Contents
Key recommendation changes 3
We upgrade ITV and Mediaset to Buy, downgrade TF1 to Sell and MTG to Hold,
and retain our Sell on Antena 3 and our Holds on M6 and Telecinco.
3
Advertising: TV to lead the recovery 5
The European ad markets have reached the bottom of the current ad cycle, in our
view. We forecast ‘flat’ ad markets in 2010, followed by a recovery in 2011. TV will
be the major beneficiary of returning ad demand, with incumbent broadcasters
taking the lion’s share.
5
Who is best placed when ad demand returns? 8
Broadcaster net advertising forecasts 11
Structural themes 13
We examine the various structural issues facing the major broadcasters. Our
ranking of the issues leads us to concludes that M6 and Mediaset are best placed,
with TF1 and Antena 3 facing an uphill battle.
13
Audience: Multichannel penetration still playing out 14
Regulatory change: Life’s getting easier 19
Cost-saving programmes 21
Long-term margins 22
Programming: Content is king 24
Valuations 26
We have updated our DCF-based target prices to reflect our forecast changes. We
assess the potential valuations of broadcasters on a DCF basis, excluding 2009
and 2010, and on a multiples basis, applying mid-cycle operating margins.
26
DCF-based target prices 26
DCF based valuation scenarios 26
Assessing mid-cycle margins 27
Balance sheets: The good, the bad and the ugly 30
Dividends are still getting paid 31
Changes to forecasts 32
We outline our key forecast changes in Tables 27-33. For more detailed forecasts,
please see the individual company sections.
32
Company profiles
Antena3 36
ITV 40
M6 44
Mediaset 48
MTG 52
Telecinco 56
TF1 60
CTC Media 64
CME 68
TVN 72
Appendix 76