Audiovisual. INVESTOR DAY June

Transcription

1 Audiovisual INVESTOR DAY June

2 Table of content Growth profile / profitability target Markets & Competitive positions Digital opportunities page 2

3 Lagardere Active Growth profile / profitability target Markets & Competitive positions Digital opportunities page 3

4 Lagardere Active strong organic growth over the past few years 2002 revenue 569 Revenue YoY change CAGR ( M) Organic growth % Acquisitions % Divestitures % Exchange rates % 2005 revenue (French GAAP equivalent) % IFRS impact revenue (IFRS) 621 page 4

5 Lagardere Active sales house consistent outperformance of advertising market (France) Advertising revenue CAGR % 4.6% 3.6% 3.4% Radio TV * Lagardere Active Publicité Market Despite underperformance since 2004 (in terms of audience share) Europe 2 (radio) RTL9 (TV) * LAP TV : Canal J, Tiji, MCM, MCM Pop, MCM Top, La Chaîne Météo, RTL9 Source : IREP page 5

6 and strong contribution of radio operations abroad Revenue CAGR ~ 40% * 8.4 Revenue (IFRS) Revenue (French GAAP) Operating Inc. (French GAAP) Operating Inc. (IFRS) Operating margin consistantly increasing up to 10.8 % in 2005 * Restated French GAAP equivalent page 6

7 Lagardere Active Growth profile / profitability target Markets & Competitive positions Digital opportunities page 7

8 Lagardere Active Profitability trend over the past few years 2005 Change excl ( M / IFRS) DTT (excl. DTT) Revenue % Operating income % Operating margin delivered 6.6% 7.6% 8.7% +31% 2007 operating margin target 8.9% page 8

9 Lagardere Active 2007 Profitability target despite Commited to 2007 operating margin target of 8.9 % opening up of retail distribution sector to TV advertising (from on) Impact on radio advertising revenue might exceed -5% fee reduction from TV distribution platforms (cable and satellite) Impact on TV theme channels fees around -15% by 2007 (vs.2005) page 9

10 Lagardere Active Action plan to meet profitability target Portfolio management Divestitures (profitability dilutive activities with risky prospects) Match TV, B3Com, Studio International Accretive acquisitions radio stations in Russia, Poland and the Czech Republic Other initiatives Re-engineering Music division restructuring (Music Radio stations & Music TV channels under the same management) Nationwide station network restructuring (Europe 2 & RFM) Procurement optimization Crossborder synergies to emphasize between France and Eastern Europe countries G&A costs reduction page 10

11 Lagardere Active Growth profile / profitability target Markets & Competitive positions Radio Television Production Sales house Digital opportunities page 11

12 Lagardere Active A leading player in radio in France 3 radio stations Europe 1, Europe 2, RFM gathering close to 20% audience share Cum. daily reach 12.1% 11.3% 9.6% 9.5%9.3% 8.1% 7.8% 6.5%6.2% 5.9% 5.2% 5.1% 4.8% 4.5% 3.4% NRJ RTL France Inter France Info Europe 1 Skyrock Nostalgie France Bleu Fun radio Cherie FM Europe 2 RFM RMC RTL2 Rire et Chansons N 1 radio sales house Estimated market share (net revenue) IP 28.2% Other 7.8% NRJ Régies 31.2% LAP * 32.8% * incl. «GIE Les Indépendants» sales contract Sources : Mediametrie Daily reach Jan-March 2006 ; Irep, companies annual reports, internal estimation page 12

13 and abroad (22 radio stations) Russia Poland Gross ad revenue share Q Other 26% Lagardere Active * 26% Gross ad revenue share 2005 AD point 3% Agora 7% other 9% Lagardere Active 26% * incl. RBMH Gazprom 6% State owned stations 7% Profmedia 17% RMG 18% State owned stations 8% ZPR 16% *Lagardere Active sales house Broker FM 30% IP contracts * 1% Czech Republic Other Gross ad revenue share 2005 Radio Net ** 5% MMS 39% Lagardere Active 33% N 1 radio group in Romania Regional presence in Germany & South Africa Romania 6% Germany 5% Czech Republic 16% South Africa 3% Other 1% Russia * 43% * Lagardere Active sales house ** MMS sales house Impuls * 23% Sources : Gallup (Russia) ; Expert Monitor (Poland) ; TNS (Czech Republic) page 13 Lagardere Active 2005 international revenue breakdown Poland * Restated incl. RBMH acquisition 26%

14 Radio market dynamics Mature advertising markets in Western Europe Fast growing advertising markets in Eastern Europe ( M) CAGR % CAGR % CAGR % CAGR % 0 Russia Poland Czech Rep. Romania Source : Zenith optimedia (march 2006) : before discounts in Poland and Russia, including agencies commission in Poland and the Czech Republic page Market opportunity : in France, Digital Radio in Eastern Europe, further consolidation and Digital Radio

15 Lagardere Active The leader on Children & Music TV segments LA s position on cable / satellite market in France 38.5% audience share on 4-14 children 29% audience share on % 4.8% 8.5% 5.3% 4.9% 4.8% 4.1% 4.1% 3.2% 2.4% 2.1% 2.0% 1.9% 3.9% 3.7% 3.4% 3.2% 3.2% 3.1% 3.0% 2.6% 2.5% 2.3% 2.2% Canal J Tiji Jetix Disney Channel Bommerang Cartoon Network Piwi Toon Disney Disney Channel +1 Filles TV MCM RTL9 TF6 Canal J Filles TV Eurosport Disney Channel Canal + sport MTV TPS Star Ongoing opportunity to develop TV business : Digital Terrestrial Television Source : Mediacabsat 10 (sept 05- feb 06) cable/satellite environment page 15

16 Lagardere Active A leader in TV production LA s position Market Broadcasted Prime time (hours) Broadcasted weekly (hours) N 1 TV group in scripted production Lagardere Active Telfrance Carrère N 2 TV group in non scripted production Endemol Lagardere Active Maximal GMT DEMD other tot Angel Léo other 11.1 Heavily regulated TV Production growth correlated to TV revenues growth France focused France Télévisions 42% M6 12% Canal + 9% Arte 3% Theme channels 5% TF1 29% French scripted production breakdown (estimate) Sources : Ecran Total n 305 september 2005 (scripted) & n 571 october 2005 (non scripted) ; TVFI ; CSA, CNC page 16 Market opportunities : TV broadcaster landscape broadened (new players through DTT) + multiplication of distribution platforms => trend to more production Product placement to be introduced by «TV without Frontiers» directive

17 Lagardere Active A pluri-media sales house in France Lagardere Active Publicité Complementary media N 1 radio sales house 34.7% of commercial audience share N 1 theme TV sales house for the following segments Children (4-14) : 38.5% audience share Young adults (15-34) : 26.3% audience share 30% monthly reach on active internet users Combination of in house and third party media provides power & segmentation capacity Cross Media Original and exclusive global communication proposition (incl. street mktg) Differentiating affinity experience One stop shop Source : mediametrie, nielsen netratings page 17 Development opportunities : niche targeting performance measurement direct marketing

18 Lagardere Active Growth profile / profitability target Markets & Competitive positions Digital opportunities Reducing costs DTT Increasing brand exposure extending current businesses Developing new businesses page 18

19 Digitalization improved cost efficiency opportunity Lower broadcasting costs Digitalization => compression => multiplexing On top of distribution capacity increase, same network costs shared by many more programs => Lower broadcasting costs per program (and better quality) Lower production costs Automated and user friendly systems => less workforce required to operate them => product & service development at low incremental cost => Potential for digital developments benefiting from low break even point page 19

20 Lagardere Active Growth profile / profitability target Markets & Competitive positions Digital opportunities Reducing costs DTT Increasing brand exposure extending current businesses Developing new businesses page 20

21 DTT s take up in France exceeds initial forecasts 1.3 M «adapters» sold in 2005, vs. 1 M (max) expected 2 M in March M set top boxes (and other devices) including DTT adapters Penetration will accelerate as digital TV sets are being massively manufactured Latest forecasts for free DTT channels (incl. terrestrial, cable & satellite, ISP) 2006 : 40% of French TV households 12% DTT 28% must deliver (cable, satellite, ISP) Analogue switch-off by % Digital terrestriel coverage Households in Million Coverage in % of population 65% 85% Satellite? Terrestrial 100% 80% 60% 40% 20% % Households (M) Coverage Sources : CSA, NPA conseil (march 2006) page 21

22 DTT, a mid to long term growth opportunity for Lagardere Active Audience Increase in viewing time by DTT households 3h45 => 4h mn Audience share % 4.3% Advertising market Transfer of advertising revenues to new DTT channels as audiences shift Estimated net revenues ( M) to be captured by DTT 3.1% 3.1% 0.5% 0.5% 0.7% 1.2% 1.4% 612 BFM TV i-télé France 4 Europe 2 TV NRJ 12 NT1 W9 Gulli TMC Gulli, the only free-to-air children channel 5,4% audience share on 4-14 gathers whole families (39 % of children watch programs with their parents) OMD France March 2005 Canal J, the only pay children channel Europe 2 TV very strong on target on n 1 channel on DTT and multi-channel TV DTT activities should be profitable from 2011 on Sources : mediametrie (2 jan 2 april 2006) 4+ people : DTT adapter equiped households, study by Qualiquanti march 2006 page 22

23 Lagardere Active Growth profile / profitability target Markets & Competitive positions Digital opportunities Reducing costs DTT Increasing brand exposure extending current businesses Developing new businesses page 23

24 (France) Lagardere Active has the asset collection and expertise to address a multiplatform strategy in a segmented world Radio Television Internet Mobile TV production Sales Distribution & Other Kids CanalJ.net Tiji.fr Gulli.fr FillesTV.fr Canal J by CanalSat mobile Lagardere Images International Young adults E2.fr RFM.fr MCM.net webradios E2 and E2 TV on Orange 3G MCM Top by CanalSat mobile Virginmega for mobile Adults * europe1.fr News on SFR by E1 Podcast * Superior socioprofessional category page 24

25 Some examples of digital developments on the internet Podcasting audio & video Web Radios & TV Opportunity for addressing younger audiences Segmented audio and video streams Rock Classics 70, Rock Alternative, Rock UK 80, Rock US 80, Nouvelle Scène, etc. page 25

26 Digital Radio, a short to medium term opportunity in France An opportunity for Lagardere Active to enrich and expand its radio service + Potential distribution extension to any device + Better coverage for existing networks + More room for new developments (regulation wise) + Additional features for listeners + Digital broadcasting much less expensive - Increased competition in an already intense competition environment page 26

27 Broadcast Mobile TV, a short to medium term opportunity in France Demand for mobile TV services is there Content will be required Existing DTT channels key for mobile TV uptake (consumer will need service continuity from fixed indoor to mobile outdoor) Specific formats to be developed Tentative timetable regulatory framework by end of 2006 launch in 2007 in main cities full deployment by analogue switch-off An opportunity for Lagardere Active in France as a theme channel editor as well as a TV producer page 27

28 Children segment A collection of assets to leverage in the digital world Lagardere Active enjoys a unique position in France No 1 on cable/satellite TV with 3 complementary brands (Canal J, TiJi, Filles TV) The only children channel both on free (Gulli) and pay (Canal J) DTT The only structure controlling children channels on every TV platforms (sat, cable, DSL, DTT) & an animation production entity (Timoon) => bringing in a powerful agregation and promotion capacity Expansion opportunities Multiplatform distribution (from cab/sat & DTT to the internet & any mobile device ) Licensing / Merchandising (not tapped by Lagardere Active yet) => building a much broader content portfolio is key Implement a dynamic content production and right acquisition strategy Share investment through coproductions with other kid channels (european/canadian) page 28

29 Development opportunities in TV production where Lagardere Active can capitalize on its strong expertise and track record (22 of the best 100 TV audiences on prime time French TV in 2005) Development opportunity of low cost new production processes and concepts to address new markets (such as DTT ) Development opportunity of new specific content for new platforms (such as mobiles or the internet) Development opportunity of by-products from its leading productions adapted to new platforms and uses (previews, bonus, best of, etc.) & Focus on right ownership (especially VOD, internet, mobile, licensing rights ) to maximize the value that can be extracted from the TV Production business page 29 Sources : mediametrie (Mediamat, 4+), excluding soccer

30 Lagardere Active to tap into internet advertising boom (M ) CAGR % France Internet advertising spending CAGR % Czech Republic CAGR % CAGR % Poland Romania Russia LAP first media sales house on the internet Orange Yahoo MSN AOL Lycos Pages jaunes Internet Sales Houses ranking in France (2005 gross revenues) Tiscali LAP TF1 2.9% 5.1% 3.6% 5.8% 7.1% 8.4% 10.0% 15.2% 16.4% Sources : Zenith optimedia (march 2006), Yacast page 30

31 Lagardere Active Growth profile / profitability target Markets & Competitive positions Digital opportunities Reducing costs DTT Increasing brand exposure extending current businesses Developing new businesses page 31

32 Growth acceleration in Mobile content services An explosive market opportunity : mobile content worldwide U.S. Europe Asia U.S.$ in billions U.S.$ in billions U.S.$ in billions $ CAGR: 72% $9 $ $10 CAGR: 41% $13 $ CAGR: 28% $8 $12 6 $5 6 6 $5 4 4 $3 4 2 $1 2 2 Cellfish Media 2005 Revenues 103M, generating 200 million digital transactions per year. - Original content studios in Paris and New York with significant successes such as Blingtones, the first music label for cellphones (7m Blingtones sold in 05) - Content distribution through a global network of wireless carrier portals in the US and in Europe with a reach of 350 million subs - Key partnerships include Orange, SFR, Bouygues, Cingular, T-Mobile, Verizon - Key products : music, ringtones, wallpapers, videos, games and creating Mobile Social Networking applications (user generated content : blogs, chat, dating). page

33 Lagardere Active Growth outlook Over the next 5 years ( ) Expected developments to fuel overall revenue growth * Eastern Europe growth dynamics Radio abroad : +15 to 20% / year TV : +6 to 7% / year Digital growth opportunities International revenues by 2010: about 30% (up from 20% in 2005) Overall profitability to further increase * Excluding possible divestitures page 33