Métropole Télévision S.A. (MMT) Earnings Call Transcript & Summary

Welcome to the First Half 2021 Results Presentation for the M6 Group. I will now hand over to its CEO, Mr. Nicolas de Tavernost.

Thank you. Good evening, one and all. We are now going to present the H1 2021 results with Jérôme Lefébure, who will speak more to the accounts. The first half of 2021 was marked by a strong increase in results. M6 Group posted consolidated revenues of EUR 645 million over the period, plus 15.7% over a year. Advertising revenues grew by 32.1% over a year, coming closer to their pre-crisis levels. After a more difficult beginning of the year in January, February, let me remind you that last year, January, February didn't have the impact of the health crisis. However, advertising revenues had a favorable base effect from mid-March onwards, the beginning of the first lockdown in 2020 and the gradual recovery in consumer spending in -- after the first quarter. Consolidated EBITDA reached EUR 165 million, plus EUR 80.7 million over the period, mostly reflecting the increase in advertising revenues. This result includes the accounting of exceptional public subsidies for EUR 16.9 million for the half year. Excluding one-offs, group EBITDA for M6 is at the level of H1 2019, EUR 148.1 million versus EUR 148.3 million, so it's exactly equivalent. Operating margin was 23%, excluding subsidies versus 15.1% in H1 '20 and 20.7% in H1 '19. This improvement reflects the relevance of the strategic refocusing on our core business in TV and radio and the group's flexibility and management of its programming costs, especially -- despite the extra cost that the Euro 2020 aired in 2021 for 9 out of 12 matches. Net income for the period was EUR 119.3 million. Let me remind you that it was EUR 161.2 million in H1 '20, but we accounted -- we booked a capital gain of nearly EUR 120 million for the contribution and disposal of iGraal to GSG Global Saving Group, and the IPO of Bedrock. Excluding one-offs, you can see that net income grew very strongly. Group revenues grew by EUR 87.6 million, driven by the increase in TV and radio advertising revenues. Revenues for diversification declined because of the closure of movie theaters for 4.5 months versus 3 months in H1 '20. Restated for scope effects, revenues from diversifications grew by EUR 4.2 million, plus 11.3%. EBITDA grew by EUR 80.7 million in connection with advertising performance and the decline in costs. And also, thanks -- despite the strong increase in sport costs for the Euro, which was mostly aired in June. Individual viewing times up to June stood at 3.46 -- 3 hours 46 minutes, minus 10 minutes, but plus 16 minutes compared to H1 '20. So TV held up well. The audience share of the channels of the M6 Group were 14.7% plus 0.2 points for the total audience. For women responsible for purchases, it was 23.1%, so plus 0.6 points. It was the best viewing results for the group, illustrating the good choices made in terms of editorial strategy around unifying family programs throughout the day. For the whole day, the M6 channel is still the #2 for the commercial target with a viewing share of 15.1%, plus 1 percentage point. M6 Group also became the third biggest channel in France for viewers over 4 with a viewers share of 9.4% plus 0.5 percentage points. It was very good in terms of ratings. In prime time, we had the best first half on women responsible for purchases with a viewer share of 18.9%, plus 2.2 points. We were able to bolster our big entertainment groups like Top Chef, Married at First Sight or Pekin Express. And also other successes like Lego Masters, [indiscernible] and Appel a temoins. And we also had big events with the Euro 2020 in June and July. This year the channel broadcast 8 matches in June, with France, Germany with EUR 15.2 million. In access prime time, 5: 30 to 9, the viewer share for women responsible for purchases grew by 1.1 points, with Incroyables Transformations, La meilleure boulangerie de France with EUR 2.3 million viewers on average; with 22% viewers share for women responsible for purchases. The evening news were a very big success, the biggest ratings for 7 years. And Scènes de ménages is the most watched drama by the whole viewership and women responsible for purchases. For Puissance TNT, W9 and 6ter, performance was satisfactory in spite of the growth of legacy channels. W9 had a good first half and was stable. 6ter and Gulli were slightly down. W9 strengthened its position as #2 channel for women under 50 for the whole day. In access prime time, all reality TV had a great season with many successes for drama like Escape, a 2-part TV movie with 12.8% viewers share on women for -- responsible for purchases. With varied programs for the whole family, 6ter, was the biggest new generation DTT channel created after 2012 for women under 50 with great viewer ratings, thanks to its drama and Gulli is the biggest channel for the under 10s. And viewership grew by 13.2% -- reached 13.2%, plus 1.5 points on that target. So pay TV channels, Paris Première, it confirmed its status as the most watched pay TV channel with 12 million viewers, and Teva is also the leader on its main demographic play and AVOD is still growing with the exclusive programming. So 6play confirmed its attractiveness in H1 2021 with 20 million registered active users versus 17.2 million. Last but not least, for radio for the first half, the Radio division with RTL was still the leading private radio group with listeners share of 18.1% for listeners over 13. So a 4.5 point lead over the second. And it's remarkable because we have fewer stations than the biggest competitor, and Radio France has a much larger budget than the radio stations in our group. RTL is the biggest private radio station and listeners share of 12.3%. Les Grosses Têtes is the most listened to -- show, especially with podcasts and 13 million listens and downloads. RTL2 had 3% listeners share, plus 0.2 points, and it's the leader on young adults. Fun Radio had a listeners share of 2.9%, and it ranks #2 for the morning show. Now coming to advertising. As I said in my introduction, advertising revenues for radio, TV and digital grew by 32.1% over a year. Coming back to precrisis levels marked after the health crisis, the base effect was favorable, thanks to the power of our TV and radio. This was very attractive for advertisers and also because of the Euro 2020 on M6, advertising revenues grew by -- for TV grew by 84.1% versus Q2 '20, overperforming the advertising market with a clear lead of 7.5% over the level of Q2 2019. So TV's momentum is very strong and very good for Q2. And we'll say more to the outlook for H2. For the whole H1, the performance for the TV division was plus 34%. Out of the biggest sectors, food, retail, telcos rebounded strongly, whereas personal care, automotive and transport, tourism and catering were impacted by health restriction on their business. Other operations grew by 21.4% over the year in H1 '21 be it radio and digital. Programming costs for TV reached EUR 237.1 million versus EUR 192.8 million in H1 '20 and EUR 241.9 million in H1 '19. That didn't include any expenditures for used TV that was acquired in H2 '19. With optimized investment in programs, we have invested in our programs with the euro and other programs that were aired in Q2, whilst controlling programming costs because overall, M6 was able to absorb the extra cost of the euro on its programming cost. It was more than offset in H1. Contribution of the TV business was EUR 137.2 million to consolidated EBITDA versus EUR 66.2 million in H1 '20. It benefited against this backdrop from a EUR 13.4 million tax credit. Excluding the tax credit, the contribution was in excess of that of 2020. The recurring operating margin for the core business was 24.2%, excluding the tax credit versus 17.1% for H1 '20 and 23.2% for H1 '19, which was another record in terms of operating margin for the TV business. Regarding radio, revenues were EUR 73.1 million, up 22% over 1 year. EBIT reached EUR 14.4 million versus minus EUR 2.2 million in H1 '20, reflecting the increase in revenues and also EUR 3.4 million in subsidies and audiovisual tax credit and broadcasting support subsidy. The operating margin for radio was 15.1%, excluding public support, as we noted, for television. For audiovisual rights and production revenues were nearly EUR 20 million, EUR 19.8 million, down 32.3% because of the closure of movie theaters until the 18th of May 2021, so 4.5 months versus 3 months in '20. So S&D only had 500,000 admittances in 2021 versus 1.6 million admittances for the same period last year. For this second half, we have a big lineup, especially the release of Kaamelott, but with the impact of the vaccine passport in movie theaters, Kaamelott is going to be a success in this year. It would have been a huge success without the vaccine passport on admittances and it is the only movie that really stands out of all releases right now. In H1 2021, EBITDA for production and audiovisual rights was nearly EUR 12 million, EUR 11.9 million to be accurate versus EUR 14.4 million in H1 '20. And regardless of releases, EBITDA also benefited in 2020 from a very big catalog acquisition for internal consumption of movies that were added on our channels during lockdown. Regarding diversifications in H1 '21 revenues were EUR 41 million down by EUR 40 million. That's explained by a base effect and the deconsolidation of iGraal for EUR 8.8 million and the disposal of the home shopping activities, EUR 35.6 million. EBITDA from diversification was EUR 6.1 million versus EUR 8.2 million in H1 '20, of which EUR 3.1 million for sold activities. So for continuing activities, Best of TV, M6 creations or digital services like cooking or health websites and M6 Interactions, revenues were up EUR 4.2 million, plus 11.3%. And EBITDA grew by EUR 900,000 plus 18.3%. So for me, it was a quite satisfactory half year, especially in terms of the TV business, in terms of firepower for our channels and in terms of expense control and revenue growth because we're almost back to 2019 results with an increase in TV. Regarding the outlook, before I hand over to Jérôme, I will say more to that after Jérôme's presentation of the accounts.

Thank you, Nicolas. A few comments on the overall simplified consolidated statement. You've just had explanation about the half year operating activity. My comments, of course, regard the line -- other operating proceeds, highlighting government support received by the group because of coronavirus in 2020 and which have an accounting impact of EUR 16.9 million, which you'll find in the EUR 25.3 million, which is an atypical amount. The other operating elements in terms of proceeds -- expenses reflect the activity and investments we have made throughout the half year, notably in programming costs and the cost of contents on the line called consumption and other operating expenditures, but also staff costs. The headcount is slightly down. The expenditures are stable, reflecting a variable remuneration related to growing 2021 performance and group saving. Regarding the operating income, the impact related to capital gains on subsidiary sales 2020 was an exceptional year in terms of capital gains this year. In March 2021, we have sold a small share in our diversifications around the hosting of databases and files in digital activities, therefore, a capital gain of about EUR 3 million. Regarding the point which is probably the most significant in this half year, it is an increase in our share of losses in companies, Salto and Bedrock, related to the significant investments we have continued -- we are going to continue. So that Salto can install its base of subscriber and Bedrock can continue their investments to offer video streaming -- the pan-European video streaming solution and not only to French companies. Finally, one word about corporate income tax, this tax shows the drop in the corporate tax rate in France since January '21, but also the positive effects of tax liquidation in 2020. As you know, this is done in May. Therefore, it has -- this year had a positive effect. So in a few words, net profit for the period of EUR 119.3 million versus EUR 161 million last year. But this EUR 161 million integrated EUR 120 million of capital gains. Whereas this year, the profit does reflect the operating performance of our activities throughout the half year. Regarding the simplified -- the condensed balance sheet end of June 2021, not a lot of evolution, especially regarding balance sheet. A slight change in working capital requirement, showing the activities in the second quarter, mainly liabilities and assets, receivables, payables and also the stock of audiovisual rights because we've continued our investments in -- as explained by Nicolas de Tavernost. The main element of the first half year for the group, notably concerns the cash. The payment of a dividend this year was higher than previous years are outside of 2020. We have paid close to EUR 190 million in dividends. Without the result of the half year. This has a negative impact of EUR 65 million on equity, a limited effect on cash of EUR 56 million in the group benefiting from the good results, the results of the first half. Regarding the cash flow statement, first, we have growing flows, reflecting the ability to self-finance, the good operating performance of the first half 2021 in relation to the first half of 2020. Regarding cash flow from investment activities, we here have an increase in what we call recurring investments, reflecting mainly acquisition of fixed audiovisual rights, justifying most of the increase versus 2020. But on the nonrecurring element side, the activities have been limited in terms of cash impact to EUR 8.2 million, mainly related to the sale of M6 hosting I was alluding to earlier. Regarding funding activities, we find the dividend I was referring to EUR 189.4 million and also the contributions to joint venture current accounts. Here, we're talking about the contributions made to allow those 2 project companies, Salto and Bedrock to fund not only their activities, but also their working capital requirements. Therefore, an increase in the use of the cash of EUR 14 million this year. Overall, a negative development, change in cash, minus EUR 56 million, but a closing balance of EUR 38.4 million with EUR 141 million in gross terms. Here again, the group is starting the second half of 2021 with a strong balance sheet. Nicolas?

Thank you, Jerome. Regarding now the prospects for the second half of the year. On the one hand, we have had the end of the Euro with very satisfactory audience shares on the 3 matches, we -- that remained to air, notably the final. Regarding advertising prospects, things are looking quite good. Nevertheless, the number of uncertainties are related to the health situation in September. That's why we have to remain kind of cautious for the time being. Advertising is looking good for now, at least in the short term, whatever is predictable. Once again, we are living in an uncertain world. And the evolution of the health situation can have an impact on those prospects one way or the other. That's the first issue. Secondly, the other activities, of course, movies is impacted by the present health crisis despite good movies like Kaamelott. We still have a few films to release that are very -- will be very popular. We hope that vaccination will allow admissions. And we hope that the government will support the promotion of those cinemas, notably partial funding of distribution costs since we have decided to help the movie theaters to maintain our theatrical releases. It's also up to the state to help the sector in those releases. Regarding the project of a merger with TF1, the necessary documents have been drafted. The signing has become final, notably after the positive advice of staff, trade union representatives. But of course, we still need to have the agreement of independent authorities, i.e. mainly the French CSA and the ADLC. So the teams are working to produce all necessary documents and comply with what the different legislation required. And the independent authorities will have to judge this work. We think that this will be finished by October 2022, when we expect a final decision for the operation at stake. It is quite cumbersome work on this authorization. We remain strictly competitors during this interim period until we have a final go ahead of the operation. Thank you. I don't know whether you have any questions on this first half and the prospects for the second half of the year.

Thank you. [Operator Instructions]. We have a first question by Annick Maas, BNP Paribas.

My first question regarding the advertising market. And generally, you're quite conservative. You seem to be more positive. What are your prospects? What is your time horizon? Do you think at the end of August is okay? Second question regarding the programming costs over the year. How can you think about it? And last question regarding Salto. Could you tell us the increase in the number of subscribers at this stage?

Thank you for those questions. Regarding -- first, advertising forecast, they're slightly different for radio and television, by the way, for the digital. Regarding TV first, TV remains positive over the summer. For the M6 Group in July, we have had 3 Euro matches that were quite good. And for August also. We have no sufficient visibility about the month of September. October through December have been very good last year. We were up vis-a-vis 2019. So depending on the health situation and the passport, we will see how our customers behave. That being said, today, there is a desire to invest in television. And we hope that the health crisis will not derail that evolution. That's why we've been conservative in the figures indicated. But to this day, and once again, given the health crisis, we are relatively optimistic on the second half of the year. Regarding programming costs, they will increase in the second half of the year because even we will only have 3/11 of the Euro. Nevertheless, we will make a number of efforts to produce French drama. We will broadcast. So we have sufficient leeway to have an increase versus 2019 and 2020. The increase will be moderate, but we give ourselves some flexibility for a September programming. Regarding Salto, they can provide you with their figures, but the figures are -- in keeping with the budget presented, they're doing quite well. If you compare with last year, I think the summer months are not necessarily the most important one for subscribers. It's really the end of the year that will play a part. It will also depend on the events we put on Salto in September, but things are going according to plan, both for subscriber and funding. What we'd said -- this is what we said when we presented the figures about Salto.

We've got our next question by Conor O'Shea by Kepler Cheuvreux.

Yes. I have a few questions, if I may. Regarding Salto, you talked about EUR 7 million in terms of operational losses for Salto and Bedrock for H1. What could we expect for the full year in terms of your contribution, your share of the contribution? Secondly, for radio, contrary to TV, which is not back to 2019 -- it's not back to 2019 levels in terms of revenues, especially in Q2. I can imagine that lockdown or curfew had an impact, but very often, radio responds very quickly whenever there's a change in scenario. So are you expecting a recovery during H2 or Q3? And maybe some catch-up of radio on TV? And then third question, could you just give us some color with a bit of hindsight now about -- with examples of the permanent savings that have been identified and secured thanks to the pandemic, in fact, ways of doing things differently in particular, in terms of production and so on? And any idea of what that could mean in terms of cost savings?

Thank you for your question regarding Salto. The draft budget expected a share of losses for EUR 22 million for M6 for its 1/3 share after-tax impact. And we are on plan now. So there's no reason to say that we're not on plan. Regarding Bedrock, we've been deconsolidating Bedrock with the 50% disposal of RTL Group. And so we have fully allocated earnings or losses, and there were no surprise here. It's the same mode of magnitude, keeping in mind that we are ramping up with Bedrock with new customers and above all, new services for current clients. Regarding radio. Radio right now -- well, the advertising business of the last 4 months will depend on in-store traffic. It's very important. So far, contradictory measures were given on vaccine passports in shopping malls, in particular. If there are no vaccine passports in shopping malls for the long term, there should be decent business for Radio. If there's a vaccine passport obligation, it should be more difficult for advertising. Some sectors suffered on radio and television, in particular, automotive, of course, tourism. But other sectors are doing better like specialized retail or mass retail. That's what we can say right now without making any precise predictions about the radio business for the last 4 months. Regarding your question about whether there are permanent recurring savings related to the experience of the COVID crisis, so to speak. Regarding programs, apart from optimization, which is not COVID-specific, our program line, there are no savings to be expected. There should be rather extra spending in terms of production given the opportunity that should be adopted on thermal TV sets or because of post -- production postponements and extra health measures and contact tracing. So cinema or TV production or production of sports events are not going to be less costly. It should be rather the opposite. There will be exceptional increases for some production spending that we are trying to absorb in our budgets. Second comment regarding structural savings. At corporate level, we made efforts to optimize our structural costs because of remote working and more flexibility. For instance, from the 1st of July onwards, we vacated a building that we rented. The lease was up and we've absorbed the population from this building in the various facilities that we occupy. So there are going to be similar recurring savings, but this is not a considerable amount. Most of our expenditures are related to programs. And so we're not expecting to decrease very strongly our programming spending to stay competitive, both with the traditional competition, but also with the competition from SVOD.

We have a next question from Julien Roch, Barclays.

Yes. Nicolas and Jérôme. Coming back to good prospects for advertising in July, August and no visibility over September. Looking good, does that mean taking the 84% of Q2 and making the comparable differences, that's plus 40? Can we have any idea of what looking good means? And second question about government support, the 16.9% in H1. Will you receive further subsidies in H2? And if so, by how much? And third question, could we have a split of the [7.9%] between Q1 and Q2?

Well, looking good. Let's do a bit of linguistics. Looking good means positive for us. So that means that advertising will be positive for us for July and August. But August is not over yet. And also there was a recovery last year. So we're not dealing with the same figures as March or April. In April last year we had minus 70% for advertising revenues in April. Conversely, July and August were looking good once again. And so we're comparing ourselves to 2019. That's the benchmark, really. So we're going to have an increase for the 2 summer months. But let me remind you that the 2 summer months will not be the biggest in the year. And by far, for September, once again looking date to date, we are rather positive. I'm simply saying we are cautious because last year, part of the inventory came in late in the month. And so we are careful about the fact that if the vaccine passport was to be strengthened and so on, what we booked at the -- what we booked late last year will not be booked this year. So I can't make any forecast. I'm simply saying that in many of the consumer-based sectors, you can see that there's a lot of spending appetite, which is sustained by television, in particular. And there's the same experience for digital, which is holding up well. And for the [indiscernible], the figures published for Q2 are dizzying. That shows the competition for these operators on the advertising market, which is really one and only a single market for audiovisual for advertising. Regarding your question, public subsidies from the government. Well, to be quite clear, the mechanism that was initiated and was voted in the finance bill last year. But given Brussels -- commented was not booked in the 2020 accounts because we didn't have Brussels go ahead. And so it's in H1 that it was booked. As we consume the subsidies, most of that is booked in H1 for TV and radio. So there is going to be a remainder for H2, a very small remainder for H2 2021. That's what we can say, and it will depend on the programming policy, but don't expect a big earnings impact in H2.

And maybe just, Julien, to add to that, in accounting terms, this is an entry for Q2. You were talking about Q1 versus Q2 because of the publication of the decree, which was in June, only allowing us to book from then on. So in June, we booked the full effect for 2020 and H1 2021, so a very small impact on H2 -- a small impact in Q2, sorry.

We have a question by Christophe Cherblanc, Societe Generale.

I had a first question about Salto. You mentioned that the impact for the full year was after-tax impact. The tax savings, did it recognize any contribution for equity affiliates? Or is it in the earnings, if you look at the income statement? And you talked about a positive tax balance, but it's still fairly significant. I wanted to know what that was for. And still about Salto, you have a partnership with TF1 and France Television. If you are making projections and if you were to have a merger with TF1, what would be the attitude vis-a-vis Salto, would you be more aggressive? Ideally, would you like to only have an eye-to-eye partnership with TF1 and no longer have France Television in it? After the merger, would there be a change in the strategy regarding Salto?

Well, before I let Jérôme answer about the accounting impact. Just one clarification regarding the projected merger. The cost due to the projected merger, which are assessed to -- were handled as one-offs in H1 that was booked in the expenses of the company for EUR 3.5 million. And so we could have used it to calculate the operating margin, but it would have been marginal. That was number one. Number two, to answer your question about Salto. We will fully honor all of our commitments vis-a-vis our partners, especially France Television, but then maybe there will be a discussion. If the merger is adopted, which we are all looking forward to. We will have a discussion with our partners, in particular, France TV to know what their position will be vis-a-vis the merged entity. Let me remind you that we've benefited from an official statement in favor of the merger by France TV, but then France TV will have to decide on a streaming policy, and we are going to look at it in due course. And in full compliance, of course, with the agreements that we signed when we designed Salto.

So regarding the equity part of Salto, it's an SNC. So it's transparent in tax terms. So we have it as an equity affiliate for our share of 1/3, and you can see it in the net income group share. But for Bedrock, It's subject to corporate tax. So we are taking our share of their net post-tax profit. For the tax balance in 2020 -- in 2021, we did some -- in 2020, we had some restructuring operations, including operations which means that we had some deductibles and so that reduced the tax burden for the amount of this operation. And -- which was EUR 15 million, EUR 20 million?

EUR 15 million.

Roughly, yes, we're still calculating.

We have a question from Thomas Coudry, Bryan Garnier.

I have 3. The first one, could we go back to the tax credit. Could you confirm that these benefits will have to be reimbursed that they are booked once and for all? Secondly, I wanted to know more about addressable advertising. Could we know a bit more about how attractive this product is? Is there good -- is it really embraced by consumers? Or are they accepting the fact that they're giving over their data and also whether advertisers are accepting that? And another question about the context regarding the merger deal with TF1. I wanted to know how you are making sure that your team stays mobilized in this context. There's some uncertainty for the team about the positions and headcount, how are you looking at that?

Thank you for your last question regarding headcount motivation, it's untouched. It is still -- we are still competing with all other market players. Let me remind you that we had various works council meetings that unanimously approved the projected merger in the various works councils. So now, of course, the procedure is going to be very lengthy, very cumbersome, very comprehensive, very administrative, very heavy and cumbersome. This is France after all. So we are going to look at what is happening in the Netherlands and when we're looking at the Dutch colleagues undergoing the same operation, it seems to be quicker and less complex there. So of course, we will comply with the regulatory obligations and the law. However, we could observe that this is a very cumbersome decision for both groups. I would even say the 4 groups because that also involves the 2 shareholders, Brice, which is going to be the exclusive controlling shareholder in cases of successful operations as well as RTL Group. And you're right to point out that meanwhile, the 2 companies need to work independently. And these are efforts that are required -- major efforts required from these 2 companies. So the Competition Authority via its President is committed to have a public answer by October. If they were to give their opinion earlier, we would be very satisfied if that is to be positive. We would be extremely positive -- extremely satisfied to have a positive answer. Because, one, we are looking forward to having this merger to strengthen the momentum of our 2 companies. It's not just defensive, but it's also very aggressive as an operation. We have big projects. In particular, we want to grow programming, to optimize programming, to grow digital and to focus on French language production and local production. So it's a very positive project. And we want to offer more firepower to our clients that are looking to compete effectively against some oligopolies, which are being built in terms of digital supply. Let me remind you that the production business is being consolidated very quickly. We have the biggest flow producers with [indiscernible] that merged [MediaOne] controlled by [KKM] is now much, much bigger with very big acquisitions in drama production, in animation and movies in Europe, French consolidation in terms of publishing. So what we're offering with the limitation on vertical concentration, as publishers, we are limited in how much we can concentrate vertically, but we want to build the group that could rival more effectively the competition. And we can -- want to be more aggressive in terms of our offering for TV and also audio for radio will be much more efficient. We can save on structural costs. We can have optimized programming in terms of the circulation of IP, and we will be more suited to the taste of viewers and listeners. And we will have more local content. And that could be beneficial to producers because more optimized revenues and more optimized programming. That's a stronger group with more ordering. And in terms of news, we'll still develop quality news. On M6, news is very successful at noon and at 7:45 with our newsroom show. And we want to leverage that in terms of the news and media pluralism compared to what's going on in social media. So size is going to be a prerequisite, and the quality of the team will allow us to have a very powerful group in France. And I think that this merger is really a very good thing and a great opportunity for the French market, a tremendous opportunity. And if it was not possible, that would be a historic failed opportunity to have a great audiovisual group that would benefit consumers and clients. To answer your question about subsidies, government support, as you may know, I'll repeat that again, is fully one-off because I'll remind you that they -- they were an incentive for broadcasters to maintain their orders in audiovisual production. So that's 15% of our commitments, this subsidy. So for the M6 base, that's about EUR 100 million in commitments made. So that translates into EUR 50 million in subsidies to date. And then in accounting terms, depending on accounting rules, it was booked as a sort of broadcasting -- retrospective broadcasting support after the programs were aired. Some were aired in 2020 and broadcast -- bought in 2020, broadcast in 2020, some deferred until 2021. So it's a one-off support to support the industry in the last few months. That has allowed us to maintain investment in drama last year and commitments in programs, as I was saying earlier, to fund part of the difference in production costs requested by some of our producer partners are produced by us related to COVID. Let me give you an example. We've had a movie that will come out at the end of next week, where we have had to stop shooting because of COVID, whereas we had tried to maintain production. So in many cases, we have had to face significant cost overruns in the area of production and it is continuing. Besides, we have a number of constraints today that are quite strong in terms of theatrical releases. Kaamelott, for example, is a real hit. We've invested a lot in this movie. That is following the series. It has had 1 million admissions in the first week. We think we have "lost close to 1 million admissions" in that week because of the health passport, it's a pity because it's a major success. We will have a financial balance but that is one of the main investments that will allow us to fund other things. We are involved in 2 other movies that will come out at the end of the summer. [indiscernible] the other one [SS117]. Of course, they're going to suffer from the health care passport as the whole sector.

I had one update on addressable advertising. Do you have something to say?

Well, addressable advertising remains marginal for a number of reasons. The main one being that we don't have much room. It's not necessarily very positive today. We have a good advertising team, and we have a good occupation of advertising screens. Secondly, it concerns only a number of boxes because to have addressable advertising, the set top box have to be connectable. So it's quite marginal, it's going to take time. We're thinking of a number of positions because we think there should be consolidation in commercial offers. Each company won't be able to stay individually. That is an example of what the merger can bring, it's very important. We always think it is a defensive merger. On the contrary, today, when we do addressable advertising on TF1 and M6, you only have the channels of the group that can reach geo-located advertising, but advertiser wants more power, YouTube and all that, to be able to be efficient. We can reinvest -- we have to reinvest part of that money in French and European production, movies, drama. If addressable advertising is a good thing, we have to have -- to be able to offer advertiser power in a geo location. And the fact of having M6 and TF1 channels together, that will allow us to offer our customers in different cities, efficient addressable advertising. Today, when you match the different channels, the different boxes available, geo location, well, you have reduced figures, and you're not very competitive with those who offer addressable advertising on systems that are not regulated like YouTube. So from that point of view, it is in our interest to have that merger. But to answer your question that form of advertising is still relatively insignificant.

We're taking one last question, Jérôme Bodin, ODDO.

Two small questions. You were mentioning rights in movies, the complications related to COVID. How is the rights activity behaving? Is -- could that offset a more difficult half 2? You mentioned the cost of merger. On the first half, you said EUR 3 million. Regarding half 2 I wanted to be sure that this amount is integrated in the right category.

The specific amount is EUR 3.5 million of expenditures. We have a committee of independents that have had to make a number of decisions. We have carried studies with the BCG. The amount should be slightly lower in the second half of the year. But we will have other expenses related to the merger in the second half of '21 and in '22 until this merger is implemented, and we hope it will be. Regarding the application of rights. Here, again, the merger would create value for everybody today. We need to circulate the works. We need to develop production with a lot of ambition. Let me give you a very practical example. And that is a very personal conviction. In M6, we were able to produce short fiction, Kaamelott, Camera Cafe. We have Scènes de Ménages, we have En famille. All of those short drama are of good quality. We've had [Sona] on W9, quality stuff. But we're not happy in terms of volume of French prime time drama. We would like, on M6, to develop prime time drama. Why don't we do that massively? Because in September, as of the middle of August, you will have regular program on that. Why is it that we haven't done it so far? Because the French fiction, if we wanted to be successful, must be airable. Given the variety of hours we have on SVOD and on linear channels, there's a fragmentation of audience. Given the cost, French fiction costs between EUR 700,000 and EUR 800,000 an hour, sometimes 1, 2, 3 to have an efficient audience. TF1 does it very well. They have a more efficient revenue given their size. That is why there is this difference. We could be an excellent platform of -- second to broadcasting. Like, for example, what TF1 does already, we have a lot to learn from them in this area. So it's very important for viewers to be able to develop French drama. And all this would be good for everybody. Here again, the fragmentation that was decided when DTT channels were launched, that has meant a loss of competitiveness and value for French channels. Another example, I'm thinking of free VOD and streaming, we will have very important investment to make. There will be no difference between linear and nonlinear. You will have part of TV consumption that will be done in a nonlinear context. We have started also investing regarding M6. We have specific investments on the nonlinear through 6play in case of merger. Those investments will, in fact, be good for the viewer because we will also have optimization of all of those programs. So I'm convinced that this will create value for the whole French ecosystem. And -- because fragmentation, excessive scattering has been synonymous of a loss of value for the whole ecosystem. So thank you very much for this presentation of the half year. See you for the yearly results. We are reasonably optimistic about our activity in the second half of the year. We will do our utmost. Of course, we have no control over the health crisis and this stop-and-go policy, lockdowns, end of lockdowns. But we feel that people want to consume. And it's good to be able to answer the request of the public and the market for the second half of the year. So have a very good summer and see you for the presentation of the annual accounts.

Thank you very much. This web conference is over. You can now disconnect. Thank you for taking part. [Statements in English on this transcript were spoken by an interpreter present on the live call.]