Programming costs weigh on TF1

French commercial broadcaster M6 overtook larger rival TF1 at the end of last week in terms of market capitalisation as the latter’s shares dropped sharply on poor second-quarter results.

TF1 saw its second-quarter operating profit fall from €57.3 million (US$62.3 million) to €22 million year-on-year. Coming on top of a €19.2 million operating loss in the first quarter, that meant that the first-half operating profit was €2.8 million, down 96.7% year-on-year.

The decline in operating profit was due to some extent to non-recurring factors including the first-quarter operating loss suffered by news channel LCI, which has now migrated to the free-to-air platform, a negative impact on scripted programming costs as a result of government rules concerning co-production, an amortisation of goodwill related to the acquisition of Newen Studios and certain charges related to TF1’s restructuring programme.

However, on a comparable basis, TF1’s operating profit for the quarter fell from €69.2 million to €42.7 million, with operating profit for the first half falling by 40.9% to €57.5 million, thanks to the impact of the cost of transmitting the Euro2016 football tournament and the positive impact of the prior year sale of Euronews.

The group’s second quarter revenues grew to €543.3 million, up from €505.6 million for the same period last year.

Advertising revenue was more or less flat, rising from €411.6 million to €414 million, with other revenues, including digital, rising more markedly.