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Television station predicts ad slump

SOCIETE Television Francaise 1, owner of France's most-watched television channel, fell the most in seven and a half years in Paris trading after forecasting a 9-percent drop in 2009 sales because of a slump in advertising.

TF1 declined as much as 18 percent. Advertisers are taking a wait-and-see approach because of the economic crisis, Chief Executive Officer Nonce Paolini said. TF1 will cut costs by 60 million euros (US$75.8 million) this year and reduce its dividend after reporting a 28-percent slump in 2008 earnings.

TF1 and rival M6-Metropole Television have suffered as advertisers slashed spending. TF1 is taking the right steps by reducing costs and expanding in digital TV, Charles Bedouelle, an analyst at Exane BNP Paribas, wrote yesterday.

"The ad downturn is severe enough to wipe out all these positives while the valuation is not really cheap," Bedouelle wrote. He has a "neutral" rating on the stock.

Net income dropped to 164 million euros from 228 million euros in 2007, TF1 said in a statement. Analysts polled by Bloomberg News predicted 151.5 million euros.

TF1 will reduce its dividend to 47 cents a share from 85 cents. "In front of such an unprecedented crisis which affects every sector of the economy, the whole group is moving to face the present challenge," Paolini said.


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