Friends and Opponents Lay Out Arguments for TF1/M6 Merger

Tim Cross 25 January, 2022 

The proposed merger between major French broadcasters TF1 and M6 has been dealt a significant blow, as influential advertiser trade group Union des Marques has signalled its opposition to the move. The trade group says it will pass its views on to France’s antitrust watchdog and communications regulator, the two bodies which are reviewing the merger. But this blow was perhaps softened somewhat as rival broadcaster France Télévisions lent its support, telling a Senate committee that it doesn’t see the merger as an existential threat.

A merger between two of France’s largest broadcasters might have been a complete nonstarter ten years ago, due to the risk of creating a monopolistic player in the French TV market. But the two companies argue that they each have to compete with significantly larger international businesses – specifically Google and Facebook, for ad revenues.

The Union des Marques however has published a statement opposing this logic. The Union argues that TF1 and M6 don’t directly compete with the big tech players, since digital display and video ads aren’t direct substitutes for TV ads.

The trade body says it surveyed its members and worked with economics consultancy Extent Economics to gauge the interchangeability between TV and digital ads, and found that TV remains an “essential” channel for brand communications. As a result, the Union argues that advertisers need a “balanced and competitive television market”, suggesting that a merged TF1 and M6 could threaten this balance.

These views have been submitted to questionnaires sent out by the two regulators, and the Union says it will soon take part in several hearings where it reiterates these views.

Friends in unexpected places

This statement, coming from advertisers themselves, undermines a key argument made by TF1 and M6 in support of their merger.

But then it’s not really surprising either. Competition between broadcasters forces cheaper ad prices for advertisers, and a merger between two major players could allow the combined company to charge higher prices. While it’s in advertisers’ interests for France’s major broadcasters to survive, it’s not necessarily important that they thrive.

TF1 and M6 will make this case to the two regulators. Ironically, broadcasters themselves have spent a lot of time and effort arguing to advertisers that TV ads aren’t interchangeable with digital ads. But the reality is that TV ad revenue growth has stalled as the digital ad market has grown at a rapid pace, as brands have invested more in data-driven digital ads.

And broadcasters of course aren’t just facing competition for ad revenues. The growth of international streaming services represents another existential threat, which the merger is also designed to counter.

And it was on this front that Delphine Ernotte, president at France Télévisions, lent her support. Speaking before a Senate enquiry on the merger, Ernotte said that if TF1 and M6 believe they need to merge to stay in good shape, they should be allowed to do so. Ernotte added that more should be done to protect France’s audiovisual sector from the financial might of international streamers.

Long road ahead

Time will tell how much weight competition watchdog l’Autorité de la concurrence and media regulator ARCOM put on these respective arguments.

ARCOM president Roch-Olivier Maistre has previously suggested he’s in favour in principle of the merger, describing it as a “natural” and “comprehensible” move.

Previous comments from the competition body however may be more concerning for the two broadcasters. Emmanuel Combe, acting president of l’Autorité de la concurrence, told the Senate enquiry in December that the question of substitutability between TV and digital ads is a crucial one.

“The question of substitutability is fundamental, it will have to be answered,” said Combe. “And then know what the impact on competition will be.”

And l’Autorité de la concurrence might not be the only body that needs persuading. French telco Illiad and broadcaster Canal+ are both pushing for the European Commission to review the merger, another potential roadblock to the union.


About the Author:

Tim Cross is Assistant Editor at VideoWeek.
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