France Télévision Strategic Analysis

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France Television Group Strategic Analysis

Subject: Basics of Strategy

Tutor: Iris CHAMPAGNE

Assignment done by: Kian RAJABI NASRABADI

L3 Gestion – English Track – TD 1

Contents:

Introduction

1. The strategic problem
2. Strategic diagnosis
3. Three recommendations
4. Action plan for 5 years

Conclusion

Introduction

France Television Group (FTG) is a 100% publicly owned group that has so far the largest market share in terms of number of audience in France. It is directed by Délphine Ernotte who started her activity in August 2015 with the main objective of creating an ongoing news channel. Later in 2016 the channel ‘France Info’ showed the realization of the mentioned objective. On this same year, the group allocated 50 M€ to digital programming.

In 2010 the company decided to categorize each channel and increase digital access to each. This campaign yielded into more than 200% of growth (35 M to 106 M) in number of audience from 2010 to 2015.

The French group owns 6 national channels (France 2, France 3, France 4, France 5, France Ô, France Info) and one radio-visual operating in French overseas departments (France Première). Each of these channels cover one main program category. FTG is also a shareholder of 4 thematic channels (Gulli, Mezzo, Planète Thalassa, Planète Justice) and 3 international channels (TV5MONDE, Euronews, Arté).

1. The Strategic Problem

The current challenge of the group is the competitive privately owned companies in France and those who are affecting the French market from abroad such as Netflix from the US. Today, the issue is not only restricted to direct competitors but most importantly the substitutes of the audiovisual industry being the famous social network companies such as Instagram and Facebook. It seems like all these companies fight severely over people’s attention. As a French contemporary scientist and philosopher Idriss Aberkane says in his book titled ‘libérez votre cerveau’, in the 21st century attention is the most valuable resource that companies and societies yearn for.

The strategic problem is that how the group can keep up with this technologically advanced competition financed by private investors in a constantly evolving industry?

2. Strategic Diagnosis

2.1 External Diagnosis

To run this diagnosis we will use the Porter’s 5+1 forces tool. This is because it is a thorough analysis which could clearly show the threats of the industry to the group. Since the concerned industry is in constant evolution, this diagnosis can clearly show us the situation of the group in its industry. The graph below illustrates the power of different actors on the industry on a scale of 0 to 6, being very low to very strong respectively.[pic 2]

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• Direct Competition (4 out of 6 – Fairly high)

Only 6 companies of the PAF group have taken over 80% of the industry. The group TF1 being the largest European private TV channel is just behind the FTG in terms of audience. But the rest of the 5 groups are quite far behind. This shows that the biggest direct competitor for FTG is TF1 but the competition looks more like an oligopolistic market axed on 2 large groups. This means the industry is not a competitive monopolistic market and this is why we can consider the direct competition fairly high and not very strong.

Another reason of this fairly high power is the increasing number of international media agencies such as BBC, CNN, Reuters, Disney etc. With globalization, all these companies have already created their own subsidiaries in France and could e considered as direct competitors to many channels of the group, in particular France 4 by Disney and France Info by BBC and other international news channels.

• Power of new entrants (1 out of 6 – Very weak)

        The FTG being 100% supported by the government plays an intimidating role on the market. Plus the fact the 80% of the market is concurred by only 6 groups shows a high market domination by big players. This means that it would be very difficult for new direct competitors to enter the French audiovisual market.

        Moreover, this industry has a high fixed cost on average because it needs high level of technology and expensive equipment and governmental level regulations. This is another reason why newborns would have a very difficult time wanting to enter this market.

• Power of the audience (2 out of 6- Fairly low)

        The bargaining power of the audience is fairly low because the group deals with a mass market who gets most of the services free of charge. So we could say that there is nothing much to bargain by one audience.

• Power of suppliers (3 out of 6 - Medium)

The bargaining power of audiovisual producers and distributors who give services to the FTG is medium. In 2015 the line-up programming of the group’s channels incurred 47% of the costs from 924 suppliers. The share of this specific cost is significant in the total cost but the number of suppliers is high which shows a low power of the suppliers.

• Power of substitutes (6 out of 6 - Very Strong)

        Substitute companies include every media that could attract people’s attention and take their time off the FTG’s programs. These could be subscription-based streaming websites such as Netflix who is estimated to have 6,2 M subscribers only in France by 2020 (Statista). Facebook with 32,07 M active users in France (Statista 2019). Instagram 10,3 M active users in 2017 (eMarketers 2016). And even Google and the whole internet which is the number one substitute to TV programs with 53,7 M monthly users in France in 2015 (Statista 2019).

• +1 Force: Laws & Regulations (3 out of 6 - Medium)

        The group being 100% public, it is very sensitive on the labor law. From 2013 to 2015, the company increased its expenses to become a single handled brand. These expenses include the negotiation with the employees to raise salaries which increased the personnel costs by 15%. And, 2 voluntary retirement plans added to benefits which of course did not solve the aging average problem of the employees.

The fact that the company has to respect a 22 months delay before broadcasting a movie recently released, shows that there are still many restraining regulations that FTG has to respect compared to it substitutes such as Netflix who recently broke the barrier of presenting its movies in The Oscars.

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