‘Survivor’ Deaths Blur TF1 Stock View as French Blockbuster Hit

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The French television channel "TF1" logo is displayed on a tablet screen in Paris. France’s most-watched channel has struggled with flagging advertising revenue amid rising competition from newer channels. Close

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Photographer: Lionel Bonaventure/AFP/Getty Images

The French television channel "TF1" logo is displayed on a tablet screen in Paris. France’s most-watched channel has struggled with flagging advertising revenue amid rising competition from newer channels.

The death of a French “Survivor” contestant and the suicide of the reality show’s doctor have taken down the shares of Societe Television Francaise 1 10 percent. Investors say the decline may be far from over.

The fallout from the cancellation of one of the most-watched shows on the Paris-based company’s main channel, TF1, is compounding a decline in advertising revenue, investors say. TF1 announced the cancellation of the upcoming season of “Koh- Lanta,” the French version of “Survivor,” on March 22 after Gerald Babin, 25, died of a heart attack during the first day of filming in Cambodia. On April 1, the show’s doctor Thierry Costa, 38, committed suicide, producer Adventure Line said.

“The bad news is accumulating,” said Bruno Ducros, who helps oversee about $3.9 billion in equities at CamGestion in Paris. “Buying TF1 shares today at this level would be hazardous.”

TF1 is trading at about 12.5 times earnings, higher than its average over the past three years of 11.9 times earnings, according to data compiled by Bloomberg. Still, TF1 shares have lost about three-quarters of their value since 2006, when they hit the highest in almost a decade of 29.07 euros. During the 2000 technology bubble, the stock traded as high as 94.20 euros.

Photographer: Jacques Demarthon/AFP/Getty Images

Relatives follow the hearse carrying the remains of late Gerald Babin in Nemours, outside Paris, during his funeral ceremony on April 5, 2013. Close

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Photographer: Jacques Demarthon/AFP/Getty Images

Relatives follow the hearse carrying the remains of late Gerald Babin in Nemours, outside Paris, during his funeral ceremony on April 5, 2013.

Since the start of the year, TF1 has fallen 8.5 percent compared with a 0.6 percent increase in the benchmark French CAC 40 index and a 6.5 percent jump in the media sub index of the Stoxx Europe 600 Index. (SXMP)

Even Worse

France’s most-watched channel has struggled with flagging advertising revenue amid rising competition from newer channels. Revenue from advertising slipped 5.9 percent in the fourth quarter for the TFI channel and 10 percent in the third quarter, the company said. Chief Executive Officer Nonce Paolini has predicted more declines.

“The first quarter of this year, as far as we can see, would be even worse than the third quarter of 2012,” Paolini said in a statement on Feb. 20.

Against that backdrop, the lost Koh-Lanta season couldn’t have come at a worse time, said Amandine Gerard, president of fund-manager Financiere de L’Arc in Aix-en-Provence, France.

The show, modeled after the “Survivor” reality show that gained popularity in the U.S., pits contestants against each other to survive a series of challenges in difficult and often rugged natural conditions.

‘A Blockbuster’

“Koh-Lanta is a blockbuster so this represents a loss of advertising revenue,” said Gerard, whose firm oversees $205 million. “TF1 used to be THE channel in France, but with the dispersion of its audience to other channels, they are losing advertising pricing power.”

The Koh-Lanta series had as many as 8 million viewers per show last year, according to TF1. That’s higher than the channel’s average prime-time audience of 6 million. The network’s program with the biggest audience, an annual concert, drew 13 million viewers.

“This brings up questions over reality shows and what they’ll do with the ‘Survivor’ show,” said Ian Whittaker, an analyst at Liberum Capital Ltd. in London who recommends selling the stock. “It’s just not a great story for them.”

Granted, TF1 isn’t the only source of revenue for the company, which also owns Eurosport France, news channel LCI and entertainment channel TMC among others.

“Koh-Lanta won’t have an enormous impact because of the diversification of channels,” said Bernard Delattre, president of Altimeo Asset Management in Paris. “I’m not sure if even a blockbuster show like this will have an effect.”

A Blow

A TF1 spokeswoman said the channel hasn’t yet discussed the future of Koh-Lanta. Another spokeswoman said that it was difficult to measure the impact of the recent incidents on the stock price, and hard to estimate the value of the show’s advertising revenue.

CamGestion’s Ducros said that the show represents 50 million euros net in advertising receipts, making even the loss of one season a blow to TF1.

“Koh-Lanta and The Voice are the most profitable shows on the channel,” he said. “Koh-Lanta will be replaced by an American series, but it certainly won’t be as profitable.”

To contact the reporter on this story: Adria Cimino in Paris at acimino1@bloomberg.net.

To contact the editor responsible for this story: Vidya Root at vroot@bloomberg.net Andrew Rummer at arummer@bloomberg.net

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