Why the legislative elections have an impact on the stock market shares of TF1 and M6

The prospect of privatization of public broadcasting by the National Rally worries the financial markets. This would upset the balance of the media sector, particularly the advertising market.

The political instability created by the dissolution of the National Assembly has cascading repercussions. Tuesday June 11, it was the TF1 and M6 groups which saw their shares fall on the stock market. At the close, TF1 shares had lost 7% and M6 shares a little more than 3%. They had both gone even lower in the afternoon. If the National Rally comes to power after the legislative elections, which is not excluded, it promises to privatize public broadcasting. The far-right party does not really say how or when, the project is still quite vague. But this worries the financial markets because private media would suffer the consequences, especially television.

A sector that would be disrupted by the privatization of public broadcasting

The arrival of one or more new competitors would upset the balance of the sector. TF1 and M6 would inevitably experience a decline in their revenues because the advertising pie would shrink even further, while it is already cannibalized by American platforms and this should be worse in the years to come.

A recent study by Arcom and the Ministry of Culture showed that in 2030, major digital players would capture 65% of advertising resources, compared to 52% today, and only 25% ten years ago. We are mainly talking about Facebook, Instagram, WhatsApp, Google, YouTube, Amazon and TikTok. Advertisers now prefer to go to these sites rather than television, a medium with aging audiences.

Digital revenues insufficient to compensate

But private channels also have digital revenues today. They will increase from 800 million euros to 1.2 billion euros in 2030, again according to this study. TF1 and M6 have developed and invested a lot of money in their own streaming platforms. But this only limits the damage and will not compensate for the decline in their advertising revenue on the shelf. In this context, let’s imagine that France 2, France 3, France 4, France 5 were privatized, there would only be crumbs left for historically private television. This is why some financial analysts believe that total privatization is downright impossible.

For radio, it is exactly the same scenario, the advertising market would be incapable of absorbing the entry of new private stations. The difference is that it is not just a small handful of actors currently appropriating the majority of resources. In radio, sharing is much more fragmented.