1

construction of a construction of a public television group :public television group :

France TélévisionsFrance Télévisions

By Marc SCHWARTZBy Marc SCHWARTZDeputy Director GeneralDeputy Director General

International Symposium “Media on the Move”International Symposium “Media on the Move”Taipei – Sept 20-21 2004Taipei – Sept 20-21 2004

2

France’s leading broadcaster

Source MEDIAMAT - 2003

Others

39,5%

4 y

.o. a

nd

mo

re

.

31,5%

10,9%

12,6%

1,8%

3,7%

3

premium channels

advertising

thematic TV channels production

other

multimedia distribution

international

France TV Group

4

France 2, founded in 1964 is a national general-interest network broadcasting 24 hours a day.

France 2 offers a broad range of quality programming and fulfils an ambitious, threefold mission : to inform, entertain and educate all audiences.

With an audience share of 20,5 %, it is the leading public broadcaster.

Terrestrial networks with distinct identities

the general public channel

5

France 3, founded in 1973, is a national and

regional general-interest network with 13 local stations and 24 local news desks.

Its regional programming has made it France’s most acclaimed network (approval rating of 76%).

France 3 broadcasts nearly 18,000 hours of programming yearly, including 11,000 hours of local programming.

Its editorial guidelines are based on 3 directives : local communities, discovery, and innovation.

With an audience share of 16,1 %, France 3 has stabilised its audience.

Terrestrial networks with distinct identities

the regional and local general-public network

6

France 5, the knowledge and educational channel, is a window open on the world and contemporary society.

Decode...comprehend...and learn : these are the watchwords of a channel aiming to arouse the curiosity of its viewing audience.

With an audience share of 2,9 % (6,3 % on its terrestrial broadcasting schedule between AM 6.45 and

PM 7.00), France 5 has been progressing steadily, year by year.

Terrestrial networks with distinct identities

the resource channel

7Terrestrial networks with distinct identities

the overseas network1500 professionals, divided on three oceans and in 10 stations comb the colors of the world on the televisions and radios of RFO

17 TV channels with 2 TV channel brands Télé-pays and Tempo, and 10 radio stations 24 hours a day

Through its stations, RFO broadcasts programs which circulate and exchange thanks to a powerful satellite network, which makes this company the first audiovisual force of French overseas territories.

8

financial datafinancial data

9

programming costs1515,6 M€

breakdown by channels

712,8 M€ 706,3 M€90,2 M€

6,3 M€theme channels

Documentaries, theatre, spectacles

Games, entertainment

breakdown by themesNews

Magazines

Drama

Sports

Cinema

Others

Youth

110 441

240

232

5881

41

140

174

financial data

10

the French TV advertising market

54,4%

22,2%

Others

0,9%

11,7%

8,6%

2,2%

Source : SECODIP 2003

21,1%

financial data

11

key financial data

(M€) 2003 2002licence fee 1 499,5 1 470,5 2,0%

advertising 710,5 677,4 4,9%

total turnover 2 372,0 2 282,1 3,9%

ebit 40,3 35,1 14,8%

net income 14,2 53,2 -73,3%

cash flow from operations 117,0 106 10,4%

equity 345,8 331,5 4,3%

net cash / (debt) 114,8 106,7 7,6%

Growth %

ebitda 158,8 165,0 -3,7%

financial data

12

* In

clud

ing

the

varia

tion

of d

epre

ciat

ion

on s

port

s rig

hts

programming costsConsolidated data (M€) 2003 2002

news 127,2 127,1 0,1%sports * 102,2 93,7 9,1%programs 483,3 463,8 4,2%

France 2 - programming cost 712,8 684,6 4,1%

national news 48,7 48,3 0,9%sports * 64,4 66,5 -3,2%local programs 306,5 294,6 4,0%

France 3 - programming cost 706,3 688,7 2,6%

magazines 45,1 46,2 -2,3%documentaries 31,4 27,2 15,2%others 13,7 11,9 15,1%

France 5 - programming cost 90,2 85,3 5,7%

CFI - programming cost 4,9 - -

Other broadcasters - programming cost 1,5 4,9 -69,5%

France Télévisions - programming cost 1 515,6 1 463,5 3,6%

national programs 286,7 279,2 2,7%

financial data

Growth %

13

terrestrial TV channels : individual accounts

(M€) 2003 2002 2003 2002 2003 2002

turnover 1 049,4 1 019,8 1 096,2 1 077,4 163,3 148,7

licence fee 608,0 596,3 756,2 741,9 132,8 126,3advertising 396,0 378,2 277,0 268,7 28,1 20,3

programming cost 712,8 684,6 705,8 688,6 90,2 85,1

ebit 23,7 39,4 5,0 5,1 5,1 3,1

financial income 2,5 0,1 -1,6 -4,6 -0,5 1,9

exceptional income 6,0 -9,5 6,7 19,5 1,7 -3,8

net income 28,8 27,1 8,4 20,5 4,4 1,0

consolidated EBIT 23,4 28,7 9,7 11,9 4,8 5,5

consolidated net income 14,0 17,2 6,5 -1,0 4,6 3,1

financial data

14

- reinforcement of equity : 345,8 M€ at year-end 2003, + 66% in 4 years- net financial debt : - 67% in 4 years

204

242277

332346

245170 191

126 110

120,1%

70,1% 68,9%

37,9%31,7%

0

50

100

150

200

250

300

350

400

1999 2000 2001 2002 2003

equity (M€) net financial debt (M€) Gearing ratio (net debt / equity)

financial data

a strong financial position

15

constitution constitution of the groupof the group

16

from ORTF to France Télévisions... (1/2)

1964 Act : creation of the French Radio-Television Office (ORTF)state monopoly on radio and television broadcasting

1974 Act : dissolution of ORTF - setting up of seven public industrial and commercial organizations, including :

- 4 national program companies (Radio France, TF1, Antenne 2, France Régions 3)- 1 organization in charge of broadcasting (Télé Diffusion de France)- 1 production company (Société Française de Production)- 1 audiovisual archive center (Institut National de l’Audiovisuel)

1984 : end of state monopoly - launch of 2 commercial TV channels : - La 5 (free-of-air TV channel) - Canal + (pay TV channel)

1986 Communication Act :- setting up of CNCL (regulator for audiovisual sector)- privatisation of TF1- end of SFP and TDF monopoly (now both privatized)

Historical highlights

17

1989 : « common presidency » for Antenne 2 and FR3 - creation of the Audiovisual Superior Council (CSA)

1992 : Antenne 2 and FR3 become France 2 and France 3 – creation of France Télévision brand name

1994 : La 5, the commercial TV channel goes bankrupt and is replaced by La Cinquième, a public information and educational channel

2000 Act : reinforces the audiovisual public sectorestablishment of France Télévisions holding company which owns France 2, France 3 and La Cinquième, and 30 subsidiaries

2001: Group financial managementfirst consolidated accounts, tax integration, cash pooling, reinforcement of the information management tools

January 2002 : - 5-year contract with the government on « Goals and Means of France TV 2001-2005 »- new visual identity - France Télévsion => France Télévisions- La Cinquième becomes France 5

2004 : RFO’s integration to France Télévisions

from ORTF to France Télévisions... (2/2)

Historical highlights

18

the « organisation charter » of France Télévisions

the channel directors are responsible for the editorial policy and programming choices and the the day-to-day management of their company (eg. Human resource & Budget)

the Chief Executive Officer define the scope of delegation in fixing limits of intervention. In case of divergence, especially about programs, he makes the final choice

a large scope of competences delegated to channels directors

The holding company

the autonomy of subsidiaries

a strong coherence through common planning and reinforced harmonization

a collegial structure in the management of the group (Executive Committee)

three principles

the channel directors :

take part in the boards of the holding’subsidiaries when those are in relation direct with them

participate to France Télévisions’ Board of Directors and take part in debates on the strategy of the group

are responsible for transverse missions aiming at controlling joint projects

a collegial decision-making in order to maintain the coherence

19

France Télévisions’ organisation

The holding company

Board of Directors

FRANCE 3

Board of Directors

RFO

Board of Directors

FRANCE 2

Board of Directors

FRANCE 5

Board of directorsFRANCE TELEVISIONS

- appoints the premium channels’ Director Generals

- deasl with all the questions linked with the 5-year contract with the Government

- approves the TV channels’ budgets

- distribute the licence fee between the channels

France Télévisions’ Board of Directors :

+ all the traditional missions of a holding’s Board of Directors

- all the traditionnal competences of a Board of Directors, except those assumed by the holding’s one

- especially deal with all the questions linked with editorial content (audience shares, strategy of programming, acquisition of programs…)

TV channels’ Board of Directors :

20

what does the holding company do ?

the holding France Télévisions SA missions setting the group’s strategic orientations

coordinating and promoting the programs and services offer

carrying the development policy (domestic & international)

managing France 2, France 3 and France 5 common affairs

elaborate and conduct the group financial policy

exert all the shareholder’s competences (appoves budget, financial reports…)

receive and distribute the public funds between the TV channels

the holding financial competences

The holding company

organisation of France Télévisions’ holding 7 specific divisions : programs strategy, diversification, communication, public relations,

finance, human resources and internal audit

5 common divisions for the group and the channels : research, international, legal affairs, program acquisition and sports

21

financial calendar

Organisation de la fonction financière

monthly

repo

rtin

g

quarterly

cons

olid

ated

man

agem

ent

char

tsbo

ard

of d

irect

ors

half-yearlyco

nsol

idat

ed a

ccou

nts

actu

alis

ed fo

reca

sts

on

yea

r-en

d fin

anci

al re

sults

yearly

Gro

up y

early

acc

ount

s

corp

orat

e in

com

e ta

x re

turn

bu

dget

22

corporate governanceaudit committee of the board, created in 2001

• four to five meetings per year• main topics : (1) consolidated accounts, (2) acquisition of programs, (3) news programming costs,

(4) advertising and merchandise exchanges, (5) cash management, (6) internal control, (7) human resources procedures

Creation of an internal audit direction• annual audit plan validated by the audit committee on september 2003

• accomplished missions : acquisition of programs, non-core purchasing, advertising and merchandise exchanges, audit of several subsidairies….

application of the French Financial Security Act (equivalent of the Sarbanes Oxley Act)• process lead by the internal audit department• process : (1) risk analysis, (2) creation of a working group, (3) settlement of an auto-evaluation

questionnaire for sociétés anonymes (SA) of the group, (4) delivery of reports (for each SA) and of letters on the evaluation of the internal control on risk management (for each entity)

reinforcement of the management tools and settlement of new procedures• production of a wide scope of financial information, through monthly, quarterly and half-year reports• settlement of actualised forecasts on year-end financial results, within the year

• settlement of new procedures• harmonization of the information management tools : ERP project with a group dimension (Oracle e-

business suite)

Constitution of the group

23

a better use of our resources : the Synergia plancost-reduction and cost-cutting objectives of 170 M€ between 2001 and 2005, through : • creating value through cost reductions program derived from the

size of the group and/or derived from mutualization of means)

• creating value within the channels (cost killing programs)

• no net increase of staff during the 5-Year contract

operational subdivisions : • non-core business purchasing• diffusion costs• non-core business departments • sports• news

•acquisition of programs•co-productions & management of the stocks of programs•production department

Growing cost-reduction and cost-cutting results :

15,2 M€ in 2001 24,0 M€ in 2002 48,3 M€ in 2003

A few examples :- 30% decrease on mobile phone prices, - decrease of almost all the recently renegotiated sport rights- launch of information tool group projects on financials and human

resources

The holding company

24

Marc SCHWARTZ+33 (0)1 56 22 60 12

m.schwartz@francetv.fr

France Télévisions7 esplanade Henri de France, 75907 Paris cedex 15www.francetelevisions.fr