(News Bulletin 247) – The two private audiovisual groups are making significant progress this Monday at the start of the session. The National Rally finished only third in the second round of the legislative elections. This removes the risk of a privatization of public audiovisual, and therefore of pressure on the advertising market.

A small sigh of relief from the shareholders of TF1 and M6. The two private audiovisual groups are climbing this Monday, the day after the results of the second round of the legislative elections.

At around 10:45 a.m., TF1 shares rose by 5.3% and M6 shares by 3.9%.

Both titles suffered after Emmanuel Macron announced the dissolution of the National Assembly. The market feared that the National Rally (RN) would come to power and implement a measure of its program, namely the privatization of public broadcasting.

Such a privatization, on paper, would require replacing public funds with private funds and therefore financing the operation of public media through advertising revenues. “If this project were to be carried out, it would naturally be very negative for private players. The French market would not be able to absorb such an increase in competition,” Oddo BHF explained in a note.

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A threat far away

This specter of a privatization of public broadcasting had already receded after the first round of the legislative elections, when an absolute majority for the RN seemed difficult to achieve. The second round shattered this risk, at least in the short to medium term. The RN only came in third place in the vote, with just over 140 deputies, very far from the 298 elected representatives needed to have an absolute majority.

“There was still a bit of uncertainty after the first round of the legislative elections. It is likely that not all investors had factored in the very high probability that the RN would not be able to form a government,” explains Alexandre Desprez, analyst at the independent research firm AlphaValue.

“The violence of the RN’s failure in the second round had probably not been anticipated by the market and can perhaps explain the reaction of the titles,” he continues.

“TF1 and M6 shares should, however, continue to trade at a discount compared to their prices prior to the dissolution of the National Assembly. Firstly, because the RN is ultimately progressing compared to 2022. And therefore the privatisation of public broadcasting can only be postponed. Secondly, because of the second-order effects on the economy. TF1 and M6 draw the vast majority of their revenues from France. However, uncertainties about the ability to form a government could impact consumer confidence and lead companies to reduce their television-related marketing budgets,” the analyst explains.

However, Alexandre Desprez sees a slight positive effect in the very short term. “The legislative elections led to an increase in audiences for political programmes, such as the debate organised by TF1, which should be slightly positive on the top line (revenues, editor’s note) of TF1. We therefore expect a good surprise in the half-yearly results (with a preference for TF1) in addition to the advertising revenue generated by the Euro which is expected to be at a high level,” he argues.