TF1 should restructure, says Morgan Stanley

Investment bank Morgan Stanley has called for troubled French commercial broadcaster TF1 to restructure its business following disappointing financial results. TF1 saw net advertising revenue drop by over 27% in the first quarter of the year and the company only achieved €14 million in cost savings, a small portion of its €60 million cost saving target for ‘09.

“Perhaps more than any of the other European broadcasters we follow, we believe management has the possibility to drive the share price and create shareholder value by restructuring the business, which is now loss-making, it noted.

TF1 has been losing audience share and does not currently own outright any digital terrestrial television properties, a move that Morgan Stanley suggests could see it respond to the current situation. “Although a major bit of bad news is now out of the way, we believe signs of recovery are absent and that 2Q09 is shaping up in a similar way to 1Q09,” it added.

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