The World: Where will French ads go after public TV ad ban?

President Sarkozy's ad-free public TV proposals will prevent advertisers from reaching key audiences, Mark Tungate writes.

To Brits who take the ad-free BBC for granted, the fact that public TV channels in France have ad breaks at all might seem odd. In fact, the state-owned broadcaster France Televisions, which runs the channels France 2, France 3 and France 5, rakes in EUR840 million a year in ad revenue. And this is despite the fact that French citizens are expected to cough up an annual licence fee of EUR116.

Officially speaking, the ads pay for "higher-quality programming". But others will tell you they are necessary because half the French don't pay their licence fees.

In any case, all this is set to change in January 2009. Last week's announcement by the French President, Nicolas Sarkozy, that he plans to scrap advertising on public TV has thrown the media sector into turmoil. Where will France Televisions get its missing millions from? And where will advertisers place their spare cash?

The Bourse, the French stock exchange, seemed in little doubt about the latter question. The values of private terrestrial broadcasters TF1 and M6 rose by 9.9 per cent and 4.5 per cent respectively after the announcement was made.

The president of France Televisions, Patrick de Carolis, took the news calmly. In an official statement, he said the move was in line with his "editorial strategy". "Since taking on this job, in August 2005," he said, "I've wanted to place the accent on culture and creativity, and strengthen the quality of our offering. This move will reinforce our identity as a public service."

At the same time, he sought to reassure the organisation's 300 ad sales staff, saying he would make efforts to ensure they had "a future within our group".

Sarkozy's move is a populist one. The French often grumble about advertising on public television, and while the official figures are not yet in, the public is thought to be largely in favour of the decision.

It remains to be seen, however, how France Televisions will make up the deficit. Sarkozy proposes a tax on the increased ad income of the private channels, as well as a "minuscule tax" on profits made by companies that own "new means of communication, such as internet access and mobile telephony".

Another option is to establish a commercial group along the lines of BBC Worldwide. This would bring together the international channels France 24, the CNN-style news service created by the government a year ago, the overseas French-language broadcaster TV5 and Radio France International.

Advertisers and agencies are in shock. Gerard Noel, the vice-president of the Union des Annonceurs (Union of Advertisers), pointed out France Televisions currently accounted for 20 per cent of French TV adspend and 7 per cent of overall media spend. "The private channels will find it impossible to augment their space by 20 per cent, so there's a danger of inflation. Many advertisers will think about spending their budgets elsewhere, either below the line or online," he said.

Advertisers say the move robs them of access to 35 per cent of the overall TV audience, 24 per cent of which fall into the prized "housewives under the age of 50" category. But Arnaud Serre, the president of Mediaedge:cia, told the French press that while cost per thousand would inevitably rise, there would still be "a rebalancing in favour of thematic digital and satellite channels, as well as pressure on TF1 and M6 to improve the quality of their prime-time programming to attract advertisers in search of a quality audience".

The French advertising supremo Maurice Levy, the Publicis Groupe president, said there was a possibility that the leading channel TF1 would end up with between 65 and 70 per cent of overall TV adspend, with the second-ranked M6 taking up to 20 per cent. "The rest would be shared by the remaining broadcasters, which will help the digital and theme channels."

He added that the move could affect the growth of French adspend. "It's clear that no longer having access to public TV will handicap the market, and that the growth we might have hoped for within certain sectors might not be realised," he said. "But let's not forget that the internet is exploding here in France, so I'm not too concerned about the overall growth of the French advertising market."

Levy dismissed as "a fantasy" the media rumours that Sarkozy made the decision as a boost to his friend Martin Bouygues, whose telecoms, media and construction group has a 43 per cent stake in TF1.

Nicolas Bard, the managing partner of the communications planning agency Ne Kid, the French outpost of Naked, admitted that he was somewhat perplexed by the decision: "The TV landscape has been like this for 20 years, so I'd like to know what the real reason behind this is. Is it because TV viewers are also voters?"

He added that there was no comparison between France Televisions and the BBC. "The BBC has commercial income, from international channels, books, TV and merchandising, that helps it to offer quality programming while staying ad-free in the UK," he said. "It seems unlikely that France Televisions will be able to create such a structure by the end of this year."

However, he did admit that the agency was rubbing its metaphorical hands together in anticipation. He said: "Advertisers will be wondering where to spend their money, which, as media-neutral communications consultants, puts us in a very good position. Merci, Sarko."