By Florence Guthfreund-Roland & Mathilde Hallé

The TF1 group has petitioned the French media authority (the “CSA”) to swap its LCI news channel from pay to free DTT, based on the provisions of a new law adopted on November 15, 2013 which granted the CSA the power to authorize a pay DTT channel to migrate to free DTT, upon request from the broadcaster. In case of such a request, the CSA must consider whether a migration to free DTT would jeopardize (i) the principle of pluralism, (ii) the quality and diversity of TV programs, and (iii) the stability of the television sector. In a decision rendered on July 29, 2014, the CSA formally refused to approve the migration requested by TF1.

In support of its request, TF1 mainly contended that the decrease of LCI’s turnover partly results from a reduction in the fees paid to broadcasters by subscription-based television service providers (notably including cable/platforms operators). TF1 also claimed that LCI’s audience has substantially decreased, as have LCI’s annual net advertising revenues. On that basis, switching from pay to free DTT is, for TF1, the only option left to ensure LCI’s viability in the near future.

However, the CSA rejected TF1’s request based on the following arguments:

• According to the CSA, LCI’s swap from pay to free DTT is not necessary to ensure pluralism on the free DTT market. Indeed, the LCI news channel is similar to two existing French free news channels, being BFM TV and i>Télé;
• In addition, LCI’s migration to free DTT would lead to a decline in viewers for existing free news channels;
• As a consequence, LCI’s migration to free DTT would likely jeopardize the balance of the advertising market considering that: (i) this market is already down and the level of advertising expenses has reached its lowest point in more than 10 years; and (ii) given the significant position of TF1 in the market, the latter would still be able to create advertising revenues for LCI (notably via cross-selling practices). Moreover, according to the CSA a prohibition of tied sales of advertising space between LCI and other channels belonging to TF1 would not compensate the channeling by LCI of part of the advertising resources specific to other news channels;
• Based on the above, LCI’s migration to free DTT would materially affect the economic and financial situation of existing free news channels. Indeed, the CSA considered that neither competitive measures nor measures pertaining to the content of TV programs would be sufficient to thwart the transfer of audience shares from existing free news channels to LCI on the one hand, and the channeling of advertising resources by LCI on the other hand. In particular, the effects on the quality and diversity of the programs that would result from the offer of an additional free news channel would not compensate the detrimental impact on the economic and financial viability of existing free news channels, thus jeopardizing compliance with the principle of pluralism.

On the basis of similar considerations, the CSA, on the same day. rejected requests from the M6 group and the Canal + group to swap their respective channels Paris Première and Planète+ from pay to free DTT.

TF1 has two months to appeal the decision of the CSA before the French Administrative Supreme Court (the “Conseil d’Etat“). It can be noted that, in case of appeal by TF1, the decision of the CSA would remain applicable until the Conseil d’Etat rules on such decision.

For further information, please contact Florence Guthfreund-Roland (Florence.Guthfreund-Roland@dlapiper.com) or Mathilde Hallé (Mathilde.Halle@dlapiper.com).