Mushrooms After the Rain: France's Children's Channels

With the advent of satellite television, thematic channels have multiplied in France, like mushrooms after the rain. One of the favorite targets of these new outlets is children who can now have access, according to which cable or satellite bouquet they receive, to up to five channels entirely devoted to them. Six by November! Why, just six months ago, they could barely receive two. Next to veteran Canal J, and Cartoon Network, which was only carried on satellite, are now AB Cartoon, Teletoon, Disney Channel France, and soon Fox Kids.

The new channels have been either launched by the digital satellite networks, referred to as bouquets in France, or independently by American channels who are attracted by the new broadcasting opportunities. Children channels are considered as appealing as cinema channels. In the last few months, France has had three competing digital platforms launched. Surprisingly, while cable never really took off, with only 1.5 million subscribers to date, DTH (direct to home satellite) went quickly over expectations with nearly 600,000 digital subscribers registered in only six short months. Sure, the amazing advertising campaigns that have accompanied these launches has helped. In fact, the competition has stimulated the market. Ten years ago, cable was handicapped by the launch of a cinema and sports pay-television, Canal +, who now has over 4 million subscribers.

CanalSatellite - The Digital Leader

Of the three digital bouquets, CanalSatellite, controlled by Canal +, shot first. CanalSatellite was already an existing satellite platform, but was analog, carrying only the thematic channels that one could find on cable. The digital service was launched in April 1996 with additional channels, interactive services, multiplexing, of Canal + most notably, and pay per view, making a total of 40 channels. Already carrying Canal J, as well as Cartoon Network, CanalSatellite Numerique was less in need than the other bouquets to create a children's channel. But aiming to present the best and widest reaching offer, the service worked out exclusive satellite carriage deals, as has been achieved with Disney Channel France. CanalSatellite is to date the leading platform with 440,000 digital subscribers (plus 130,000 using the older analog technology).

A Strong Newcomer, TPS

Not wanting Canal + to have the monopoly of pay television in France, terrestrial broadcasters TF1, France 2, France 3, and M6 have associated to create TPS (Television Par Satellite), together with Lyonnaise des Eaux and CLT, who are also both shareholders of M6, and France Telecom, which is also acting as a cable operator. TPS was launched in December 1996. It bet on the fact that it carries the terrestrial broadcasters' programming, and not CanalSatellite, which is not received well in all parts of France. The digital satellite platforms predominantly target small towns where reception is generally less good. TPS also carries the thematic channels developed by its shareholders and to complete its offerings launched cinema channels and ... Teletoon. Supported by a strong ad campaign, which ran on all of its powerful terrestrial partners, TPS started strong with 170,000 subscribers by June 1997 which was well over expectations.

AB Sat: The Outsider

The outsider has been AB Sat. It has been launched by leading independent French producer and distributor, AB. For years the company made a name, and high profits, by producing TF1's children's shows and successful long-running youth sitcoms. When the launch of AB Sat established a competition with TPS, their already sensitive relationship with TF1, a shareholder of TPS, became worse. In fact, TF1 has canceled all of AB's children's shows for September. Sure of its Frs 1 billion yearly turnover and its prominent catalogue, AB went to the NY Stock Exchange to finance its bouquet where it received Frs 888.9 million. AB Sat's concept is totally different than the previous two: it is cheap. Whereas the others start at around Frs 100 per month, AB starts at Frs 40 per month which includes access to all 18 new niche channels with themes ranging from action to romance to erotic, to ... cartoons. Unable to enjoy the same megaforce financial backing as its two competitors, AB Sat has not yet benefited from a consistent launch campaign, and its subscribership is low with only 11,000 by the end of June. AB Sat does not have, however, such a high break-even level, needing only 400,000 subscribers compared to at least twice that for the others. Because of their concept, the AB channels are not running after fresh programming. They rely heavily on AB's existing catalogue. 90% of AB Cartoon's programming comes from its' library (AB handles 15,000 animated episodes) and as for the rest, the AB channels are known as the ones paying the lowest acquisition prices. AB Cartoon's concept is to run the "oldies but goodies" animated series during the day and anime at night. Though the budget is not unveiled, it is said to be in the Frs 20 million bracket.

Though all of these channels rely mainly on their shareholders' catalogues and have relatively small budgets (Frs 30/60 million), they need to secure a number of subscribers that digital platforms do not seem to be able to offer alone. Prior to convincing kids to watch them, they have to first convince cable operators to carry them. A difficult crusade since, even if they are currently launching into digital, the cable networks are still all analog and can't add a channel without taking one off.

Disney, A Strong Label

Disney Channel France has for its part managed to get access to most of the cable systems thanks to its strong label. Operators figured they could benefit from Disney's image and that it would help boost subscriptions. The Disney Channel is the only kids' channel to have positioned itself as pay TV. They too are betting on its strong label, powerful in not only the kids' minds, but also in the ones who have the wallet, the parents. It tries to establish itself as a French channel, appealing to families, and perfect for baby-sitting. Launched in March, the first figures have proved far better than expected, with 200,000 subscribers registered by the end of June. This was their goal for the end of one year. However, these results are to be taken prudently. How much extra will people want to spend when they have access to an increasing number of children's channels? Disney Channel's subscription rate is 35 francs per month. Most of Disney Channel's current subscribers - 170,000 - come from CanalSatellite, whose first subscribers, attracted by novelty, seem at this point to be in the mood to take a quasi complete service. 70% also subscribe to Canal +. The Disney Channel has only achieved 30,000 subscribers from cable to date. Disney's animated features are a good asset. However, their broadcast is rare, probably so as to not hurt their healthy home video revenues. Disney programming only makes up 50% of the channel's schedule, and being structured as a French channel it has to meet certain quotas. Even if they have negotiated a progressive deal with the regulatory body CSA, the channel only has to air French programs 30% of the time for this year. Obtaining French shows is currently a headache, especially in the children's programming field. Not only because of increasing concentration of catalogues, but also because, TF1, France 3 and M6 are the biggest commissioners of animated series and of course, the cable and satellite rights often go to ... Teletoon. To enter the market, The Disney Channel practices higher acquisition prices and intends to do pre-acquisitions and a few co-productions to get fresh product. In order to succeed, the channel will have to prove it is offering an especially worthy product; one that people will want to pay for and renew.

The Cable Struggle

To get access to the cable networks is not so easy for the other newcomers, especially when they are linked with a digital platform. The three main cable operators are all linked with one of the bouquets, which can lead to conflicts of interest. Lyonnaise des Eaux (Paris, among others) and France Telecom have shares in TPS. Generale des Eaux has interests in CanalSatellite. This is not the only problem these channels are facing.

Keeping Teletoon in Second Place

Thanks to its recent pick-up on Lyonnaise des Eaux's cable networks, TPS' Teletoon is the second most widely broadcast children's channel. While still well after Canal J, TPS has 529,000 subscribers to date. "We are having discussions with the other cable operators but they are not easy," says Francois Deplank, who heads Teletoon. Besides the conflict of interest with Generale des Eaux, a shareholder of competing bouquets, the talks with the other operators, including its own shareholder France Telecom, are not evident. "With the multiplication of channels they tend to go toward a segmented offer (children, sports, etc.) on option (people pay extra for additional channels for which they 'option'), putting the different bouquets in competition, which is not in our interest." Deplank would prefer to be offered as part of the basic channels which are those that are fed into every cable home without additional charges. "We have more chances to gain new subscribers through TPS than with the cable networks!" The financial arrangements with cable operators vary from case to case, but the average price that Teletoon gleans is 2F per month per subscriber as part of the basic service, and 3.5 F or more when on option.

Teletoon needs 1.1 million subscribers to break even. Its current budget is Frs 30 million "but is to climb to Frs 50/60 million in three years," adds Deplank. 30% of its programming comes from TF1, 30% from France 3, and 10% from M6. The rest is acquired. One-third of the channel's current budget goes to programs and that will climb to 50% in three years. In order to reinforce its identity, the channel intends to do a few co-productions of short animated series and specials, which will be different from what its broadcasting shareholders commission.

Its' concept is 100% cartoons as is one of its main upcoming competitors the Cartoon Network. The Turner channel was not conventioned by the CSA until now, and as a result, could barely have access to the French cable networks. CSA has recently announced, however, that according to European regulation, if Cartoon Network is sanctioned in the country from which it airs (UK), they can no longer be refused. Deplank is confident though. "We had the example of a small cable system in Alsace (French border) who stopped running Cartoon Network to carry us instead. They are quite happy about it. Cartoon Network still runs half of its programming in English, and French kids usually learn to speak French before English!"

Making a Space? Fox Kids

As if this was not enough, a new player is coming to the game as of November 15 - Fox Kids. At this point, they are announced on CanalSatellite. "We are currently meeting everybody and we have a good feedback concerning our concept," says Benoit Runel, who heads the new French American-backed channel. Its' break even point is at 1.8 million subscibers. 75% of its programming comes from Fox and Saban, and includes series such as The Power Rangers. Saban has an animation production subsidiary in France which is one of the more active. Though not available yet as it is still held by AB, Saban also acquired the prominent C&D French catalogue. Fox Kids' positions itself, compared to Canal J, as an "entertaining" channel, while Canal J aims to educate and inform children. Fox's target focuses on children from 2 to 12 years-old but has dedicated slots per age group.

Canal J and Original Programming

With this increasing competition how will Canal J maintain its leadership? Asked six months ago, Eve Baron, head of programs, was quite confident, "I don't think it's 'competition.' The channels are positioning themselves differently. Disney targets a family audience. Teletoon runs only animation. The budgets of most of these channels are very low and they don't do any original programming. They know what it costs! For our part, we are the only channel offering a full range of programs and topics to children. We are 11 years old. We dedicate Frs 65 million to programs per year, 90% being put into first run shows. Frs 45 million go to in-house production, with a two-hour daily live show among others, and co-productions." At this point, Canal J seems to have a considerable advance, being carried by all cable systems plus CanalSatellite which helps it enjoy a healthy 1.9 million subscribers. The channel made a consistent Frs 120 million turnover in 1996, including Frs 30 million from advertising and Frs 87 million from subscriptions. To counter the attack, the channel is further boosting its schedule, reinforcing what makes it special: original programming. Canal J is to introduce a news show for kids this fall, among others.

As we've seen, the future remains full of uncertainties for all of these channels and depends on so many factors such as their financial reserves, the development of DTH, their ability to seduce cable operators, and, lastly but definitely not least, the kids. Competition is going to grow tougher for sure. In addition, terrestrial broadcasters have muscled up their children's programs; France 3 is dedicating 1,300 hours per year, TF1 1,000 and so on. The number of hours children watch television has tended to decrease these past years due to competition from video games and computers. Nothing proves that a greater television offering will make it increase again. Let's hope quality will make the difference.

Marie-Agnès Bruneau has been writing about the French television business since 1984. For four years she ran Mediaspheres, a weekly French television trade magazine. She is currently a freelance writer, living in Paris, who regularly contributes to FT Media and Telecom's publications.