M - Lagardère

LAGARDERE ACTIVE
A focus on Radio
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SUMMARY
ÎKey figures
Î Radio in France
z
z
z
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Advertising market
Competitive landscape
Europe 1
Music radio stations (Europe 2 & RFM)
Perspectives
Î Lagardere Active Radio International (LARI)
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KEY FIGURES
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Key figures
Î Lagardere Active – consolidated
(in Euro millions)
Revenue
Operating income
2002
2003
568,0
14,0
580,0
27,0
Î Lagardere Active Broadcast – consolidated
(in Euro millions)
2002
2003
462,0
23,3
509,0
32,4
var.
272,0
10,7%
287,4
5,7%
op. margin
37,2
13,6%
40,0
13,9%
Revenue
Operating income
Î Radio activities
Revenue
Operating income
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RADIO IN FRANCE
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Advertising market… revenue breakdown per media / country
FRANCE : #1 radio market in Europe (along with the UK)
Radio
Television
Consumer
Magazines
Newspapers
0%
France
6
10%
20%
Germany
30%
13 %
31 %
31 %
12 %
40%
50%
UK
60%
70%
Italy
6%
14 %
27 %
32 %
21 %
12 %
21 %
30 %
21 %
16 %
15 %
14 %
26 %
19 %
26 %
80%
13 %
90%
100%
Spain
Advertising market… still very dynamic
Î Advertising revenue + 15 % for radios between 1999 and 2003
vs. + 12 % for TV and + 3 % for plurimedia
Î Market share for radio growing from 7.0 % to 7.9 % of total plurimedia
advertising revenue over the same period
Radio advertising revenues in France
8,0%
760
720
7,5%
M€
700
680
7,0%
660
640
6,5%
620
Market share in plurimedia
revenues
740
600
6,0%
580
1999
2000
2001
2002
2003
Source : IREP
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Advertising market… outlook
Î2004 : + 4.8 % increase
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Radio benefits from strong competitive advantages
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„
flexibility adressing advertisers’ demand for reactivity
ability to provide measurable returns on ad spending
(TV-like approach : agencies going for the cheapest GRP cost)
Î 2005 : + 2.9 % increase and a stable market share for radio (1)…
… despite a very challenging H1 comparison basis (+13% in H1/2004)
Î Mid and long-term
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Radio in France remains a simple and solid media
with unrivaled morning audiences
(1) Ad Barometer (BIPE / Interdeco, sept. 2004)
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Advertising market… trend
Million euros
1200
Annual growth rate
15%
1000
10%
5%
4.3%
800
4.8%
2.9%
600
0%
400
-5%
200
-10%
0
1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005
Source : Ad Barometer (BIPE / Interdeco, sept. 2004)
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Competitive landscape … a concentrated market
Î 13 networks attract more than 80 % of commercial radio audience
… of which 10 owned by LAGARDERE + RTL + NRJ
Female
Young
20
25
30
35
40
Male
10
45
50
55
Seniors
5
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(audience ratings 1996 – 2004)
CA (%)
no- de- 04
se- oc- 04
av- jn- 04
ja- ma- 04
no- de- 03
se- oc- 03
av- jn- 03
ja- ma- 03
no- de- 02
se- oc- 02
av- jn- 02
ja- ma- 02
no- de- 01
se- oc- 01
av- jn- 01
ja- ma- 01
no- de- 00
se- oc- 00
av- jn- 00
ja- ma- 00
no- de- 99
se- oc- 99
av- jn- 99
ja- ma- 99
ja- ma- 98
av- jn- 98
se- oc- 98
no- de- 98
no- de- 97
se- oc- 97
av- jn- 97
ja- ma- 97
no- de- 96
se- oc- 96
(%)
EUROPE 1… Lagardère’s flagship radio station
Îan innovative ’’News & Talk’’ format
Story of a recovery
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11
10
9
8
7
6
AS (%)
Source : Mediamétrie
EUROPE 1… a strong franchise
ÎTargeting high education & high income audiences
Î A unique blend of expertise, positioning and brand
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a high barrier to entry
a kind of TF1 equivalent in the French radio landscape
a long lasting model
EUROPE 2 and RFM… improving profitability
Î National network, Europe 2 and RFM getting closer to filling the gap with
main competitor NRJ
OPERATING MARGIN - NATIONAL OPERATIONS
60%
50%
40%
30%
20%
10%
0%
2001
2002
LAGARDERE ACTIVE FM
13
2003
NRJ GROUP
Radio in France… perspectives
Ϋ Paquet Telecom » new regulation
Î TV ad market open to retail sector starting 2007
Î Additional regulatory changes to come …
Î From analog to digital broadcasting
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(LARI)
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LARI - 18 stations in 7 countries… 27 million listeners every day
Poland
Czech Republic
Germany
Russia
South Africa
Romania
Hungary
Current & future EU members
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Others
Leadership positions
n° 2 in Russia (M)
M
Music
N&T
News&Talk
n° 1 in South Africa (M)
n° 2 in Poland (M, N&T)
n°1 in Czech Republic (M, N&T)
n° 1 in Sarreland (M)
n°1 in Romania (M, N&T)
Rank among private stations ∼ daily reach Monday to Friday
LARI is tapping markets representing a potential of 270 millions inhabitants
and close to 1 Billion $ of radio advertising revenue*
* ZenithOptimedia December 2004 – excluding Germany
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A global approach for a multi-local strategy
Î Lagardère’s industrial know-how
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programming / marketing / network devlpt & mngt / sales organization ...
a key competitive advantage to create and develop 100% local stations
„
„
„
local brand
local programming
local management
Î Ideally positioned for implementing a winning radio strategy
on a country per country basis
New licences / Frequencies
Business extension
+
Segmentation
Leverage existing
back office & sales force
Existing leading
LARI' s platforms
Consolidation process
underway
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LARI ‘s underlying profitability
Operating margin
2003
as reported
2003
proforma*
2003
100%
4,4%
8,4%
12,4%
* Based on 2004 equity stake levels
Major changes occured in 2004 :
9 Russia – Europa Plus, from 60% to 100% (consolidated proportionally before & globally from 2004)
9 South Africa – Radmark, from 31.7% to 47,5% (equity conso. before & consolidated proportionally from 2004)
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Strong drivers for short and long-term growth
TOP LINE
Î Advertising growth prospects for the next 3 years
+ 11,4 % * for LARI vs. + 5,5% worldwide
Î Advertising in its early stage (Russia…)
=> significant room for growth mid to long-term
Î Organic growth opportunities (additional frequencies… 21 awarded to LARI in 2004)
Growth by acquisitions (LARI is a major player in the consolidation process)
Î Strong brands
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Ancillary revenue such as SMS, merchandising, events...
„
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expected to grow rapidly (only 2% of 2003 revenue)
Competitive advantage for longer term development opportunities
„
through new distribution channels (digital TV...)
* CAGR for countries where LARI is present, excluding Germany (ZenithOptimedia, Dec. 2004)
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Strong drivers for short and long-term growth
BOTTOM LINE (margin expansion)
ÎImplementation of best practices through internal benchmarking
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LARI’s most profitable station : 55 % operating margin !
ÎAdditional local cost synergies through network extension
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new frequencies & participation to market consolidation
ÎPotential for global synergies
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technical suppliers (broadcast, network), satellite providers etc…
LARI outlook
LARI
very well positioned
for achieving double digit operating margin
within the next 3 years
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