They're anxious over there
Euro b'casters buckle up for 'very rough ride' amid U.S. financial woesRegardless of whether the U.S. passes the $700 billion bailout the second time around, the impact of chronically tightening financial markets and nearly 12 months of economic jitters already is blowing cold winds over Europe's biggest broadcasters.
"I'm operating on the assumption that the world as we know it isn't going to end and that the bailout program will be passed," said one European media analyst based in London. "But the impact will be widely felt and comes on top of a tough year. Commercial broadcasters, and especially those who are mostly reliant on advertising, are in for a very rough ride."
The news from the U.S. didn't get any better Thursday, with the Dow skidding nearly 350 points. Even before the impact of the multiple bank failures of the past month cycles through the economy, free-to-air channels are showing the strain of nearly a year of financial unease — slashing program budgets and issuing profit warnings and a confetti of pink slips.
This week, Britain's ITV said that by the end of February, it will have cut 1,000 jobs.
COO John Cresswell said the cuts are the latest cycle of "efficiency" savings intended to protect ITV's £1 billion ($1.76 billion) annual program spend.
Last week, Germany's ProSieben issued a profit warning, with the private equity-backed venture thought to be worth just 20% of what KKR and Permira paid for it three years ago.
KKR and Permira are reportedly looking to cut €100 million ($138 million) from its budget this year, and ProSieben still is without a replacement for CEO Guillaume de Posch, who steps down at year's end. "No one seems willing to take on what looks like a suicide mission," a German insider said.
RTL Group, Europe's largest commercial TV network, has been cautiously optimistic about the German market, saying it sees no signs of an advertising downturn. In fact, RTL boasted double-digit revenue and operating profit growth in the first half. But that hasn't helped its share price, which is down 46% for the year.
In France, private network TF1 recently invested €133 million ($184 million) to restructure its content and production activity amid rumors of who will buy out the group. But its shares are trading at half their worth of a year ago.