1. www.idate.org TV broadcasting : is it time for a consolidation opening the way to pan-European players ? Laurence Meyer Head of the Media Economics department IDATE

2. www.idate.org 2 The World TV market: sustained growth over the last decade … AAGR : 9,2% Source : IDATE

3. www.idate.org 3 The World TV market: but major differences in the way TV is financed Europe : Subscription TV has driven the market USA : TV adv. spending has been the main growth factor Source : IDATE

4. www.idate.org 4 The World TV market: an inevitable transition to digital… Source : IDATE

5. www.idate.org 5 The World TV market: more than 200 million digital TVHH by the year 2010

6. www.idate.org 6 The World TV market: and a number of multichannel homes continuously growing Terrestrial TV reception is loosing ground Source : IDATE

7. www.idate.org 7 The World TV market: a sector marked by numerous technical and commercial innovations … The launch of DTV Investments in digital network roll-out Additional cost caused by analogue/digital simulcast Additional cost induced by increasing competition Additional cost resulting from market « fragmentation » A wider range of services: More thematic channels NVOD Enhanced TV Transactional iTV services (T-commerce, T-banking, Games) VOD Commercial/marketing innovations Towards the « TV à la carte » concept Cable : « triple play » offerings The potential threat of alternative « broadband » networks Significant investments in content and network upgrading

8. www.idate.org 8 The World TV market: a dynamic which has not engendered significant international expansion … USA Europe RoW Walt Disney Viacom AOL Time Warner Bertelsmann Vivendi Universal News Corp. 2001 Turnover geographical breakdown

9. www.idate.org 9 Market restructuring Major media players in trouble Consolidation under way: 2001-2002: hard times for audiovisual Inflation in audiovisual rights (notably in sport and cinema rights) « Free fall » after over- evaluation on the Stock market Gap between the offerings proposed and the customers’ expectations Slow down in the world TV markets’ growth + Over-investment due to digitisation and convergence

10. www.idate.org 10 Consolidation under way: a TV market « held up » by a diminished growth rate in the TV advertising market and a lower increase in digital TV subscriptions Source : IDATE

11. www.idate.org 11 Consolidation under way: a trend towards concentration rather than geographical expansion Services closing down Market leaders announcing record losses Mergers and acquisitions on the rise

12. www.idate.org 12 Questions arising from the current situation … KEY QUESTIONS Is it time for consolidation to open the way to pan-European players ? Is there going to be enough space for new players ? What are Europe’s main advantages compared to the USA when considering the transition to digital ? Underlying questions Is the European TV market at the beginning of the consolidation and restructuring process or, is it now on the way to « stabilisation » ? How will a slower than expected transition to digital impact the sector ? Is the place of « historic » media players going to be in anyway reinforced ? How the current troubles encountered by the major media players will impact the whole value-added chain, and particularly « upstream » market players ? What exactly could/will consolidation bring to European market players ? How then would be likely to perform Europe on the world TV market? 123 …