TF1

The TF1 War Chest Swells and Les Bleus March on

 

• Audience numbers fell slightly in May. However the World Cup boost is coming and will put Q2 numbers on a sure footing.
• The world cup so far has generated record audiences as the French march on.
• During the last World Cup in 2010, TF1 started the year in similar fashion. Down 10.6% from year start to World cup start and went on to return 17% to year end. 2014 YTD down 13.5%.
• Net cash can now be estimated at € 540 million and expected to grow to a billion in a year.(Sale of American discovery/51% sale of Eurosport so far. They have an option to sell the remaining 49% from mid-2015).
• Acquisitions are in sight as the war chest will be used.
• Expected acquisitions are in content (content is king as shown with ITV) and digital where they will look for targets to produce strong margins to replace the profitable Eurosport.
• Returning cash to shareholders has also been promised. A share buyback or a special dividend is on the way.
• French economy bottoming and macro structural change is coming.
• We also expect a gradual recovery in the advertising market. 12 has been a good technical level to Buy with numerous catalysts on the horizon.
• Looking for a PT:15 €.