guidance of EUR 990 million, we should be a bit lower than the average this year and a bit higher next year. That is due to how we monitor it and how the thing is. But yes, this year will be a bit lower and, clearly, lower being between EUR 1 million to EUR 10 million maximum in terms of what could be achieved this year compared to EUR 990 million. But even I don't know yet exactly the figures. So I can't give it to you, but I think that's where we're in proportion, which is in a range, which is very clear for you and for us.

Now second point is relating to the interactivity. On this, I would say that we have growth in the interactivity, which is a low single-digit in million euro. We have a very good Q3 for a very specific reason, and we could monitor it very well during the summer. So that's what I can say on the growth of interactivity. But as you know, this activity has a rather good profitability, so that gives us good opportunities to improve the contribution of the interactivity to the Broadcasting segment in terms of EBIT.

Now regarding Studios & Entertainment. I'm not sure I get exactly your question. I would say that simply this combination, just to understand what has happened during the first 9 months. We have on Studios & Entertainment, a good performance of entertainment if we exclude, of course, on the top line, the deconsolidation of the teleshopping activity. We have some -- well, expecting on Q4 and improve -- significantly improve on Studios as I already mentioned. And I would say that on Studios and Newen and production globally, we are late around EUR 20 million for the first 9 months, which we will recover in Q4, which would lead to something which is more comparable, everything being the same as last year. In terms of top line and in terms of profitability, we should have a bit more increase of the profitability of this segment altogether for the year, having in mind that, of course, the profitability we had is all together with studio and production. And despite the limited performance of TF1 studio in terms of cinema activity, but that's part of it.

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Operator [30]

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Another question from Mr. Julien Roch from Barclays.

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Julien Roch, Barclays Bank PLC, Research Division - MD & European Media Analyst [31]

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On Digital, the margin for the first 9 months was 2%. You helpfully gave us some indication of margin in 2020 and 2021. So this year, taking into account the restructuring, are we going to stay around the 2% level? Or can we be between 2% and then stay at 5% for the full year?

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Philippe Denery, Télévision Française 1 SA - Executive VP of Finance & Procurement [32]

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Well, the profitability of the Unify segment should be more significant in Q4 because of seasonality of the business. And we should expect a better margin for the whole year than, of course, for the first 9 months. Now concerning the profitability in Q4. Last year, we had 13% profitability in Q4, which basically is something which could be a benchmark or you should [define] in order to look at what should be delivered by Unify for the year. We will have this year some one-shot cost -- restructuring cost, well, which will not be compensated in Q4 as such. But Q4 should deliver a very significant -- more significant profitability than during the first 9 months. As it has always been the case because of the seasonality, then we confirm that it should be the case this year as well for Q4.

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Julien Roch, Barclays Bank PLC, Research Division - MD & European Media Analyst [33]

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Okay. So you said that the 13% in Q4 last year was a benchmark. Do you mean pre or post the one-off restructuring cost in Q4?

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Philippe Denery, Télévision Française 1 SA - Executive VP of Finance & Procurement [34]

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Pre, pre, but again... Pre, yes. But again, we won't have significant restructuring costs in Q4 because a good part of the work has been already done during the first 9 months, as it is shown through the figures we have given for the first 9 months. So the slowdown or -- the profitability and the 2.9% decrease is linked with the restructuring costs and so on, but we don't expect too much anymore on Q4 and after.

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Julien Roch, Barclays Bank PLC, Research Division - MD & European Media Analyst [35]

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Okay. So it's pre and post basically?

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Philippe Denery, Télévision Française 1 SA - Executive VP of Finance & Procurement [36]

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Yes.

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Operator [37]

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We have no other questions. (Operator Instructions) We have no other questions.

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Philippe Denery, Télévision Française 1 SA - Executive VP of Finance & Procurement [38]

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Well, thank you to all of you for joining us this morning, and we'll always remain available for any other question if necessary. Thank you very much. Have a good day. Thank you.

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Operator [39]

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Ladies and gentlemen, this concludes the conference call. Thank you all for your participation. You may now disconnect.