Television Franchise

Good evening, everyone, and thank you for joining us for our H1 result presentation. I'm Rodolphe Belmer, CEO of the group, and along with Mr. Pierre-Alain Gérard, we will walk you through the group's performance for the first half of 2026 before we answer your questions. Let's start with the key highlights on page number three. In H1 2026, the group maintained its clear leadership in Linear, both in terms of audience and in terms of advertising market share, despite a particularly competitive environment, notably with the Winter Olympics in Q1 and the Football World Cup in Q2. Second, our H1 results are in line with our full-year targets for digital growth and profitability against a difficult advertising and regulatory backdrop. Third, the level of COPPA, which stood at 77 million euros in H1, is above expectations and validates the choices we have made to safeguard profitability, notably regarding the football World Cup. Lastly, the group maintained a solid financial position, which gives us flexibility to keep executing on our strategies. in an environment that remains volatile and offers limited visibility, we maintain our 2026 targets. Let's go now into more details in the business review, starting with our media and studio segments, starting with media on page six of the document. In H1, the group maintained its linear leadership across commercial targets. and the TF1 channel or flagship channel kept its significant lead over its main competitor. As I said, this performance is particularly noteworthy given the very competitive environment in H1, including events such as the Football World Cup and the Winter Olympics. This reflects The strength of TF1 editorial offer across all major genres, like entertainment with Les Enfoirés, sports with the Six Nations tournaments, and premium drama with Les Détrancies. News also continued to perform strongly. The 1pm and 8pm buzzings maintained a significant gap versus their main competitor. LCI, our news channel, posted a record audience share in H1 and its best-ever month in March at 3.2% share of the 4-plus targets. And Bonjour is now firmly established as France's second morning show. Overall, the group once again demonstrated the resilience and appeal of its premium content offering. Moving to streaming now, page 7. TF1 Plus continued to show strong momentum a bit more than two years only after its inception. The platform attracted 42 million streamers per month on average in F1, up 20% year on year, and reached a new monthly record of 44 million in June. The platform audience also benefited from the launch of our landmark distribution agreement with Netflix in late June. Early Performance has been well ahead of expectations. On June 25th, we recorded a new daily record of 8.3 million streamers on TF1+, driven by the Koh-Lanta final and the launch of Secret Story, which ranked among Netflix's top 10 titles. Overall, 573 million hours were streamed in the first half, up Almost 7% year-on-year on a site-centric basis. Advertising pressure reached 5 minutes and 47 seconds per hour on average, up also 7% versus H1 2025, and close to our mid-term target of 6 minutes. From a monetization standpoint, CPM stood at 12.5 euros. The platform's attractiveness to both streamers and advertisers translated into a growth of TF1 Plus advertising revenues of almost 20% year-on-year, reaching 109 million euros. The group overall digital revenue, which also includes advertising revenues from TF1 Info and Addressable TV, along with revenues from subscriptions of our TF1 Plus premium offer service, and micropayments amounted to €134 million at 17% year-on-year. Micropayments continued to gain traction with more than 800,000 transactions recorded since the beginning of the year. The ramp-up is still constrained by the roll-out of the offer across telecom operators as it has only been deployed at this stage on SFR eligible set-top-box and more recently, very recently, on WIC Telecom 1. Studio TF1 now, H8, revenue amounted to 124 million euros in the first half, slightly down year on year. As expected, activity this year is mainly weighted towards H2. Studio TF1 continued deliveries to its long-standing partners in France, with content like A priori for France Television. It also co-shooted its international collaborations, including The Teacher for Channel 5, while continuing to diversify its crime picks with the streaming platforms with programs such as Day One for Prime Video. First Half was also marked by the successful theatrical release of Pour le Plaisir, Good Vibes Only in English, the first film distributed in cinemas by Studio TF1 in France, with more than 700,000 admissions. Now I will hand over to Mr. Pierre-Alain Jarre. Thank you, Rodolphe.

Let's now turn to financials in more details. First, revenue on page 10. Group revenue amounted to 993 million euros in the first half of 2026, down 6% like for like, and had constant effects, ahead of market expectations. In the media segment, advertising revenue was 714 million euros, down 9%. The evolution reflects the structural decline of the linear advertising market, exacerbated by advertisers' cautious stance in an unstable environment, and by the exceptional competitive environment in June related to the Football World Cup. In this context, the group managed to maintain its leadership with a market share close to last year's level, demonstrating the relevance of its commercial offering. The launch of TF1 Prime notably helped us extract greater value from our premium primetime inventory, highlighting its unrivaled standing among advertisers. Regarding streaming, as mentioned by Rodolphe, TF1 Plus advertising revenue rose by almost 20% to 109 million euros in the first half, and the overall digital revenue amounted to 134 million euros. Non-advertising media revenue was 156 million euros, down 19% on a reported basis, but slightly up, excluding scope effects related to the disposal completed last year mainly My Little Paris and Play-Doh. At Studio TF1, revenue amounted to 124 million euros, close to the level of last year. International activity was boosted by distribution deals, while France benefited from deliveries to Netflix in H1 2025. Turning now to profitability on page 11. Current operating profit from activities amounted to 77 million euros in the first half, with a margin from activities of 7.8%. This level is above market expectations and in line with our annual guidance. In media, COPAS stood at 81 million euros. The 44 million euro decrease year-on-year mainly reflects the decline in high-margin linear advertising revenue.

Programming costs

totaled 433 million euros, down 19 million euros year-on-year. As a reminder, we chose to maintain premium programming in the first quarter to support the launch of the new TF1 Prime TF1 Reach ad segmentation. In the second quarter, we demonstrated agility on cost in a rich market and in a very competitive environment. This allowed us to limit the impact of the linear declines. As a result, the media margin reached 14.3% in Q2 and 9.3% over the first half. At Studio TF1, Copa amounted to minus 4 million euros. The 10 million euro decline compared to last year mainly reflects bass effects comprising a deal on music assets completed by JPG in Q1 2025, deliveries to Netflix in H1 2025, and a delivery schedule of high-margin TV movies more weighted towards the second half of the year. Overall, first half profitability confirms the group's disciplined execution in a challenging environment. Let me now move to the income statement. I have already commented on revenue and COPPA. Operating profits stood at 70 million euros. No particular one-offs to highlight beyond the amortization of the PPA related to JPG. and non-recurring costs related to digital acceleration. Net profit attributable to the group excluding exceptional tax surcharge came in at 56 million euros, down 37 million euros year-on-year. The impact of the 2026 finance bill amounted to 5 million euros in the first half, including 3 million euros already recognized in Q1. Net profit attributable to the group including exceptional tax surcharge was 51 million euros. On page 13, our balance sheet remains a key strength to navigate an unstable environment while accelerating our digital transformation. Net cash reached 432 million euros at end June. The evolution mostly reflects the dividend payment by TF1 of 132 million euros in April and free cash flow after working cap of 57 million euros in H1. A brief technical note to his comparison with last year. The group has changed its assessment regarding French drama co-production with the development of streaming and notably the acceleration of our OTT distribution strategy as illustrated by our partnership with Netflix. The broadcast rights now carry greater economic value to the co-production share. As a result, a larger portion of drama acquisition cost is now recognized as inventory rather than capitalized as intangible assets, mechanically reducing both capex and the corresponding amortization charges by approximately 40 million in H1. The symmetrical inventory increase unwinds as content is broadcast and consumed, which is precisely what happened in H1, explaining why the reclassification has no impact on working cap. And of course, as this is purely accounting, This change of estimates has no impact on free cash flow after working cap. And now, back to Rodolphe.

Well, thank you, Therana. Let me conclude with our outlook. In the media segment, TF1 will continue to offer the best of free, family-oriented and serialized entertainment. Key highlights will include iconic franchises such as Koh-Lanta and Star Academy, which perform particularly well in digital and among younger audiences. The group will also benefit from a strong slate of premium drama, including Cat's Eye Season 2, La Cible, and La Contesse de Monte Cristo. In sports, the second half will feature a solid lineup, notably with the matches of the French national football team and the nation's championship in rugby. In digital, the three initiatives that we launched recently are expected to further contribute to our Revenue Acceleration in H2. First, with the distribution partnership with Netflix, which is live since late June and delivering early performance well ahead expectations. Second, the deployment of our MeetTel solution through our TF1 ad manager platform. We have recently strengthened our local commercial footprint with partnerships with partners like Cities Media in June to commercialize locally our local inventories. This agreement gives local advertisers access to TF1 Plus and addressable TV solutions through combined offers, thus supporting revenue growth with SMEs and retail networks. The continued ramp-up of micro-payments supported by the roll-out of the offer across operators' sector boxes. For Studio TF1, activity will again be weighted towards H2, notably due to Studio TF1 America's delivery schedule. The theatrical film distribution division in France has four additional releases planned in the second half, de Jean Moulin's biopic starring Gilles Deluche, which was part of the competition lineup of the Cannes Film Festival. Turning to slide number 16, in a context where visibility remains limited and with the lean advertising market still under strong pressure in France, we confirm our 2026 targets. Strong double-digit revenue growth in digital in 2026. Maintain a mid to high single-digit margin from activities before capital gains in 2026, subject to the evolution of the linear markets. Aim for a growing dividend policy in the coming years. We remain disciplined on cost, focused on digital acceleration, and we capitalize on our solid balance sheet to navigate these complex environments. That's all for this introductory presentation, and we are now, with Perrin, ready to take your questions.

Thank you. This is the conference operator. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and 1 on their touch-tone telephone. To remove yourself from the question queue, please press star and 2. Please pick up the receiver when asking questions. Anyone who has a question may press star and one at this time. The first question comes from Christophe Charblon with Bernstein. Please go ahead.

Yes, good evening. Thanks for taking my question. I have quite a few, so I'll keep it to three. The first one is on the dividend. You're committing to a progressive dividend policy. Without giving precise numbers, what is the level of margin you need to reach to fully cover the dividend in 2026? That would be the first question. And related to that, if that was not the case, are you happy to pay out more than 1% of profit? The second question is on the... the consolidation of the market. We've seen in Germany and in the UK the convergence between pay TV players and free-to-air broadcasters. Do you think that's something that could make sense in the French market, or do you see specific features in the French market which are such that it doesn't make sense? And the last one is just on the studio. you mentioned the decline in H1. Is it fair to expect that on a full year basis, the COPPA of studio will be back to the level we saw in 25 with a double digit margin? Thank you.

Well, thank you, Christophe, for this set of questions. Maybe I leave the question on dividend to you. On market consolidation, maybe a status on this topic, as you said, we've seen a wave of consolidation between pay and free broadcasters in Europe. We have looked at that quite in detail, analyzed those transactions, those evolutions. What we think and when we try to analyze what would be the level of synergy, we estimate that the level of synergy that we would have in France in such a scheme would be quite low and not totally certain that it would create value for our shareholders, given the very small overlap between our lineup of content and the lineup of content of the Play TV players in France, which are very, very distinct and different in our business. The core of our cost base lies in the content cost, of course. Studio, well, the lower performance in H1 is mostly due to phasing effects, and we expect to return to a nominal performance trajectory in H2. Yeah.

And regarding dividend, you're right. We don't have a policy in terms of payout. And as you said, we were aiming. It's an objective, but it has to be reassessed each year. You have noticed, and you're not the only one, that we have a stronger net cash position and we are capitalizing on that when we say that we aim to increase the dividend.

So to be clear, you would not exclude to pay more than 100% of profit into dividend because you've got such a high net cash position or is it a no-no?

It's reassessed. It will be reassessed depending on the market, on the outlook, etc. It's not something that will be automatic.

But what we can say is that we don't have will have specific principles and will have specific cap regarding our net results. I think that for the moment, what we said is that we reiterate, we confirm our guidance in terms of profitability, and we also confirm our guidance in terms of dividend policy. Of course, it has to be reassessed each year by the board of directors of TF1, but the policy is constant. and we estimate that we will cover our dividend policy with the profitability of the group in the immediate future and we don't have cap in case it wouldn't be the case. It was not the case.

Okay. Thank you. I'll jump back into the queue.

The next question comes from Eric Havary with CIC CIB. Please go ahead.

Yes, good evening. Thank you for taking my questions. I have three questions.

First one is on the advertising outlook.

I know that you don't have research visibility on September at this time of the year, but the question is more your sentiment on the advertising trend for the last four months of the year and any change in the mood of the advertisers. And also the basis effect, we know that the Q4 2025 was weak, so it should offer a positive basis effect. So could you give some comments on these prospects? Second one is on your programming cost cutting. In Q2, was it just in June to make some tactical savings versus the World Cup, or was it more broad-based over Q2? And so could you consider further significant programming savings in H2 beyond the World Cup in July? and last question is on the what is the announcement of Two contracts that were terminated, one with Canal Plus on the distribution of your small BTV channels and the second one with the independent radio networks on advertising sales. Could you please quantify the impact both on revenues and EBIT of these contracts? Thank you.

On the advertising outlook, as you know, it's very difficult to give a firm outlook for our market, which tends to be increasingly marked by low level of visibility and forecastability. I don't know if it's pure English, but you understand the notion. Still, when we look at the estimates, provided by consulting firms specialized in our sector which tend to converge towards a market that should evolve in the linear segments around minus 10% for the full year and in total if we include digital minus 6% for the total market we think that this view is fair and we more or less share that perspective. And for TF1, we're very big. We represent almost 50% of that market, the television advertising market, meaning that we more or less, with some nuances, evolve like or in the same kind of trending line. And for the moment, there is no real improvement in the trend of the markets that we can see around the corner in France. Programming cost, we have just, well, first, our strategy, our intention, our objective is to to be able to continue to finance a superior line-up of contents over time because that's the bedrock of our superiority and of our leadership on our market. Meaning that our view is to be able to or is to strive to fight for the sustainability, the perinity of our programming costs. Of course, we have to adjust that principle to the reality and to the evolution of the market and to the evolution of the demand of our customer. We have adjusted slightly our programming costs in Q2 to adjust to a very low level of demand, mostly because of the World Cup broadcast by our competitor and of course we will adjust in the same way tactically in the second half if the market turns to be less solid than what we expect but for the moment we don't have plans of that kind but we want to preserve the agility that's needed to protect our profitability in case The market turns out to be less positive than what we expect. Well, contract with Canal+, it's a small contract. No single digits. There's a million of euros annually. And the independence, the conservation contract that we ask for the advertising of the independent radio stations in France. Again, in terms of impact at the local level, it's a mid-single-digit level, million euros annually. Not good news, of course, but it's a bit insignificant at the group level.

Okay. Thank you. Thank you.

As a reminder, if you wish to register for a question, please press star and 1 on your telephone. For any further questions from the phone call, please press star and 1 on your telephone. There are no more questions from the phone call, so we have questions from the web. from Alexandre Desprez. What is the reason behind the LFL decline in non-advertising revenue in media?

Maybe I let Pierre-Alain who has already started touching upon this question in his presentation answer in more details to your question, Alexandre.

Maybe I wasn't completely clear, but if you remove the perimeter and back from the sale of My Little Paris and Play 2, the revenue from a non-advertising media segment is up, slightly up.

It's not a decrease. We divested last year, you remember that, two small non-core companies that we had last year, one called My Little Paris, And the other one, it was played to in the music publishing business.

And if you do the math between the minus 6% and the minus 10% reported, you find that it's around 40 million perimeter effect.

We have a follow-up question from the phone call. Mr. Christophe Charblanc with Bernstein. Please go ahead.

Yeah, thank you. I'm just using the opportunity. I just wanted to follow up on a smaller issue, which is the digital ad revenues. Is it fair to assume that the Netflix collaboration you mentioned that, you know, the audience, the traffic was above expectation, is it fair to assume it did not generate any significant revenues in Q2 and that we might see benefits more in Q3 and Q4?

Yes. Yes. Well, we launched only on June the 18th with a ramp-up, as usual, of the service across Netflix subscriber base, which took a few days, meaning that, well, in the second half, we had literally only, well, a dozen days of service of TF1 Plus on Netflix. We couldn't perceive any revenue impact in H2. We will see some revenue impact in H2, and we think based on the early results that we can already experience with Netflix that it will help accelerate the revenue growth of TF1 Plus and bring it back to a very solid double-digit growth in terms of revenues. In H1, without Netflix, we enjoyed revenue growth We deliver the revenue growth of 19%, and you should expect that number to significantly increase on the back of our distribution deal with Netflix, which is very successful, and also on the back of the early days of our mid-sale developments over H2.

Okay. Thank you.

You don't have a fifth one, Christophe?

I can. I just want the World Cup, just what is, I'm not sure you're going to give precise number, what is your estimate of the money that went to the World Cup event and Do you feel that that distorted the market in some way at the end of Q2 and in July? I think in the release you mentioned you lost one point of market share in H1. So is that just the World Cup or is there any non-World Cup impact?

What we tried to convey in our press release is that despite the impact of World Cup, we were able to overall maintain our market share of the advertising market since we lost only 0.7 percentage points, which is from a basis of 47%. It's a very low impact that we had despite the importance of the event. That's what we meant.

Okay. So that's about 50 million of extra reviews for M6, above and beyond what they would have done without the World Cup, right?

Well, I don't know how you do your math, but probably you should use your Excel Tumblr. Because if you do 1.5, 1.4%, we have 50% market share. We lost 0.7, meaning that our companies might have at the best 1.5% market share overall over the first half. On the market in the first half, which was of 1.2 billion euros in total.

Thank you for that, according to estimates.

Yeah, 1.4 million euros. Yeah, 1.4 million. If you do the math, it's a factor less than 50 million. It's 15 million, not 50. Well, it's not an estimate that I make. I'm just doing some math with you because it's funny.

Yeah, okay, okay. So we'll see what they say on their call.

Thank you. There are always many ways to present the revenues driven by a sports event of that kind. But what's important at the end of the day is what incremental market share you generate or you lose. on the advertising market, and this increments. How does it compare with the cost, the incremental cost of this event compared to your usual line-up of content? That's how you should assess the profitability of such events. It's very difficult to analyze, but well, as I think the incremental, market share over the year, for instance, and assessing the increment of cost and comparing the two elements, that's the good way to assess the real profitability of this kind of spending.

Agreed.

Thank you.

Thank you, Rodolphe.

The next question is a follow-up from Eric Havary with CIC CIB. Please go ahead.

Yes, thank you. I have a follow-up question, I guess, for Pierre-Alain. It's on the working cap requirement. I remember that at the beginning of the year, you mentioned that the working cap would weigh on free cash flow this year with some exceptional payments that have been TV rights and the impact of their new TV advertising offering. So on H1, I see that the working cap is neutral. So could you make an update on this point?

It's true. I said that at the beginning of the year, and it's still true, but usually you find that the working cap requirement is rather positive on the first half of the year and rather negative during the summer and most part of Q4. So it's not very surprising.

There are no more questions registered at this time. Mr. Belmer, back to you for any closing remarks.

Well, thank you, and a very short closing remark in the form of a summary. In an environment that remains very volatile and offers limited visibility, our leadership position, our digital momentum, and our strong balance sheets provide a solid foundation for the rest of the year. Our priorities remain clear and unchanged, and we confirm our 2026 targets. Thank you very much for attending today's presentation, which was quite late, just before the weekend. Thank you for taking the time and see you in a few months.

Thank you very much.