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

Well, the year 2023 was a year that we could call robust with an audience share for all free-to-air channels of 20.5% in the group. So we were the only channel that really grew on the commercial target. We were still the leader as [indiscernible] will explain in the radio cluster. And we had a good year for cinema with 8.3 million admissions. In the highlights of 2023, first of all, as you know, this was a year rich with sporting events. We were involved with the Women's Football World Cup and some of the matches of the Rugby World Cup. The economic context was fairly uncertain with inflation, of course, and international events. So we recorded a decline in the advertising market. We'll come back to that with David, but we were able to protect our operating margin at close to 23%. And we also changed our diversification portfolio with a capital operation on GSG, which is doing well. And we disposed of the media and services division to Prisma and the CTZAR company, which were 2 diversifications that we deemed -- that we didn't have the critical mass for. And regarding the results for the whole year, the quantitative results, consolidated revenues like-for-like, excluding disposals, which declined by minus 0.7%, advertising revenues overall, including digital, radio and TV, minus 1.5%, and operating expenses declined also slightly. Overall, our consolidated EBITDA was EUR 300.7 million with an operating margin of 22.9%, as I said earlier. And net income, which includes divestments that I've just talked about, that Jerome will walk you through and also the end of the Salto operations with the liquidation of Salto. So overall, net profit of EUR 237.1 million. Now if you'll allow me, I'll give the floor to Guillaume Charles for the whole of television, who is the Head of Content for the group, and he's going to tell you about all the TV and video business for the group.

Thank you, Nicolas. Good evening, one and all. First of all, as a preamble by way of introduction, I wanted to give you the main metrics of what is the most important for us the viewing hours for video for the whole group. So you can see in 2023, over 9.4 billion hours were consumed in 2023 for the channels and services of the group and for 6play and the replay version of Gulli, that was 0.5 billion, so 500 million hours viewed. As you'll see, the clear goal for the next few years, and we'll present that is to, of course, strongly grow the nonlinear hours as we've already done, which become more and more important in our viewers' consumption. Now a word on activity for TV ratings. Of course, as in the past few years, we've been facing a decline in viewing time for linear TV. This is what you can see for the whole audience and the 25-49 age group, which is very important, but this is the main asset of television. We have a daily coverage of nearly 75% including for the targets under 50. So now our -- in terms of positioning, this is a widely consumed media. I won't give you any brands, but the well-known as VOD platforms have less than 10% daily coverage. So of course, this is new competition, but now in terms of coverage, television is, of course, an essential and necessary medium. We can see that in consumption. Competition is not just on the TV market with a direct competition where they are competing with SVOD, VOD and other forms of video on the Internet and on devices, but you can see that on the 25-49 age group or even on younger children, most content consumed is viewed on TV. So it's our responsibility to follow consumers. Now coming back to more usual metrics on audience share, the group, as we said, had a mixed balance on the 4 plus target. We are facing an aging in the TV format. Now TV is consumed by older people. So since M6 is the youngest channel and Gulli is also very young. So the 4 plus whole of France audience share declined by 0.5 points. However, despite good performance on the commercial target, the 1 that matters for advertisers, which is growing because we had a 0.2 point growth with the number of free-to-air channels that had pivotal audience share for the TV market. How can we explain this good health of audiences on targets, while the market is mostly structured around entertainment? And because of the strikes in the U.S., there's less content, the platform strategy of major producers means that there's less availability for U.S. TV shows. But for prime time, we were able to replace the U.S. TV show nights with drama or flows. And you can see that entertainment has pride of place. So reality TV, Farmer Seeks Wife or Pekin Express, this is the most widely consumed as replay content. So you can see that Pekin Express had almost 30%, 26% of consumption is nonlinear. This is the same for L'amour est dans le pré, Farmer Seeks Wife. So the hallmark of all the reality TV that we have is very important for nonlinear consumption. This -- there were major sporting events also that year. So we were involved in the Rugby World Cup and the Women's Football World Cup. And as we announced, we'll have the Euro 2024 this year, which will be a major moment because we'll air the finals. And also, movies stand out when TV is more and more competitive. So the fact that in the group, we have SND and M6 Films allows us to secure major rights for our channels and also news and current affairs. We believe in the fact that a French medium lives through the news. So our news bulletins are the most widely viewed amongst the under 50s and capital is having record viewership. For the other channels, it was a great year for our DTT channels, which are still growth engines. W9 is the second largest DTT channel on the 25-49 group, for 5 years, it's been beating its prime time record always on the commercial target. And it's essential because there are programs for young people with reality TV. And so there's good complementarity between channels like W9 and our 6play service where people can catch up on all that. And sister, youngest in the family in HD DTT channels, so second-generation channels is the leader with the 25-49 group. And here, prime time shows had historic viewerships both on the whole of over 4 and 25-49 group. So added to Gulli, this means that we had great performance. Gulli, I'll add well on that. This is an acquisition in the group. What is essential is that we were successful in transforming prime times. There are 2 kinds of Gulli, one for children in the morning with cartoons and kids shows. And what's essential for this integration of Gulli in the group was to have a family prime time offering and this is shown because with group synergies for the second consecutive year, we were able to have historic records for Gulli in prime time, which is essential for its market. And finally, it's a great year for our cable and satellite channels in terms of audience share. You can see for each of those, Paris Premiere, it was the best year ever. Serieclub, best year since we started measuring annually and Teva, the best year in 4 years for the 25-49 group, so great performance from our cable and satellite channels for last year. And now I think that this is radio. Regis will comment on radio results. And not just radio, the audio hub, as we call it.

So the radio market in France, still dominates audio well. Radio is doing not so bad with a number of daily listeners, which is almost stable, minus 1%, listening time, which has grown. So overall, we've been flat over 2023, which is rather good news. And radio still accounts for 58% of the audio market share in France, which -- that's the dominant medium for audio, including for advertising. The M6 Group is the #1 private hub in France with 17.6% audience share in 2023 for morning shows which are, of course, prime time for us. We have the biggest private offering in the morning with over 2.9 million listeners on RTL. The morning show hosted by Yves Calvi and Amandine Bégot for RTL2. This is the only music-based breakfast show for young adults with over 1 million listeners. And Bruno on Fun Radio, which is the second most popular music-based morning show in France behind NRJ on the 25-49 group, which is the most important for advertisers, a 6.4% audience share. And for podcasts, RTL is now the #1 private publisher of podcast with 30 million listens and 6 podcasts in the top 30. You know that in France, podcasts are mostly a radio business. And you can see that these 6 podcasts, Les Grosses Tetes, L'Heure Du Crime, also a very big cast, Jean-Alphonse Richard, Laurent Gerra, Philippe Caverivere, more recent big hit, Lorant Deutsch, also very successful; and Caroline Dublanche with Parlons-Nous. So very quickly, that was radio. David?

Good evening, all. A word about the advertising markets. We had revenues of EUR 1.067 billion, so a decline of about EUR 16 million like-for-like because the last 3 months, we didn't have the sites. So the decline was a bit lower by about EUR 14 million if you compare our 2 main BUs, audio and video for video, the TV market went through a bit of a rough patch. You'll remember, H1, the decline was 8%, very strongly, a big rebound in Q3. Q4 was a bit disappointing. According to estimates, the market should end around minus EUR 3 million, we will know in the next three days -- in the next 2 weeks. We're doing a bit better at minus 2.2%. Linear TV suffered a bit more. There was good news for digital revenues and segmented TV, which grew very strongly. Before I move on to audio for 2024, it's always difficult to make predictions but we expect our central scenarios around stability with all uncertainties and inflationary threats that remain, as Nicolas said, but there are some events like major sporting events. The euro, as Guillaume said, a minute ago, we'll have the final and half of the main matches aired on our channels, which should help. For the audio cluster, that was a rather good year. You can see the other operations scope in which you had the sites. The growth for the audio hub is around 4% in terms of advertising revenues. So in line with the market, maybe slightly more. The audio market is doing well, benefiting from 2 major fundamental assets that will remain. First, it's very effective. in terms of drive to store. And the access cost for advertisers is very low. So with these 2 assets that will remain, there's no reason why the market should be bad for 2024. That was a very [indiscernible] presentation. Now Jerome will talk to the annual accounts for 2023.

Well, first, some comments by activity, starting with TV. As David said, in a deteriorated economic context, revenues declined by the amount that David said. And most of the decline in EBITDA is explained mostly by the decline in revenues to which we added some technical costs, commercial cost and a bit of content cost for the streaming dimension on 6play, and so that has deteriorated things somewhat. But you should note that the TV segment generated 22.5% operating margin in 2023. Radio, as Regis and David presented, revenues grew strongly, thanks to advertising. And here, you have most of that revenue growth in the EBITDA with great cost control and when there are savings that emerge, they are reinvested in programming to bolster audiences. Production and audiovisual rights, very strong growth in revenues, explained mostly by the number of movies that we released in theaters and the number of admissions that matched with a very good year in terms of admissions. However, like every year where we have big theater releases, we have a big chunk of amortization of broadcasting rights that we buy early on, and so that has an impact for the whole year. That's why there's a slight decline in operating margin at 15.5%. Regarding diversification, 2 major elements. First of all, deconsolidations that explain a significant part of the variation in the figures between '22 and '23 here, diversification. That's the divestment of Best of TV in 2022. So home shopping in supermarkets and DIY stores that we sold in H2 '22. Apart from that scope effect, in our continuing operations, you have a difficult context for real estate because, as you all know, it's been mentioned many times in the media, H2 was marked by a strong and fast increase in interest rates. So acquisition costs increased. And so real estate transactions declined, and so there was a decline in revenues for our franchise business, Stéphane Plaza. However, this segment still has a strong operating margin of 42% at the end of 2023. For equity affiliates that we have no control over, but with a significant interest share, 3 are noteworthy. These are the highlights of the fiscal year, justifying between last year where we had almost EUR 71 million in losses. We have a positive contribution from this portfolio of companies. Why? Because that's the central line. Last year, we made a provision. We booked losses in 2022 for Salto and we provisioned the liquidation costs for the last few weeks or months of business in 2023. Since all these costs were booked in 2022. This year, we managed the liquidation of Salto with TF1 and FTV. The operations are almost complete. And so that resulted in a slight positive contribution because the liquidation happened very quickly and at good conditions. Bedrock is the business in which we've been investing for a few years for video streaming technology, which is used not only by M6 but also other clients like Videoland in the Netherlands or other channels in Luxembourg and Hungary and also in Belgium. And Bedrock is still growing its platform. And I'll remind you that Bedrock was the supplier for Salto and thanks to that, it developed features on its platform that will also leverage for the M6 Group. And Global Savings Group, this is a significant stake we have 31.5% of capital. We had 40% last year because in 2023, GSG had an external growth operation with one of its competitors, peppers.com, and the shareholder of Peppers did as we did in 2020, when we sold iGraal, they decided that to continue on -- it would make more sense to continue on then to divest. And so there was some dilution for existing shareholders and the contribution of a profitable company on top of that and the first year of profitability of legacy activities at GSG saw a strong rebound year. And so that's why we went from minus 71% to plus 8.3%. And like last year, here, you have the key figures for this portfolio, which is of 3 types of business streaming with Bedrock, you can see that the issue with Bedrock is to grow its client base and to have more users for its technology. A lot of things are in the pipeline and for digital marketing, GSG, I've told you about EUR 103 million in value on our balance sheet. This is a company with almost EUR 240 million in sales. It's profitable. and even had an EBITDA over revenues margin of over 15% at the end of '23. Panorabanques and QuickSign, do marketing in very different segments with digital and financial marketing and Miliboo, a company that we bought into a few years ago that is still growing for furniture and WBA, which is an event management agency which is also growing still. Regarding the financial statements, the traditional format. I won't come back over the overall consolidated statement of comprehensive income. We've given a lot of details about that. We might only add a strong growth in net financial income, explained by the strong increase in rates and the average amount invested during the fiscal year clearly higher this year than last, EUR 360 million invested versus EUR 215 million and EUR 350 million versus 0.5% in terms of interest rates. The balance sheet, a few significant variations, some deconsolidation effects and also a reclassification effect between current and noncurrent liabilities explaining the variation between noncurrent liabilities and current liabilities, but nothing significant, excluding the amount higher than distribution that can contribute to equity. And the cash flow statement a year when the cash flow from operating activities was once again positive, plus EUR 69 million explained by more rigorous management of WCR and also maintained CapEx, but also resources generated by asset disposals in nonrecurring items versus the charge last year of EUR 6 million, and you have dividends and the contribution to joint venture current accounts, and that explains all the cash flow. So net cash (sic) [ cash ] at closing of almost of EUR 440 million and a net cash of EUR 340 million. So nonfinancial aspects, some information. We will give you more information in the URD. First, we have made an effort, of course, in the social area on balance and the share of women in leadership, as we said, also in content. As we saw in the video, we have 56% of women presenting information shows. We have top chefs, that is a very important element. The first entertainment prime that was labeled EcoProd, allowing us to enter in green or sustainable production. Of course, our foundation continues its work, and we've been able to reduce by 20% our energy carbon footprint in '22, thanks to savings on all of our sites. Finally, in this area, we've implemented a mentoring system. The foundation did get a price, and we have appointed governor in charge of FX. And this will allow us to go further in this direction of CSR. All this leads us given that the net income of this year to propose to the general meeting, the vote of dividend of EUR 1.25 payout of 66%, which is exactly the same one as the one we had between '18 and '22. So that is consistent. We're confident about our fundamentals. Henry is now going to tell you about our investment plans in OpEx to develop streaming, but that, nevertheless, allows us to maintain in '25 a dividend -- a similar dividend to mark our ability. First, to invest and to maintain profitability. So much for the financial part. Before I give the floor to Henri Fontaines who is notably in charge of strategy within the Supervisory Board, we're going to tell you about the streaming plan we have to develop streaming. What I wanted to tell you first is that TV has 2 legs, one strong leg, the linear representing 92%, 93% of its revenues. But of course, there's also digital streaming representing between 7% and 8% of TV revenue today. given the drop in linear little by little, streaming will increase. We have been the group, which as early as 2008, has implemented streaming. Some operators were skeptical that streaming, we have developed today through 6play. 6play now has spectacular results, especially at the beginning of '24, with about 1 million people going on our side, visiting our site every day, and that complements very powerfully the activity we have in the linear area that will offset the drop in linear. And since the advertising is more expensive. That allows us to offset. Nevertheless, there's a question of timing that arises. We are going to tell you about it. But first, we have tried to decide the -- what we call the SIG, the services of general interest, allowing us to have -- to benefit from the right positioning that location is very important for visibility of service. [ Arkom ] has made a decision that may be validated by the EU to put forward those public services extended to DTT authorized services. I always thought that aggregators were very important. Why? Because there is a method to watch TV with a form of zapping. And sometimes, you can lose the viewer on the road. So I hope that all of the audiovisual landscape will be convinced, we will facilitate viewers live to make sure they do not go from one area to another, one channel to another. This is what we're doing with this project of aggregation. We already have Molotov, for example, which have done that work. This one example that is very bad or late, the one radio did with the choice is not to do aggregators. The U.S. have started doing that with radio. We have a U.S. aggregation side and Radio did it quite late. So when you are on a U.S. side, you do not control your flows, you're zapping. For example, when you call RTL, when you have RTL2 on an American platform, it doesn't work and you do not control your data. So I think that this question of aggregation, the way in which you consume TV is very important. Nevertheless, once you've defined those SIG, once you have agreement. We do -- third thing, we buy content. We develop contents, and this platform will include a lot of content. Finally, we have a technology with Bedrock. As Jérôme presented, Bedrock is a European technological company. We will have innovations in M6. That is a generic name like RDL+. That is how we will call or [indiscernible] streaming platform. Henri will launch this plan on March 6, it will be launched in the beginning of the year.

Hello all, I am not going to give you many specific elements about the platform, but I will tell you more about the approach, the rationale. It's a plan -- an investment plan that started already which is already being implemented. The ambition goes until '28. As Nicolas said, streaming does not show today. M6 has had a platform since 2008. We have been the first audiovisual group to start that in replay. It was a good idea to do that in the last 15 years. We have launched a number of initiatives, notably the evolution of a replay platform, a video platform that was 6play in 2030. We've had partnership with social media, the launch of Bedrock in 2020. It is very good to pull technology between editors. And our last -- in the last few years, we have focused mainly on capitation and the use of data because we're going to have more targeted contents and more targeted advertising based on that history, 15 years of work today, we have a 6play platform that is very powerful. Especially for young adults, it is our core target. We have more than 16 million people watching our videos, record was last November. We are seeing a very strong growth recently. Today, we have more -- 518 million hours on 6play. As Nicolas said, this year, this figure is growing by more than 30%. So massive views is there. 34%, you're right to give me the figure. What we want to do is, of course, to develop the share in revenue last year that represented to EUR 74 million. Those are advertising revenue, VOD -- coming from VOD and also subscription through 6playMax and GulliMax. The nonlinear in fact is seen in our main program, M6 is very strong. This is where we have the strongest growth today, 1/3 of pickup that is now broadcast is done through 6play. More than 1/4 of top chef is done through 6 play. Same thing for [indiscernible]. Of course, through a content policy that will be more streamable, we want this proportion to increase and help our linear activity. why help our linear activity? Because until '28, our linear is going to remain our main source of revenue and profitability First, because the TV market is very resilient. It is the one that is more resilient to the growth in digital. This linear advertising market is going to be supported by the increase in the segmented advertising. And on this -- in this area, we still want to control our costs year after year. That's why we have a high level of profitability. That is our historic base streaming is the growth that will feed the historic base. Well, with the use of streaming, video is very much consumed and it is the streaming that takes. You see more than 70% of growth since 2019. What has supported this growth is the development of connected TVs. The fact that now almost everybody has a TV that allow you to access the Internet and get all sorts of content, not only linear TV here regarding catch-up market, it is a double-digit growth every year, not since -- not only since 2019. We want to extend that to all advertising. We want to develop 6play with the new platform. Why is it that we insist so much between linear and nonlinear? We think that one feeds the other. It is in that manner, M6 Group will be able to continue its successful history. First, our content about EUR 500 million for programming costs. We can pull them between linear and nonlinear. I was telling you about the 3 -- our 3 flagships, of course, those are programs that are amortized in the linear sector. Finally, by going into and get to those extra audience, we want to offset the drop in linear audiences, we're going to catch people who are connected. We can reach them with our free content and with this large coverage, we can monetize with CPM that is higher than what we have for Linear. If we go into the details, if we dive into the figures, today, what does streaming bring to linear, it brings us two more windows. For example, we no longer depend on life. We have initiated what we call previews for those people who love our programs, they can see our content before they are on TV that represents an important part of our audience. It's a very important advantage to monetize. And there's also on-demand replay, 7 days, and it can be up to a month. So you have an increasing number of contents on our platform to amortize our costs. And we've seen a very successful strategy. We can use that as catalogs, contents that are flow contents like entertainment, we have had a very good audience by launching a new season of reality show, so we propose our audience to see again a number of programs. So here, you see prime time that are very well sold that represents more than 50% of extra coverage. This is what we want to extend with significant amounts. And it is the end of this virtual circle audiences that are very well monetized. How does this plan materialize? What does it relate to? In practice, you're going to see a new platform by the summer. What will be within this platform. The first pillar, the most important one will be the contents. Content is key. We're going to keep proposing powerful content and free, it remains our value proposition. We're going to increase our investments in content. We're going to propose this platform everywhere to reach everybody everywhere. There was a dead angle, those connected -- those TV connected outside of the offer managed by the 4 internet providers, but now that will change. We will be available for viewers who want to view us on connected TVs. We want to have an hybrid offer. You all see it with what the Americans do. The proposal made for viewers and advertisers is increasingly sophisticated. So we focus on what is free, but we have a lot of growth potential with a complementary pay offer -- paying offer. To do that, we need technologies, appropriate technologies. We think we are equipped for that. but the innovation launch allowed by Bedrock, given what they do for other European countries every time Bedrock publishes a new technology innovation. All of the customers can benefit from 6play and M6 plus. Of course, all this is to proposed targeted audiences. I would say that in terms of our distribution, the major progress we're going to make with or distributing partners, the 4 Internet service providers is to have a better access to targeting shared with them and enter into strategies where they will put forward our contents. They will give us a good advertising insertion. They also invest for them. It's very important to be able to keep benefiting from our contents and see their audience grow. In practice, the objective we set ourselves are the following: by '28 we would like to multiply by 2 our audience in terms of millions or billions of hours views, multiply audience by 2 and multiply by 3 the revenue -- times 3, that is we would like to have EUR 225 million. It will be mainly VOD and some paying offer. To reach those objectives, we want to have a ramp-up in our investments in order to reach plus EUR 100 million in '28 and breakeven in '27, it means that our streaming incremental revenue will be higher than the expenses as early as '27. This is what we worked on.

Thank you, Andre. We will tell you more about the evolution of 6play on March 6 that will be put on the market before the Euro '24. It will be called 6plus like other platforms working in streaming. As you have seen, the 24 results are good, the outlook is interesting. We're going to make significant investments. We're going to do it both in the area of linear and nonlinear, both or complementary. We're going to invest a lot in production. We have a lot of series. We have a lot of cinema movies activity. For example, we have funded [indiscernible] which is going to be this year's comedy, go and see it, and we're also going to keep investing in technology because it's important to offer service to our users. To do that, we have decided with the Supervisory Board to change governance -- change our governance, i.e. anticipate succession. We have worked the appointment committee has worked on that since last fall. We have -- they have selected an internal candidate who is in charge -- the person who is now in charge of advertising and he will take over after his nomination on April 24. So I'm really glad to introduce David. David is both an engineer. He also has hold an MBA from Wharton. He's been working for us for a long time. has often overperformed the market in the advertising area. And shareholders have preferred an internal candidate to protect corporate culture, and we want him to be able to counter on the support of his colleagues. So with him, I will be working on transmission until October 23. No. I said October. No, I meant April. I was just doing that to see if you were paying attention. Yes, indeed, April 23. I didn't tell you what year I was talking about. This is my last conference. I would like to thank you very warmly for your attention. We were introduced in '94. We had put 10% on the market when we were listed and the value of the group was 32% of our main competitor at the time. Today, we have about the same market cap as there's we have had good yield. I hope shareholders were happy. I would say that the team is mobilized that is going to take over soon. And I really wish you good luck. But before that, do not hesitate if you have any questions.

I had a few questions, for example, on the outlook. Can you tell us about advertising trends, the difference between linear and nonlinear. Can you give us indications about nonlinear beginning of the year? Second, regarding the strategic plan, regarding the EUR 100 million for cost what is the distribution between programming cost and the other costs? And regarding programming cost, does that include investment in supporting rights. That is my second question. My third one. I want to be sure, I think there are 2 different things. You talk about multiplying by 3, the revenue, not by 2. That's my first question. And regarding price, is my underlying question on the streaming offer. On the basis of the CPM, you assume a rise -- inflation, in fact. You have a reference for '23 to give us a benchmark. What do you think about the evolution of price? Will it be done very progressively, maybe elements of comparisons.

So first question, regarding the advertising trend, I would say it is decent for this -- the beginning of '24. We can say the trend is okay. Then we will have sports that could certainly boost advertising. But as I said, visibility is very reduced. We cannot make any inference stable plus on this year. That is our forecast. Regarding the distribution between linear and digital advertising, of course, digital advertising will grow depending on the performance we have on the digital because it's not only a transfer. We have to have strong performance on 6play, which means that for M6 plus more, we will have stronger advertising growth and digital related to traffic and price. Regarding prices, David?

Yes. Maybe there's some confusion here. Regarding the linear, we have a rise every year, about 5%. Why 5%, not more? As I was saying, TV and radio are very cheap. But if we increase prices too much, we make digital more attractive than linears. So we're trying to have reasonable inflation. But indeed, digital sold much more expensive between 2x and 3x more than linear. So the switch we were talking about multiplying by 2, EUR 500 million to EUR 1 billion and multiplying revenue by 3, from EUR 70 million to EUR 225 million, but not everything is advertising. There's also subscription. Regarding the advertising part, it's not so much a question of raising price. We think that the digital CPM is well positioned. It is relatively expensive. It is cheaper than the platforms I think that positioning is the right one, but we have a lot of margin. There are less advertising in digital TV, maybe habits are different. But of course, we will never have the same equivalent. Hence, the delta between consumption. Regarding the EUR 100 million you mentioned regarding our investment in streaming, of course, there are less revenues in distribution. That is the consequence of development of ODT, but 50% content 25, 25 technological cost and digital. As I said, it will be about EUR 40 million.

Any other questions? No. Well, if there are no further questions, thank you so much. maybe we'll see each other in other circles. And at any rate, thank you so much for your attention over those years and for the trust-based relationship that we had and that you'll have still with Jérôme Lefébure and his whole team for Investor Relations and Analyst Relations. Thank you so much.