Vivendi’s financial troubles are no secret, putting a sale of pay-TV group Canal+ on the cards. But although Canal+ has a leading position in French pay-TV, most potential bidders would be up against serious opposition. A bid from a local player would raise competition issues – but the cultural outrage if a foreigner took control could be greater still.
Vivendi Universal may be looking to sell French pay-TV group Canal+.
French media giant Vivendi Universal needs to sell some of its business to fund its huge debts, particularly after the recent downgrade of its bonds to junk status. This could mean the sale of pay-TV business Canal+.
Canal+ has already undergone significant restructuring, selling Canal Digital in Scandinavia to Telenor and pulling out of the bidding for Italy’s Stream. Indeed, Canal+ may now sell its existing Italian business, Telepiu, to focus on France.
But despite these cost-saving moves, a potential buyer would face serious challenges. Subscriber growth is almost zero and Canal+ is struggling to increase ARPU, so the acquirer will need to be an experienced pay-TV player. Canal+ also plays an important role in French culture, as the largest investor in national cinema, so foreign buyers could be blocked by legislation protecting the French ‘cultural exception’.
BSkyB/News Corp is in a strong position to fund the acquisition and address the operational problems. Adding a leading position in France to its businesses in the UK and Italy would make News Corp Europe’s largest pay-TV operator, with massive economies of scale. But even if it could negotiate the cultural hurdles, possibly by separating pay-TV from production, there would still be competition problems – particularly as BSkyB has been accused of unfair practices before.
French broadcaster M6 is another candidate, with funding and TV experience from its majority owner RTL. However, M6 co-owns TPS, Canal+’s rival domestic satellite operator. M6 might be forced to sell its TPS interest as a condition of an acquisition – or TPS and Canal+ could merge, gaining a virtual monopoly over French pay-TV.
This would have been unthinkable little over a year ago, but it has become apparent that European national markets can barely support satellite TV competition. The French government would probably choose a merger over allowing Canal+ to fall into the hands of foreigners – safeguarding the French media industry, at the price of reducing competition.
Related research: Datamonitor, iTV revenue streams and business models (DMTC0809)
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