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

Hello, ladies and gentlemen. Welcome to the Half Year Results for 2026 of M6. [Operator Instructions] Now I'll hand over to Mr. David Larramendy, Chairman of the Executive Board. The floor is yours. Thank you very much.

Thank you, Madam. Good afternoon [indiscernible] in all, I'm with Mr. Lefébure. We Will be talking you through the first half results. And we'll do something a bit different than usual. That is we're going to start with the World Cup. A World Cup review. That was mainly during H1, yet there were some matches played during Q3. As you probably know, we were the sole broadcasters with 54 matches that were broadcast on not M6, but then M6+ between the 11th of June and the 19th of [ July ]. What couldn't we say about the World Cup? It's very positive in 3 different ways. That is we scaled up for M6 as we decided to broadcast the matches. So it's positive in terms of the audience share and M6 was the first domestic channel during the whole competition. As far as number of views are concerned, 94% of the French, 60 million of French we're watching the World Cup on M6. And for those below 50 million, it's almost 100%. Now of course, the audience shares for the French team were excellent with EUR 13.7 million as an average, with a peak during the semis between France and Spain at more than 20 million viewers, the second best historic record. And as of today, 20th of July, we have the 10 best ratings of the year. We'll see if this situation changes during the rest of the year. But I'm not certain it's going to change, which means a really good success in terms of audience share. . Together with this, we've had an editorial success recognized by everybody. That is the way we presented the World Cup, was very modern in terms of the comments and also on the billboard and on air, and we had a major impact with social media. So quantitatively, qualitatively, it was and editorial success, a massive one. So on M6, we had the World Cup but also on M6+, as you probably know, M6+ is a very important tool in terms of digitizing what we broadcast in terms of changing the group. We've done something spectacular with M6. We have more than 4 million accounts that have opened, 11 million users, active users. And as far as videos watched, it's usually more than 1 million. So a total of 100 million hours viewed. And if you include the social media, it's more than 1.5 billion videos or outer videos that were viewed or watched by the French. And finally, to illustrate this success, we were the most frequently downloaded app during the World Cup from the different stores, app stores. And the third element, which is very important, is our commercial performance, which was unequaled. During the bold up were the first TV group in terms of advertising content and contacts. We were the first channel with more than half of those advertising contracts. We attracted more than 300 brands. That's for advertising who joined us during the World Cup. More than 40 special campaigns were organized and special events -- commercial events that were organized, which means a massive success that we're very proud of. And then we'll talk about the financial aspects of this in a minute. But to get started in a different way, I thought we'd say a few words very quickly. about this event, the World Cup, thanks to which we've grown considerably. Now let's have a look at the H1 numbers. So as of the first of January to the 30th of June, and we were helped with the World Cup partly, but also, we've had a very good H1 in terms of audience share. With the group that's gone up more than any other group at 14.2% versus [ 13.4 points ]. That's for the [indiscernible] for the ones between 25 and 49, we've gone up 1.2 points whereas the other groups apart from France Tilly, who benefited from a good sports programming, the other groups, as I was saying, have been slower than us. And if we look at the other competitors now, no, that's more than just the first half, we've improved for the full plus at 8.1 points and 13.4 points on our target on M6. And during the first half, however, we've had other events. If you look at entertainment, the main prime time entertainment hits for instance, [indiscernible] Express or [indiscernible]. These were major hits. We had also the final LaCanand then the Champions Link final between the French PSG and Arsenal. And then also we have been broadcasting. Well, we had prebought something else a couple of years ago. And for the first time, we decided to broadcast this video on M6, it was incredible, 7.1 million, more than 1 million acquired in replay, which I think is a record for this film shown on M6. And there are other things that we usually don't talk about. If you look at programming, however, this is something that happens 5 times a week, 52 weeks a year. We have access gaming and [ Lauda Fortuno ] the Wheel of Fortune plus on a Saturday. We've been suffering, but we launched [indiscernible] to which we increased twofold the [indiscernible] in a year. These were the highlights for M6. But W9 is also doing well. W9 is doing well. If you look at the period from January to June, we were ranked #1 in terms of rating, 4.7 points that's the audience share, that's the DTT channel. Its first time for us, and we're very happy about this. That's the target, 25 to 49 year old. It's historic. This represents a 27% growth of our audience share and 30% if you look at the 4+ audience share. This is due to [indiscernible] that we launched on the first of September last. And now that's really what people watch in France. It's always been the case in, month out for the first season, audience share with multiplied 7x, and that's for the average viewers. And apart from these numbers that you can see, we had a good repositioning that went on really well, which is what we told you before. So we're very happy about this. This is another success, thanks to which we've got now W9 that's grown as well considerably. And what about our digital business? We have mentioned this before. This is a key pillar in our transformation, and we're going on. We're making a way to progress. If you look at the monthly coverage, it was -- it increased twofold in 3 years, and it's still up. If you look at consumption, it's up again, up 35%, 3 years. And this means that we have total revenue multiplied by 2 in 3 years, and we're still treading that path. It's positive path. And we started a partnership as well with Amazon Prime for the distribution of our content. We're very happy about this partnership. It's working rather well. We have steady growth in consumption on the platform. So we're very happy about this contract that we signed, Amazon. Financially speaking, it's interesting and it's interesting is for the group in terms of audience share. Then as far as advertising is concerned, thanks to the World Cup, well, that's in June, we've managed to outperform the advertising market during the first half, we're growing 1% versus H1 '25. And if you look at the market, excluding M6 Group, it's at more or less minus 9%. So overperformance totaling 10 points and this overbalance is really good. It really shows that TV is an appealing medium as well as major sports event that are broadcast on TV. And then the advertising video revenue is more or less 30%, which is a record for us and 2.2 is increase in market share. Now some numbers. Revenues for the Video division is what you can see here, thanks to advertising and advertising as well during the second quarter. EBITDA is dropping to the tune of EUR 50 million, more or less. To cut a long story short, we can say that half of the drop is due to the World Cup and the rest, half of this is due to the market effect. And as everybody knows, the market is awfully complicated [indiscernible] from M6. The market is down 9%. And variable, it's an investment. [indiscernible] loss, which is lower than what we'd expected, and we're very happy about this. And our estimates show that had we not been broadcasting this, we would probably have suffered more or less the same amount, started with such competition. You know that many advertisers will come to you and there's less money for the other players. Now moving on to the audio sector. We have the RTL radio stations. RTL2 which is a radio session that works rather well in terms of consumption. We have about 96% of the French population that listens to this station. And we also have digital versions of all of these radio stations for both of them, RTL2 and RTL. And RTL is actually is the leading radio station in France and Fun Radio is, of course, also a musical radio station that is also quite well patient. And of course, the ambition here is to develop the digital aspect through podcasts mainly. We're, in fact, the second commercial podcast publisher in France, and during this season, we've actually reduced the gap with the leader in the market, and we're going to continue our efforts in this front. We have 39 million monthly listens at this stage. And when you look at the top 30 podcasts downloaded in France, you have the gross set which is leading. And then we also have 7 other podcasts among the top 30. And -- so this is, of course, something that's crucial, and we're going to continue to develop this, either by enhancing the schedule itself by looking at working on programs that work on [indiscernible] that can be downloaded that can take the shape of podcasts, but also by working on various specific podcasts. The RGL and [ fund brands ] also have a life on social media, where we have record consumption, although there's no advertising revenue generated per se through their presence on social media. We're going to work on [indiscernible] the programs starting from September. And I'm very happy to say that the main slot of information on RTL will be actually led by women and [indiscernible]. And [indiscernible] is in fact going to continue her slot between 12:30 p.m. and 2.30 p.m. And there will be a few changes made to improve this scheduling. Now on the financial results, we have had to endure margin hit by the advertising market downturn in Q2. EBITDA has gone down for the Audio division. And this is not the best time it's happening, but this is rather temporary and we're going to have a clearer view of the situation in the next months. And we remain optimistic in thinking that the market is going to come back up again. Now moving on to the other divisions. Well, where they don't have that much of an impact on EBITDA. We're looking at production and individual rights. And as for diversification, well, the real estate activity remains rather complicated. And given the international situation while the decision we announced a few months earlier, i.e., to divest from brands such as [ Stefan Plaza ], et cetera, and CVM Avenue, we're going to actually strengthen our position in Sixth Avenue and divest from Stephane Plaza network. And this transaction is set to be finalized in August. And the nonrecurring income with no equivalent in 2025 is to be noted. And now I'll hand over the floor to Jérôme, so he can talk about some of the equity accounted entities.

Now there's been a fair share of increase in profits over the period, H1. Last year in 2025, we had a lot of the preparation of [indiscernible] Germany that was going to be mounted on the Bedrock platform. And this migration was finalized in April 2026. And therefore, in 2026, we had the first initial financial flows from the traffic coming from the migrated subscribers. And there's a small amount of loss attributed to the fees related to this particular activity. Then we're rather satisfied in seeing that all of these activities are moving towards profitability on all fronts. Now moving on to the financial statement, the consolidated statement of comprehensive income, while the financial results themselves are lower than the past couple of years, and there's been a real desire to focus on shareholders, and we've been working on this from the month of May. And so this has actually reduced the remuneration treasury. And in fact, I can't give you any other major explanations on the results themselves. Now moving on to the balance sheet. You can see here that you have a treasury that has been dismissing some of its dividends, and you can see here that we're roughly at EUR 33 million. When it comes to the cash and cash equivalents and some investments as well in cinema that are going to be balanced out in the coming months. Now on the cash flow statement, we have a positive closing situation at EUR 33 million and a net treasury at minus EUR 36 million. No other major explanations that I can give out here. The main information that you need to keep in mind is that the favorable effect of the World Cup is going to significantly improve the treasury in the second half year because all of the invoicing of the matches in the latter half will be transformative to cash in the month of August. And of course, there will be the invoicing for the final phase, i.e., that of the month of July. So the positive effect will be there, will be first later on. And the level of revenue obtained was beyond what we expected. So that's good news. Now in -- on the ESG front, a bit of information here. We have achieved a lot of transparency when it comes to financial information. We also signed the working with Cancer Charter that now brings the more than 5,000 companies. We're very proud to participate in this project. And you can also see some of the -- some of the other awards we have been given. Thank you very much. Now let's move on to outlook. As I said, the advertising market is rather crippled right now, and there's very low visibility at this point in time. Given that we're going to very carefully monitor our costs in the 5 months leading up to the end of the year. You know that we have an M6 2030 plan that targets EUR 80 million in savings for the next 5 years. And well, that plan is going to be gradually executed soon. And of course, this very careful cost management is part and parcel of our DNA. So we're going to pursue that. And those who watched the World Cup, I think you were able to see some of the trailers of some major programs, some returns of some flagship programs that are going to come back on screen September, and that is also something that we're counting on for a long-term impact. On the digital front, we want to -- we're looking at a streaming revenue of more than EUR 200 million by 2028, and we're going to continue to invest in these digital programs and technologies alongside Bedrock. So that's, in a nutshell, what we can say to you on the financial results. And of course, we're open to any questions now. Over to you.

[Operator Instructions] The first question is from Christoph [indiscernible].

My first question was on the World Cup. How were the costs attributed? Was it a linear attribution in terms of the number of matches. In the second trimester, rather tiremester. And of course, you're looking ahead towards the third quarter. But how can you evaluate the commercial potential of these matches? What's the percentage that you're expecting? That's I think important for us to understand. The second question is for Jérôme, who spoke about the return of BFR. Is that going to -- the WCR is going to be completely going to be removed from last year information? And the last question is on the restructuring of the real estate front in the first semester, there's nothing actually that visible on that front. So will there be more changes in the second semester? And what is the new real estate [indiscernible] going to actually look like.

Well, I'll answer the first questions and then let Jérôme talk to you about WCR and Stephane Plaza. Yes, the attribution was entirely arithmetic. We're looking at 1/5 of the cost of each match irrespective of what the match was. And so yes, there were more costs on the second trimester rather than in the first. And about the impact on the third trimester, we think that it's going to be actually no impact. And now on the return of the WCR Well, I think it's going to go beyond the first quarter, first semester. And maybe we won't be able to recover all of the WCR from last year, but that's the plan. Now on the real estate front, the operation is not entirely finalized. We have announced at this stage, the major principles of this operation. we're currently validating this transaction, and then there will be a finalization mid-August. And then we'll know all of the metrics, mainly of the distribution of the agencies because the franchises of Stephane Plaza had the choice of either joining Sixth Avenue or continue as Stephane Plaza or make a third choice, in fact, a completely different one. And so depending on the number of franchises that choose one of these options in each of the networks, we'll have to look at the consequences that this might have on the valued assets. So this is a session. So we're actually cutting up the company with the same shareholders, and there's going to be an exchange of shares. And 74.5% of Stephane [indiscernible] will be exchanged. I think it's 25% that Mr. Plaza himself holds. And this exchange, once it's done will consolidate the share that comes from the M6 Group, and there will be a residual value which will be fully analyzed by the end of the year. Keeping in mind the recruitment of the new franchises that would want to enter our business plan rationale. So that's what I can see. And there's actually no reason, no legal motivation either to anticipate the resiliation. And in about 3 weeks, we'll have more details on this front and more the technical finalization of all of this.

Conor O'Shea, Kepler Cheuvreux.

The first question to ask because I'd like to pick on the question ask because I'd like to pick on [indiscernible] question the World Cup, 2nd of July. Now David, you've talked about this, you said that there will be a 0 effect later on. Is it 0 effect or [indiscernible] that is the cost of the programming or the schedule will be offset by incremental advertising revenue. Is that correct?

so What about this minimal effect or impact?

Second question on the dividend. 2026 is marked by a margin drop. And there's also the effect of the both capital is to be factored in. So what about your dividend outlook. Will it mirror these changes? Does that mean more net cash or -- is it based on the EPS, earnings per share level.

I don't know if you've answered my -- if you heard my answer to the first question because we're talking at the same time as the EBIT effect that's really neglectable at the end of July or beginning of July, that's the World Cup. The dividend or payout policy, it's difficult to know. And we'll see, depending on the cash flow position and the market results at the end of the year. It's too early to say. .

[Operator Instructions] Next question, [indiscernible].

I'd like to seek this opportunity. Now David, I think that in your presentation, you told us that you were wondering perhaps what's happening on the Audio market and structurally the impact on the structure of your group, could we say the same about the TV market? I'm asking the question because if the market is decreasing to the tune of [indiscernible] historically, this is something we saw when there was marked recession which means the macro landscape is not really good. That's true, but there's no technical recession. Do you think that we've had down the ladder or a flight of stairs, that's going to be difficult to clam up again. What could you say about the structural effects of the Video market? Yes, video? I'm talking about the video market.