A N N U A L R E P O R T - Bouygues

TF1 is testing mobile TV with the DVB-H standard
The background to the merger plan
is an environment that is changing
faster than had been anticipated. Four
major factors are now affecting the
overall balance in the television industry
in France, especially the pay TV
segment:
• rapid developments in digital distribution
technologies (ADSL, DTT,
mobile TV, etc.) and the equally great
rapidity with which they have been
taken up by consumers;
• the spread of free-to-view offerings,
especially on DTT and ADSL, with
operators offering bouquets of free
channels;
• the arrival of powerful new operators,
especially telecom operators,
internet service providers and multinational
publishing and retail groups,
compounded by a restructuring of
the cable industry;
• differences in the way different players
are regulated (telecom operators
are not subject to the same obligations
as TV channels).
Audiovisual rights
The audiovisual rights division generated
sales of €247.9 million in 2005
(before stripping out inter-sector
sales) and reported a 62.6% rise in
operating profit to €22.6 million, representing
an operating margin of 9.1%,
3.2 points up on 2004.
TF1 Vidéo’s contribution to Group sales
fell back by 5.1% to €160.7 million.
However, revenue surged in the second
half of the year, rising by 24.6%
after a 28.7% drop in the first half,
on the back of a strong catalogue
and the video release of Brice de Nice
(over 900,000 units sold), Les Experts
(Crime Scene Investigation – over 1
million units sold) and comedian Gad
Elmaleh’s most recent show (almost
600,000 units sold). The operating
profit in 2005 amounted to €16.8 million,
giving an operating margin of
Match Point, shown at
the Cannes Film Festival
10.5%, up by just over half a point.
On 15 November 2005, TF1 Vidéo
launched its video-on-demand service,
tf1vision.fr. This new line of business,
combined with the rapid growth of
broadband internet in France, should
help to increase TF1 Vidéo’s sales in
2006.
TF1 International, boosted by the boxoffice
success of Brice de Nice (4.3
million entries), Iznogoud (2.5 million),
Le Dernier Trappeur (2.1 million),
Aviator (1.7 million) and Match Point
(1.5 million), increased its contribution
to consolidated sales by 52.6%
to €63.8 million (before stripping out
inter-sector sales). TF1 International
broke even in operating terms, having
reported a €6.5 million loss in 2004.
International channels
Eurosport was received in 105.1 million
homes in Europe by the end of
2005, including 55.9 million paying
subscribers (4.4 million more than at
end-2004).
The channel is now shown in 54 countries
and in 19 languages. The strategy
of showing either live or recorded
major sporting events has paid off,
since the number of paying subscribers
is rising.
Eurosport 2, launched on 10 January
2005, is shown in seven languages
(English, Polish, Turkish, Greek, French,
Italian and Russian) in 37 countries
and is received in 17.7 million homes,
almost all of them paying subscribers.
Eurosport International’s contribution
to consolidated sales in 2005
rose slightly to €258.8 million (before
stripping out inter-sector sales).
Subscriber revenue is rising due
to the growing market for pay TV
in Europe, the quality of Eurosport
products (Eurosport, Eurosport 2,
Eurosportnews) and the strength of
the brand.
Advertising revenue has fallen only
slightly despite the lack in 2005 of
major sporting events like the Olympic
Games. This satisfactory performance
is the result of products and services
better adapted to advertisers’ require-
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