Gallic pay TV giant Canal Plus confirmed that 1993 profits will be around 1. 2 billion francs ($ 200 million) but warned Tuesday that heavy investment over the next 12 months will slow profit growth in 1994.
“Next year will be shaped by an exceptional volume of investment spending, ” the company said in a statement following a Tuesday board meeting. “The decline in net income after minority interests will be noticeable but less than 20%. Consolidated revenue will increase by 10%.”
Canal Plus sources told Daily Variety that estimates of 1994 profits are in the region of 950 million francs ($ 161 million).
The pay TV success story is negotiating its license renewal with the government. Network insiders say the renewal of the web’s license may be contingent on Canal Plus providing substantial financial backing for France’s underdeveloped cable industry — with little in return.
Network president Andre Rousselet has estimated the cost of the cable investment at around 450 million francs ($ 76 million) over the next two to three years.
The network said Tuesday that it also intends to invest in several new pay TV subsids and will develop thematic-channel packages for Europe. Canal Plus is known to be studying the possibility of launching in Poland and Latin America
In addition, Canal Plus is pumping large amounts of cash into the development of digital television.
On the rights-buying front, Canal Plus made it clear that it will expand its interests. “With competition as keen as it is today, it is becoming increasingly obvious that the future will be shaped by the ownership of audiovisual rights, the cost of which is increasing significantly. In these circumstances, it is clear that Canal Plus needs to expand its library and step up its efforts in the area of production to strengthen its independence.”
Theinvestment comes as the network’s core money-earner, French subscriptions, levels out. The web has 3.7 million subscribers in France in addition to 750,000 in Germany and Spain and a further 100,000 for the satellite service Canalsatellite. Rousselet said he believes the network is not far from hitting its French subscriber limit, which he put at under 5 million.
Despite warnings of a tough 12 months, Canal Plus predicts better times in 1995.