TF1 SA (TFI) Earnings Call Transcript & Summary

Good morning, everyone. Stephen Fest, Head of Investor Relations. I am happy to welcome you this morning to TF1 Group's full year results presentation. [Operator Instructions]. I also wish to remind you that this presentation will be available on our corporate website. Thank you very much. Now I will hand it over to Rodolphe Belmer, Chairman and CEO.

Thank you, Stephen. Good morning to all. I'm also happy to host for the first time the group's annual results conference call. I'm joined on today's call by Philippe Denery, the group CFO. As a way of introduction and in brief synthesis, I would like to say that 2022 was marked by the conciliation of the merger project with M6 with strategic rationale was to gain critical mass to address the SVOD market. Against this backdrop, we had to redesign our strategy and concluded, we would be better off by refocusing on the advertising and digital markets where we already have a critical mass and where there are many opportunities to grow and generate substantial value. In 2022, we were able to consolidate our leadership position in the video advertising market through a solid programming lineup and managed to maintain and even increase our share of the linear TV advertising market despite a challenging economic environment. Thanks those two differentiating strengths, namely the powerful reach of our program schedule and the expertise of our ad sales house, we produced solid results with revenue up 3%, current operating margin of 12.6% and a net cash position of EUR 326 million representing a year-on-year increase of EUR 127 million. This position allows us to consider the new chapter of our history in very favorable condition. Taking a look now at the agenda. I will present the business highlights of our two operating segments, media and studio. Then I will hand it over to Philippe Denery, who will provide a more detailed breakdown of our financial results. Let's start at -- with media. In 2022, TF1 confirmed its leadership status in linear activities and obtain promising results on the nonlinear inroad. Within a stronger competitive environment, especially from news channels due to a very intense geopolitical and French political context in 2022, TF1 Group maintained its leadership across all social demo segments. In terms of commercial targets, TF1 achieved a solid audience share of 33.6% among women below 50 purchase decision makers up 0.1 points year-on-year and 30.5% among individuals aged 25-49, up 0.3 points year-on-year. The TF1 channel recorded its highest audience share among women below 50 purchase decision makers since 2015, significantly widening the gap. I insist on that, with its main challenger. The gap in audience share grew by 0.7 points versus 2021. Reach now, Reach is the key underlying factor of our value to customers and importantly, a predicator of our pricing capacity. Reach of television remained at a high level in 2022, which provides TV with a major competitive advantage versus other media. Television reaches more than 55 million individuals in France every week. Within the French television landscape, TF1's reach is unrivaled, with weekly coverage of 49 million, an increase of 8% on 2019. TF1's reach is growing faster than the market average. It also means that we have an even stronger competitive advantage in pricing. We maintain this reach, thanks to our unique programming offer made of ambitious regular events on TF1 and a distinctive complementary programming offer through our DTT channels. Our flagship channel, TF1 offers an ambitious and even driven lineup with regular most seen events. TF1 is the only channel in the French individual landscape, capable of gathering over 7 million viewers across all program roles. Sports, with the FIFA World Cup in football and its final game, which attracted 24.1 million viewers, representing the largest ever audience in France. News in an environment of major international and national events, including French presidential elections and the final debate between the two contenders, which was watched by 7.5 million viewers, age 4 plus. French drama and in particular, Season 2 of HPI, which achieved the top 7 audiences of the year and averaged 9.8 million viewers and entertainment, where TF1 recorded all 10 of the top 10 ratings in 2022 to its strong non-scripted programming brands. The group also provides a unique and distinctive offer through its DTT channels. In a year involving major national and international events, LCI achieved a record audience share of 1.7% among individual age 4 plus and posted the strongest growth in the French production landscape with an increase of 0.6 percentage points. TMC cemented its DTT leadership position on commercial targets, with a record audience share of 4.7% among women below 50 purchase decision makers and 25/49 year old targets, but also among younger individuals age 15, 34. As part of TMC, Quotidien confirmed its status as the leading French Television talk show with up to 2.5 million viewers. Let's now discuss our nonlinear activities. In 2022, TF1 Group kept on developing its free-to-view MYTF1 platform to address changes in viewership consumption. We have made some highly encouraging first steps into the digital market where we met high demand. At the end of December 2022, MYTF1 recorded more than 26 million monthly viewers and 2.2 billion video viewed in the year. The platform recorded the top 30 highest replays, with HPI in first place, attracting 2.1 million additional viewers to the platform. The strengths of our linear lineup, and I insist on that, is the key driver of our nonlinear development. While contents coming from our linear channels account for today only 50% of our digital lineup on MYTF1, the rest being specific avoid additions. They represent more than 95% of viewer consumptions. This is a key learning for us, which will frame our line of thoughts, on our editorial strategy to underpin our digital acceleration. Our unique ability to exploit our content lineup across our channel portfolio. And between our linear and nonlinear offering is a key enabler of our programming cost efficiency. In 2022, the group's cost of programs totaled EUR 987 million, stable compared to 2021 and in a year in which we broadcasted the Football World Cup. We are maintaining a disciplined approach to our spending while increasing the audience gap with our competitors. For example, as I said before, the audience gap with the main competitor is up 0.7 points versus last year. Beyond cost effectiveness, exploiting the same franchises between linear and nonlinear generate audience synergies. The franchisees awareness built on the linear broadcast emulates demand on our digital platforms. This is particularly evident for event and cellulized content of scripted or nonscripted dramas, with striking examples like Star Academy or HPI or our daily shows. Digital offers a unique avenue to further increase the value of advertising inventory. In 2022, our ad sales team successfully experimented with two lines of actions. First, accelerating the dataization at of our advertising inventory, notably through announced partnership with third-party data providers like Darty or large food retailers, underpinning our CPM increase. In 2022, 37% of the digital inventory sold were enriched with data, enabling a sharper targeting of the advertising messages to our customers. Second, pushing for what we call a total video approach, which, in essence, means building linear and nonlinear inventory commercialization, bundling -- sorry, bundling linear and nonlinear inventory commercialization and leveraging our digital inventory as a way to complement the reach brought by our linear channels to our customers' advertising campaigns. Now Newen, again, delivered strong revenue and production volume growth. In the context of a steady demand for content in Europe, Newen has demonstrated the strength of its business model and its ability to deliver grouping, organic and inorganic growth trajectory. Since we acquired it in 2016, Newen Studios has gone through a profound of successful transformation journey coming from a single genre model fiction very exposed to a single program, [Plus belle la vie] and a single customer [France Télévisions] to now a fully diversified model across multiple indiviual genres across a dozen of European key markets. This was achieved through an intense 5-year inorganic buildup strategy, which enabled Newen to reach a critical size in Europe, and setup itself as one of the leading independent European players on the pan-European scene. In 2022, Newen strengthened its drama offering with the acquisition of Anagram studio based in Sweden and Norway, which provides new and position in the fact expanding market of Scandinavian dramas and developed its documentary lineup as illustrated by the equity investments in the British studio Rise Films in July 2022, which will strengthen the segment's presence in this genre. As part of its broader inorganic development, Newen has developed a unique and differentiated inorganic strategy based on financing high-end creative talents. In 2022, we attracted, for example, Thomas Ocana, from Spain, Teddy Leifer, which produced notably Oscar nominee like All That Breathes. Anne Kolbjornsen from Anagram, Vanessa Djian of Dai Dai Film, a producer recognized for film adaptations of plays, such as Edmond and Adieu Monsieur Hoffmann. These new talent additions will foster an enhanced creative impulse into the group and will be the driving force behind our organic growth strategy. Newen's ability to offer innovative productions and original content in a wide range of genres enables the studio to meet the growing demand for content from long-standing partners like television channels and broadcasters, of course. In addition, this allows us to diversify our client portfolio, particularly through our partnerships with major international platforms. In 2022, business at Newen Studios benefited from the delivery of prestigious productions such as Liaison for Apple TV+ and Marie-Antoinette for CANAL+. Thanks to its strategy and its ability to find talent as well as provide premium content, Newen is able to maintain a high level of book of orders at more than 2,000 hours. In 2023, the segment will deliver highly anticipated series, including Nemesis for Disney and Memento Mori for Amazon. This organic and diversification strategy has proven a real success and transform Newen into a key player in the European production landscape. It posted a very solid performance output with a 27% revenue growth in 2022 half organic and half from acquisitions. Having reached a critical size in Europe, Newen will henceforth, focus on accelerating organic growth, leveraging its widely diversified portfolio of customers, genres and geographies. Now I hand it over to Mr. Philippe Denery, who will provide a more detailed breakdown of our good financial results.

Thank you, Rodolphe. Good morning, everyone. So I will give you an overview of the '22 TF1 Group financial results. You will find the details of our consolidated and parent company financial statements, management report and financial statements appendix on our website, group tf1.fr. Consolidated revenue of the TF1 Group amounted to EUR 2.508 billion at end of '22 year-on-year increase by EUR 80.6 million, plus 3.3%. On a constant structure basis, consolidated revenues were up by EUR 86.3 million, plus 3.6%. Revenue of the Media segment reached EUR 2.798 billion, almost stable, minus 0.6%. Media segment advertising revenue at end of December '22 amounted to EUR 1.669 billion, stable on a constant structure basis. The drop in advertising revenues is entirely due to the deconsolidation of the Unified publisher Livingly Media and Gofeminin activities. Excluding the effect of change in the scope of consolidation, advertising revenues for the fourth quarter were up by EUR 11 million, plus 2.1%, driven by the very good performance of the Football World Cup games. Digital advertising revenue amounted to EUR 128.2 million. It includes MYTF1's advertising revenues, which amounted to EUR 90.3 million, up sharply year-on-year, plus 16.8%. Revenue from other media segment activities rose by EUR 13.7 million, plus 3.4% versus last year. It benefited from the growth of entertainment activities with the resumption of the show activities -- live show activities, sorry. The Newen Studio segment posted for the year a total revenue contribution of EUR 428 million, a sharp increase of EUR 92.3 million plus 27.5%, and this performance includes organic growth for EUR 46 million, plus 13.7%, as Rodolphe has mentioned. The segment performed well in the fourth quarter '22, with revenues up by EUR 14.3 million, plus 12.4% versus 2021. Newen studio activity benefited in '22 from the delivery of prestigious productions, such as Liaison for Apple TV and Marie-Antoinette for CANAL+, as mentioned by Rodolphe previously. The group programming cost reached EUR 987 million, stable year-on-year. In a year, we have broadcasted the FIFA World Cup. And this performance demonstrates once again the group's ability to control its investments while maintaining a powerful and event driven offer. The dramas, movies and series costs decreased compared to last year. The sports, news and entertainment categories are up year-on-year due to the broadcasting of the FIFA, as I already mentioned, the strong political and international news flow and the comeback of the Star Academy Entertainment Show. The group posted current operating profit of EUR 316.2 million, down by EUR 27 million year-on-year plus EUR 2.5 million, excluding the impact of the tax credit allocated in '21. The group current operating margin stands at 12.6%. If you look at by sector operating performance is as follows: the current operating profit of the media sector was EUR 269 million, generating a current operating margin of 12.9%. The current operating profit of Newen Studio was EUR 47.2 million, up by EUR 8.6 million versus last year. The current operating margin was 11% for the year '22. Regarding the income statement, I've already commented on the consolidated revenue, the cost of programs and the current operating profit. Other charges, amortization and provision amounted to EUR 1.885 billion at end of December '22, EUR 100 million higher versus last year, linked with the growth of the production activity and the impact of the one-off tax credit for EUR 29.5 million. Starting from this year, we will publish a new KPI, current operating profit from activities, the COPA, which is current operating profit before amortization and impairment of intangible assets recognized as a result of acquisition. This new indicator will replace the current operating profit in the group's financial communication from '23 financial year. At the end of December '22, the current operating profit of activities stands at EUR 322.2 million. Operating profit came at EUR 301 million after external expense of EUR 15 million of nonrecurrent expenses relating to the merger between TF1 M6 project. Net profit attributable to the group stands at EUR 176 million, down by EUR 49 million year-on-year. It includes losses of the year as well as liquidation losses related to Salto platform for an amount of EUR 46 million. Let's comment on the balance sheet at the end of December '22. Shareholders' equity attributable to the group was EUR 1.863 billion at end of December '22, out of a total balance sheet of EUR 3.643 billion. The group posted a net cash position of EUR 325.7 million at end of December '22 excluding lease obligation. And the group has a sound financial position and confirmed bilateral credit facility for a total of more than EUR 1 billion. Now let's now analyze the evolution of the net cash position. Operating cash flow amounted to EUR 614 million, up year-on-year. This includes depreciation and amortization for amount around EUR 70 million. The amount of lease obligation was globally stable versus last year. The EUR 156.1 million deterioration of operating working capital needs is mainly explained by the increase in programs advanced payment and especially for the Rugby World Cup and the increase in credit notes to be issued and accounts receivable at the advertising sales house, with some pressure on cash from our clients at the end of the year as well as had the fact that the 2 months which were invoiced in November and December will be covered in cash and accounted in January, February. Net capital expenditures amounted to EUR 310 million and is explained specifically by the Newen activity and the integration of new studios, either in Spain, flare in Germany, Anagram in Scandinavia. Acquisition and disposal amounts was positive at EUR 127 million, mainly due to the disposal of Gambettes, [indiscernible] as well as unified publisher activities during the year, net from Newen acquisition. On the financing side, EUR 127 million was mainly due to the EUR 95 million dividend payment in '21 as well as the financing of Salto. The TF1 Group posted a net cash position again at EUR 325 million at end of December '22 compared to a net cash position of a bit less than EUR 200 million in '21. The Board of Directors has decided to propose to the shareholder Annual General Meeting, which will take place on the April 14 to approve the payment of a dividend of EUR 0.50 per share. The payout ratio of the proposed dividend is 60% of the net result. I leave the floor to Rodolphe to review our ESG KPI.

Yes. Thank you, Philippe. In 2022, we renewed our commitment to a more sustainable, inclusive and timely respectful society. On June 30, TF1 Group 2022 signed a climate contract, which strengthens the group's environmental action plan targeting a 30% cut in its carbon emission by 2030. In particular, the group has committed to offering a preferential sales conditions to information campaigns regarding climate change actions and to regularly invite environmental experts onset to involve all employees in the implementation of TF1 Group's climate strategy in 2022, the group introduced an ambitious sustainability training program. The group is targeting to train 100% of staff by end of 2025. Diversity and inclusion, both in our content and internally, have also been top priorities for the group, particularly through expert [indiscernible] and awarded and recognized mentoring program for women in media. The group has also further balanced gender equality at the group management committee, which now includes 48.3% of women. In 2022, these commitments and achievements were again recognized by several leading ESG rating agencies such as Moody's ESG Solutions, which ranked us first in the European broadcasting and advertising sector, and MSCI, which maintained its AA rating. The disrecognition reflects the group's and our very strong commitment on key ESG priorities. Now coming to the outlook with a summary of the strategic orientation. As I said at the beginning of this call, we are entering a new chapter in our history with a three-pronged strategic line. First, as we have always done, we will strive to maximize the value generated by our linear advertising inventories. We believe this line of business will remain very solid in the future. since the reach we produce becomes increasingly differentiated, thanks to our superior program lineup, enabling us to develop our distinctive value for our customers and our pricing flexibility. Second, an enhanced focus on digital. We will accelerate our digital expansion and establish ourselves as the first free-to-view streaming service in the French market. We will leverage our linear content and franchise lineup to underpin our nonlinear digital development, which means, in essence, that our programming costs are set to remain broadly stable. We will strive to maximize the value of our digital inventory by strengthening our data strategy. Third, we will sustain our studio business momentum, but we'll focus on organic growth and value creation. With this road map in mind, the Executive Committee has been strengthened with highly qualified executives with relevant experience and expertise, of course. We are announcing the appointments of Claire Basini as Executive Vice President of B2C activities in charge of digital. Valerie Languille as Executive Vice President of Human Relations and CSR, and Julie Burguburu, as General Counsel. Also Pierre-Alain Gerard will be replacing Philippe Denery as Executive Vice President, Finance, Strategy and procurement, which is not fixed yet, but which is due to -- take place in the coming weeks when the transition pay, which is well ordered transition at this very key position for the group, we are the transition period has come to an end. And I want to thank particularly warmly Philippe for his significant contributions at TF1 and helping me transition into my new role. The outlook now, led by a first-class executive team and our staff is highly engaged in delivering the three-pronged strategic road map I mentioned before and in accelerating our digital expansion. In 2023, TF1 Group will further consolidate its linear leadership and accelerated digital while it's important to note, while committing to delivering a broadly stable COPA profit margin versus 2022. Second, it's cash flow generation focus will be the key undermining factor of our newly set dividend policy, targeting a growing or stable dividend. With that strategic direction, we are very confident in the short-term solidity of TF1 Group performance and on its midterm substantial value creation potential. This concludes our presentation, and I think we are now ready to take your questions.

[Operator Instructions] The first question comes from the line of Jérôme Bodin from ODDO BHF.

Yes, few questions on my side. First, just in terms of Q1 trends. What do you see for the beginning of the year? And if you can give a bit of color sector by sector. Is there some sectors that aren't coming back on TV in Q1? That's my first one. The second one is on cost. So just to make sure I have understood well. So you said flat programming cost. Is it 2023 versus 2022? Then a question on Newen. So you have insisted mostly on organic growth for Newen. So does that mean that the acquisition should remain very targeted? So what should we expect for the nice cash bill that you have? And lastly, a fairly more general question on the TV business. So following the various refusal of consolidation that you had -- that we have in Europe, it seems that most European broadcasters are now designed to stay in their own market and to develop synergies with their nonlinear activities. So what's your view on that? And is the only strategic access for TF1 and for the broadcaster? Or are there any other opportunity that you have identified in France or abroad that you can talk about?

Thank you, Jerome. Well, first question, Q1 trends or trends in revenue for 2023. What we have in mind is that while 2023 well, in terms of revenue profile will be back-end loaded with a Q1, which would be probably a bit more prudent and the rest of the year while having a better revenue profile. In terms of -- well, on the back of a better than anticipated macroeconomic environment. In terms of sector breakdown, what we see is that while the automotive sector is now coming back after a few years of difficulty for us. We also see the pharmaceutical and telecommunication sector well oriented for this year, while evidently, the food sector is a bit more a challenge because of the impact of inflation. But well, all in all, we anticipate this year to be in line with our -- more or less in line with our objectives, well no warning signal at this stage of the year. We were thinking of the annual negotiations we have with our key customers, which represent the vast majority of our revenues, our revenues being framed by annual engagements, we find out that all those discussions are going well and in line with our anticipations. In terms of cost, I insist on that, well, digital acceleration we are making will be done within -- at constant programming cost. As I said, we have an objective to maintain our programming envelope. I said broadly stable in the coming years. Well, not only in 2023, but also in the outer years. Why? Because as I said before, we have found out, and I've brought some points of evidence in my presentation today that the programs that work very well in digital and that attracts viewings of the younger audience on demand are the same programs than the ones that work very well in linear. And it is a bit evident, digital is sector, is an area marked by the necessity of a demand from customers. You don't push the programming as we do in linear. In nonlinear, people have to express a demand and the demand programs with a very strong, very high awareness. And that's why the key franchises that we have pushed and developed on linear television also the ones which work very well on nonlinear. Specific kind of programs kind of genres, that's the program which have been built in linear, which are also cellulized. And that's the key notion on which we insist. We are keeping our programming costs stable. Probably, we will accentuate a bit more the cellulized dimension of the programming we broadcast on our linear channels. But again, this digital expansion will be, for us, a profitable one in the sense that we are leveraging our key expertise and also our programming lineup to exploit. It's not only linear but also in digital. Newen strategy is to focus on organic expansion because, as I said, it has now reached a critical size, which makes it relevant and high-performing on the European scene, we don't discard in principle, targeted inorganic options. But we would be very selected in countries in which we feel we still are lacking well, critical size. But the key focus will be to accelerate or to deliver strong organic growth to maximize the value creation extracted from that line of business. While taking a broader view on the TV landscape in Europe and consolidation, as you have noted well, and I wouldn't dispute that while consolidation at terms across Europe in different countries have turned out to be -- well, denied by the antitrust authorities in many countries, will influence we have to cancel our own project. It doesn't mean that this was the only way to create value. What we're seeing now is that, well, of course, the digital orientation, we are taking and the objective of leveraging our line of program, not only in linear, but also much more strongly in a much more firm way in nonlinear is a very solid avenue to create values for our shareholders. The name of the game in the media business is to make sure you fully exploit your investments in content. And the fact that we can exploit our lineup of content because it's well designed because it works very well, which is very powerful, not only linear but also in nonlinear is a very sound way to maximize the value creation for our shareholders. And to answer plainly, to your question, do we have consolidation or significant acquisition options in the broadcasting sector in France or elsewhere, the answer is plainly no.

The next question comes from the line of Julien Roch calling from Barclays.

[Foreign Language], three questions. So ITV to adapt their business model is investing EUR 150 million more in an increase in 13% of programing costs. M6 last night said that they would reinvest at least the sale to losses at a minimum in programming, which is EUR 25 million to EUR 30 million, so 5% to 6% increase. You're saying no increase because what people watch on demand is the same program as linear. So two of your peers disagree with your analysis. With M6, increasing programming cost, and you flat what's your share? That's my first question. The second question is thank you, Philippe, for better disclosure. We finally have MYTF1 advertising across the program and Newen organic. But we still have no total audience KPI. When will we get total audience KPI? We split between linear and nonlinear, so we can fully assess progress you're making in transforming the business model? That's my second question. And then the third one is on targeted advertising. It's growing, but it's a small base because a lot of the telecom boxes still can't do it, you don't get data from the telecom operators. So why have you not been more aggressive on developing your targeted advertising on the HBB TV standard, which is about 30% of households? These are my three questions.

Well, thank you, Julien, for this for those questions. On your question -- first question, which is very important and it's very important that we clarify our stance and our strategy on this question. We realize, and it's important to insist on that, that our strategy is different from our competitors or the two ones that you mentioned, strategy. Our strategy is clearly to make sure that we fully exploit the linear programming we have invested in into digital. And we admit that on this front, it's different. Because we think, as I said before, that the key principle in the media sector is to fully exploit your lineup of content and to make sure you have scalability effect. And for a local player like us, scalability means that you fully exploit your assets, which is the lineup of programming and the power of your ad sell agency, your internal ad sell house. And probably in that sense, we are different. But it's not only a matter of principle and a matter of strategy and a matter how we perceive the value cushion drivers in our industry. That's also fact based. As I said before, we've tried -- we have made some experiments, and we have learned from our first steps into the digital sector. This year, we have put in line specific content on our MYTF1 service, which is made for 50% of the lineup of content coming from our channels from linear content that's 50% of the lineup in volume. And the rest, 50% of the rest is specific content, AVOD content that we have bought to enrich our MYTF1 digital offering. Looking at the consumption of what people watch on MYTF1 not surprisingly, of course, when you know the business, the vast majority, 95% of the consumption is focused on -- is aggregated on the content coming from our linear channels. Why? Because that's the content, because they have been pushed by the very powerful TF1 channel that's content with the highest awareness and people demand content, they know. They demand big franchises. And with that kind of reasoning in mind that we are convinced that the best approach not only because that's the scalability and the pending factor of value creation in our sector but also because we have realized that what works well is content forming from our linear channel, not every content, but the content which are cellulized, because, of course, you create the franchise online and people are consuming in binge-viewing the rest of the content in nonlinear. And it's particularly true for the younger demographics, which are attracted by the on-demand capability, the on demand new way -- new usage, new consumption. And we admit that with that in mind, we have a very strong avenue of growth in digital and also because digital inventories are in high demand from our customers because they are being less abundant in the pure digital space because of all the limitations that are brought to cookie and the RGPD regulation in Europe. But to sum up, of course, what we want to do is a free-to-view advertising-based streaming service and they become the first free-to-view streaming service. But we are different in the sense that we will leverage one single lineup of content for both linear and digital. And we think that's the widest and the most value creative direction for the future. Question two, I'll let Philippe answer and maybe I'll take question three after.

Yes, okay. Well, concerning the KPIs and the information we can give you, we have year after year, try to improve the different KPI we referred to. I just would tell you that as long as, as you know, we have to update the data as available and find the right KPI to follow on the longer term. So that's what I can tell you today on this specific KPI on total video. I know that this is something on which you are really focusing. And of course, in line with the future strategy and the actual strategy of TF1, it's very important for us to give you, well, more information on nonlinear and linked with the value we get on linear. So we are working on this specific KPI, and we'll come back to you within the next quarter.

Exactly. On the last question you had, Julien, on the targeted advertising and how we create value and what we don't do Hbb TV. Well, two thoughts I'd like to share with you. Well, first, what's the dynamics of value creation for us in advertising in that business. First is to -- first value creation driver is the fact that because we developed a free-to-view streaming service, we are sort of following the evolution of usages which increasingly go for on demand, especially from younger generation. And that's the first source of growth. We're going to grow in volume and to increase our inventory because we are following the evolution of the usage. Second element, second value driver, that's the increase in the cost of the advertising in the CPMs because of the targeting of the advertising brought by data. And in that sense, we have first focused our efforts in our partnerships with the telecom operators in France, and increasingly, we are developing partnerships with them or commercial agreements, should I say, to be more specific with them under which they are giving access to us to the set of data, and we enrich our inventories with data coming from them and nobody that we purchase from them. Second, for people who are not subscribers of the IPTV office of telcos, we could do Hbb TV. We don't discard that, but we focus today mostly on the technology that we find more compelling, which is, of course, OTT, which gives us all the flexibility to provide bespoke environments to customers and to consumers in which we can enrich the inventory, which are provided, which data that we control because of the direct connections we have with the consumers. We do OTT already quite a lot. It represents roughly 50% of our digital revenues today, and it's set to grow in the future.

The next question comes from the line of Conor O'Shea from Kepler Cheuvreux.

Yes. Three questions from me as well. First question, just to come back on [Julian's] question on the programming cost. Just to be clear, for 2023, you say more or less flat. Is that of the 2022 number, which included the higher cost for the [Football Worldcup] right? So we're looking at that number around EUR 987 million. Is that what you expect at this stage? Second question, on advertising in terms of outlook for more or less flat margins and the back-ended acceleration that you expect? Are you expecting at this stage more or less flat ad revenues full year? Is that fair to say? And third question, just on the advertising market, generally, obviously, we've seen post pandemic, a reversal of the audience viewing increases that's been quite aggressive. And we're still tracking down double-digit declines on -- for the key advertising target, housewife under 50. Can you say to what extent that is having an impact on pricing yes or not? And if not, why not? And why the market is holding up better than the viewing numbers for this particular advertising target?

Well, on programming, as I said, our programming cost in 2023 will remain stable versus 2022. Of course, as you mentioned, 2022 included the cost of the Football World Cup but was also almost stable versus 2021, just below EUR 1 billion for the full year. Meaning that what we say is that we have reached sort of nominal level of programming cost at just EUR 1 billion or just below EUR 1 billion, sorry, and our objective is to set that level stable in the coming year. And I even said that we do the same. Our intention is to do the same in the outer years, even though we don't give guidance for that specific KPI. But that's the notion. And I insist on that. It's very important because it seems like it's a very different strategies from the ones that can be followed by others on the marketplace. But it's also because with that level of investment, we have a very, very powerful and compelling lineup of programming, which works very well in nonlinear. And second, with that envelope, we can also propose more cellulized shows, which works well in both dimensions. Second question on the profile of the revenue for 2023, as you know, we don't give guidance for the revenue because of the nature of our business. I think you can understand that well. The elements I can give you at this stage, which are -- well, not with the level of precision you would probably dream of. But well, what we said is that the year will have a sort of two will be -- will present itself in two parts, with the first part, which will be a bit softer than the second part or the second half of the year. And that as I said that the year will be back ended, as you said, back-end loaded, as I said, with two dimension, a Q1, which probably will be a bit soft. Why? Because our customers, the advertisers were a bit prudent at the beginning of the year because nobody knew really well what would be the macroeconomic conditions surrounding this year 2023, which means that everybody was a bit prudent. Now when we look at a bit longer term, meaning well for the rest of the year and the best proxy we have to assess that is the annual commitments, we are negotiating with our customers today. And it seems like, as I said, those negotiations are going well and developing well in line with our anticipation. I'm afraid I cannot give more details at this point in time, unless Philippe thinks I should do. Okay. On the advertising market, and the impact of ratings on the pricing, which is a good question. As you know well, because you are following that sector. In every country, the revenue coming from the linear business of the commercial broadcasters have remained and are remaining stable, even though in every developed countries marked with a development of on-demand viewing, the average viewing time has been in recess. More or less marked or it's more marked in some countries like the U.K. or the U.S., less marked in countries like France and Italy. But in none of those countries, the revenues have been impacted negatively by the erosion in ratings. Why? Our analysis is that what we sell to our customers and what the underpinning factor, the bedrock of our pricing ability is the reach we provide to our customers and the differentiated reach we are providing to them. Our customers, the advertises what they buy from us is they reach the advertising campaigns to build their brand awareness. In a world that's increasingly fragmented in which the audio visual consumption is increasingly fragmented due to the high pace developments of digital video consumption and the attendant decline in television viewing. It's very difficult to get very strong reach from any provider, from any media player. And in that sense, the fact that TF1 is able to provide a reach, which is increasingly important in comparison to its competitors. And that's why we insist so much on the gap between us and our second -- our next follow-up, but it's also true for the gap between us and the pure digital payers. The fact that our reach is so differentiated is the key and defining factor, the predicator, as I said in my introduction of our pricing capacity. And that's what we -- that's why we think that what we proposed to the market is of increasing scarcity, the differentiated reach we are proposing. We are very, very strong in that domain, a much, much more differentiated than before. And it means that our ability to price that rightfully is untouched or even growing.

Just one quick follow-up, if I could. You mentioned timing issues on the advertising side. Just on the studio side, that's visible at this stage. Do you see anything in terms of the order book and the timing from one quarter to the next or the first half versus the second half? That suggests the things we should take into account in our forecasting in terms of timing at this stage?

Well, concerning the studios, I would say that probably the second part of the year should be at a higher level at this first part of the year as well as compared to what has been delivered to clients end of '22. And where there is a good book of order, but the cycle of the studios and production is 15, 18 months. So it will deliver more in second part of the year. Apart from that, I can't say very specific other elements, but that's what you should take in our model.