FRANCE: LAUNCH OF DIGITAL TERRESTRIAL TELEVISION

UNCLAS PARIS 002265 SIPDIS STATE FOR EUR/WE AND EB/CIP E.O. 12958: N/A TAGS: ECPS ETRD FR SUBJECT: FRANCE: LAUNCH OF DIGITAL TERRESTRIAL TELEVISION REFS: (A) PARIS 01520 (B) 04 PARIS 00886 ¶1. Summary: Broadcasters have launched 14 free digital television channels, initially to be available to about one- third of the French population. Digital coverage is expected to increase rapidly, as is the number of free digital channels. Concerns have emerged about the commercial viability of the profusion of channels, and its potential effect on the subscription television market. End summary. ¶2. March 31 marked the launch date of 14 free channels broadcast via digital terrestrial television (DTV, or TNT for its French acronym, "television numerique terrestre"). These channels are currently available to 35% of the French population, mainly in urban areas. Seven of the channels are new and seven are digital broadcasts of preexisting free analog channels, including France 2, France 3 and TF1. This is the first appearance of new, free television channels in France since the launch of channel M6 18 years ago. A special adapter device is necessary to receive the free digital channels, and costs upwards of 79 euros (over 100 USD). The free DTV channels are broadcast on the MPEG2 standard, following a recent GOF decision to assign the higher-compression MPEG4 standard to subscription DTV channels. (ref A) ¶3. The availability of DTV will expand quickly throughout France, and the launch of more free DTV channels is planned. By 2006, DTV is expected to have a geographic coverage that will reach 65% of households, and this coverage will increase to 85% by 2007. Analysts predict that the free DTV channels will be embraced as their availability increases: forecasters expect that by the end of 2005, 31% of households will watch digital television, 48% in 2006, 68% in 2007 and 80% by the beginning of 2009. The Conseil superieur de l'audiovisuel (CSA),the French television administrator, is considering applications for DTV broadcasts permits from eight additional channels. Between one and three of these applicant channels are expected to receive authorization to begin broadcasting in May 2005. Within four to five years, observers expect that there will be 20 free DTV channels broadcast in France. ¶4. The launch of DTV is expected to have a significant impact on the French television market. One potential issue is whether the sale of airtime to advertisers will generate sufficient income to support as many as 20 free DTV channels. Additionally, channels such as Canal Plus, which are financed through paid subscriptions, are concerned that they will lose subscribers to the free DTV broadcasts. Prior to the launch of DTV, only eight million French households received digital television, which was broadcast via cable, satellite and ASDL, and was available only through paid subscription. Some press reports have cast DTV in a negative light, particularly for its dependence on what some observers see as increased advertising for revenue. Whether these additional channels provide a boon only to French content producers or result in an increased demand for imported content will be watched carefully by local analysts and by us, particularly if DTV proves to be a growth area for U.S.-based content providers. LEACH