State-Owned TV Goes Commercial-Free in France

With Outlook Gloomy for Private Channels, Where Will Ad Dollars Go?

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LONDON (AdAge.com) -- In a move known in France as "le big bang," prime-time advertising has been dropped from state-owned TV. Commercials will disappear completely from those stations by the end of 2011, essentially erasing some $700 million in ad outlays.

Havas Media France CEO Dominique Delport
Havas Media France CEO Dominique Delport
On Jan. 5, 2009 -- the first night of the ad ban -- the two biggest state-owned channels, FR2 and FR3, recorded their best prime-time audiences. TV-viewing figures were up more than 10% across all channels, from 27 million to 30 million.

The post-8 p.m. ad ban means FR2, FR3 and the third state-owned channel, FR4, can kick-start the evening's viewing without the traditional 20-minute block of advertising and sponsored messages that still airs on all other channels at 8:30 p.m.

The massive increase in viewing on Monday night was helped by extremely cold weather and by interest in the latest news from Gaza, but even so, it suggests that ad-free TV has strong appeal for the French. That's troubling news for marketers.

Danone scored a small coup by buying up the last two slots on state TV on Monday at 7:59 p.m., catching the millions of viewers who had switched on to experience the new regime.

Boon for cable?
When the plan to ban ads on state channels was announced a year ago, President Nicolas Sarkozy's controversial French TV revolution was seen as a boost for the privately owned commercial TV channels. Stock prices for the two main channels -- TF1 and M6 -- soared on the expectation that they would be able to push up ad rates in response to higher demand.

But then came the recession. "The party's over now," said Havas Media France CEO Dominique Delport. "Nobody thinks it will be an incredible gift. It's a very mixed scenario."

The big question is where the 15% of France's ad dollars that have been spent with FR2, FR3 and FR4 will go. Many fear that money will simply disappear. Total TV ad spending in France was $4.6 billion in 2008.

"It is too fresh and too early to know what will happen -- where the money will go and whether [spot] prices will go up or down," said Patrick Lara, co-president of Paris agency Callegari Berville Grey.

"People will still watch the state-owned channels, and advertisers may have to turn to different media to reach them," said Mr. Delport. "It's a very specific audience, older and more upmarket, who are hard to find on the private channels."

Faring worse than neighbors
All this change coincides with gloomy predictions for French TV advertising in 2009. Jonathan Barnard, head of publications at ZenithOptimedia, said, "We expect a 5% decline in TV spend in France, which is worse than the average of 2% in Western Europe. Prices may go up on the private channels, but the weak demand and falling supply could exacerbate problems in France."

It's ironic that the usually pro-business Mr. Sarkozy is taking this anti-commercial step. Mr. Lara said, "Some people think it's a Sarkozy show-off -- something people can talk about and he can make his mark with."

Mr. Sarkozy's goal is to create higher-quality programming on the state TV channels, emulating the success of the ad-free British Broadcasting Corp. in the U.K., which operates without commercials and is funded by an annual fee paid by all TV households.

French state TV is partly funded by a similar license fee, which Mr. Sarkozy is hoping to increase, and partly by increased taxation on the commercial stations' ad revenue and on internet and telephone providers, which will bring in an extra $615 million in funding for 2009.

"It is not politically acceptable to raise a new tax, so there is a debate on financing. Everything is challenged by the economic situation," Mr. Delport said.

Employees of state TV are calling strikes to protest against Mr. Sarkozy's move. They are worried about investment in the channels and the likelihood of layoffs. "I don't think the French think that an ideal world would be one where there are no ads at all. Ads are a way of getting to know new ideas and products," said Andrea Stillacci, co-president of Callegari Berville Grey. "But the French have a passive relationship with advertising -- it's just something that's there and you put up with -- there's not so much time and energy spent on brands."

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