to download the 2012 registration document. - Groupe M6

RISK FACTORS AND MANAGEMENTThe M6 Group has, however, from an early stage, implemented a strategy to diversify its revenues, inorder to limit its dependence on the advertising market. The Group’s sources of non-advertising revenue,which represented 41.5% of consolidated revenue in 2012, are nonetheless dependent on the level ofconsumer spending and the portion dedicated to leisure - media (TV subscription, telephone, videopurchase, cinema, CDs, etc.) or to household equipment purchases (distance-selling division).4.1.4. Adapting the cost structure and increase in content costWith a cumulative programme cost of about €400 million for Group channels, the Group is exposed torisks, of upwards movements in the purchase cost of audiovisual rights.The growth in the cost of programmes noted in recent years has affected all categories: retransmissionrights for sports competitions, broadcasts, series, and feature films.This was reinforced by the relative scarcity of powerful and attractive programmes in a market wherebuyers are more numerous than before, with an increase in the strength of DTT channels, and where thenumber of sellers is restricted, notably concerning successful products such as series. In addition,technological (transfer to HD reception), regulatory, legal and contractual changes (the collectiveproduction agreement for example) may also contribute to an inflation in production and purchase.However, in order to respond to this risk, a number of years ago the Group set up a purchasing teamwhose mission is to identify the best programmes for Group channels at a very early stage in thepurchasing process, to participate in screenings organised by studios and to negotiate the best possibleprices by using their knowledge of the market and the sellers.In addition, the Group has developed its production companies, mainly C. Productions for programmesand news magazines and Studio 89 for entertainment programmes, enabling it to better control the valuechain of audiovisual production.The audiovisual rights acquisition and distribution subsidiary SND, as well as the Summit EntertainmentLLC shareholding and the film catalogue and co-production activities all contribute to the Group’sstrategic response aimed at making broadcasting rights procurement secure and to better control itscost.Lastly, programme management has the objective of defining the programme policy for Group channelsgiving them each their own identity but also enabling the sharing of resources (technical resource,studies, programmes where appropriate). Throughout the year, programme management ensures strictcost control of programmes and monitors this, as much as possible, depending on advertising revenuegrowth.SND is also exposed to a risk of movement in its purchase price for audiovisual rights it sells. SND seeksto reduce this exposure with an experienced team that identifies the promising projects, even in certaincases before they are shot, and contributes to film financing via purchase of the operating rights for allmedia (cinema, video, pay and Free TV) for France.The FC Girondins de Bordeaux (F.C.G.B.) is exposed to the risk of inflation in the prices to be paid for thetransfer to F.C.G.B. of players under contract with other clubs, due to the European scale of the transfermarket. However, for the last two years, a depressed transfer market has enabled the Club to implementa cautious salary policy. Furthermore, the efficiency of the club’s training centre always ensures that partof the backbone of the team is made up of players trained by the club. In addition, the club hasdemonstrated in the past and more recently its ability to attract players whose qualities were revealed inBordeaux, resulting in the upward revision of their transfer price.For the other Group companies, the exposure to price risk, although real, is lower to the extent that costsare more variable in the diversification activities and the number of suppliers is significantly higher.120 - M6 GROUP - 2012 REGISTRATION DOCUMENT