www.idate.org

TV broadcasting : is it time for a consolidation opening the way to pan-European players ?

Laurence Meyer

Head of the Media Economics department

IDATE

www.idate.org22

Total world TV market revenues

0

50 000

100 000

150 000

200 000

250 000

1995 1996 1997 1998 1999 2000

in M

Eu

ros

Europe USA Japan RoW

150,2 G€

234,3 G€

The World TV market:sustained growth over the last decade …

AAGR : 9,2%

Source : IDATE

www.idate.org33

The World TV market:but major differences in the way TV is financed

Europe : Subscription TV has

driven the market

USA :TV adv. spending has been the main growth

factor

Source : IDATE

Trend in the European TV market financing

0

5 000

10 000

15 000

20 000

25 000

30 000

1995 1996 1997 1998 1999 2000

ME

uro

s

Subscription TV Public funding Advertising Trend in the US TV market financing

0

10 000

20 000

30 000

40 000

50 000

60 000

70 000

80 000

1995 1996 1997 1998 1999 2000

in M

Eu

ros

Subscription TV Public funding Advertising

www.idate.org44

The World TV market:an inevitable transition to digital…

Source : IDATE

Number of digital TV households in the World

0

5 000

10 000

15 000

20 000

25 000

30 000

35 000

1 996 1 997 1 998 1 999 2 000 2 001

in '0

00

Europe USA Japan RoW

4, 8 million

72 million

www.idate.org55

The World TV market:more than 200 million digital TVHH by the year 2010

Number of digital TVHH in world to the year 2010

0

10 000

20 000

30 000

40 000

50 000

60 000

70 000

80 000

90 000

2 001 2 005 2 010

in '0

00

Europe USA Japan RoW

206 M

72 M

www.idate.org66

The World TV market:and a number of multichannel homes continuously growing

Terrestrial TV reception is loosing groundSource : IDATE

Changes in TV reception modes

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

1995 2001 1995 2001 1995 2001

Europe USA Japan

Terrestrial TVHH Cable TVHH Satellite TVHH

www.idate.org77

The World TV market:a sector marked by numerous technical and commercial innovations …

The launch of DTV Investments in digital network roll-out Additional cost caused by analogue/digital simulcast Additional cost induced by increasing competition Additional cost resulting from market « fragmentation »

A wider range of services: More thematic channels NVOD Enhanced TV Transactional iTV services (T-commerce, T-banking, Games) VOD

Commercial/marketing innovations Towards the « TV à la carte » concept Cable : « triple play » offerings

The potential threat of alternative « broadband » networks

Significant investments in

content and network

upgrading

www.idate.org88

The World TV market:a dynamic which has not engendered significant international expansion …

USA

Europe

RoW

83%

10%

7%

Walt Disney

84%

16%

V

Viacom

6%

85%

9%AOL Time Warner

100%

Bertelsmann

56%31%

13%

Vivendi Universal

15%

77%

8%

News Corp.

2001 Turnover geographical breakdown

www.idate.org99

Market restructuring

Major media players

in trouble

Consolidation under way:2001-2002: hard times for audiovisual

Inflation in audiovisual rights (notably in sport and cinema rights)

« Free fall » after over-evaluation on the Stock market

Gap between the offerings proposed and the customers’ expectations

Slow down in the world TV markets’ growth

+ Over-investment due to

digitisation and convergence

www.idate.org1010

Consolidation under way:a TV market « held up » by a diminished growth rate in the TV advertising market and a lower increase in digital TV subscriptions

Source : IDATE

Annual average growth rate observed on the world TV market

0%

2%

4%

6%

8%

10%

12%

Europe USA Japon RoW

ann

ual

ave

rag

e g

row

th r

ate

AAGR 1995-2000

AAGR 2000-2002

www.idate.org1111

Consolidation under way:a trend towards concentration rather than geographical expansion

Services closing down

Market leaders announcing record losses

Mergers and acquisitions on the rise

www.idate.org1212

Questions arising from the current situation …

KEY QUESTIONS

Is it time for consolidation to open the way to pan-European players ?

Is there going to be enough space for new players ?

What are Europe’s main advantages compared to the USA when considering the transition to digital ?

Underlying questions Is the European TV market at the beginning of the consolidation and restructuring

process or, is it now on the way to « stabilisation » ? How will a slower than expected transition to digital impact the sector ? Is the place of « historic » media players going to be in anyway reinforced ? How the current troubles encountered by the major media players will impact the

whole value-added chain, and particularly « upstream » market players ? What exactly could/will consolidation bring to European market players ? How then would be likely to perform Europe on the world TV market?

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