PARIS — Canal Plus chairman Pierre Lescure said that Warner Bros. is about to take a 10% stake in Canal Plus’ satellite service, Canal Satellite.
Warners’ option on the stake expires at the end of December, and Lescure told French paper La Tribune that the option will be exercised. Canal Plus sources said that the paperwork is currently being handled and that the deal would be part of a capital increase.
A Warners spokesman in L.A. said that negotiations were ongoing but that no deal has as yet been struck.
Exactly how much the 10% will cost the studio is not clear. Twelve months ago Canal Satellite was estimated to be worth in the region of 3.8 billion francs ($655 million), meaning Warner Bros. will probably pony up more than $65 million.
Canal Satellite’s current shareholders are Canal Plus (70%), Pathe (20%) and Generale des Eaux (10%) — which is tipped to scale down its presence in favor of Warner Bros.
Canal Satellite’s digital platform currently has around 600,000 subscribers, having been launched in April 1996. Operating breakeven kicks in at around 950,000 subs, which is expected to be hit in 1999.
Commenting on the likely Warner Bros.’ stake, Lescure noted, “The biggest studio in the world is joining us on the satellite. For 13 years Warner has always replied favorably to the development of Canal Plus.”
Links between the Hollywood major and the French pay television giant do not look as though they are going to extend further into the cable sector. Canal Plus recently took over Generale des Eaux’s CGV cable outfit, which has some 350,000 subscribers. There had been considerable speculation that Time Warner, which has a fledgling cable presence in France, would buy into CGV. However, Lescure appeared to nix that idea, telling La Tribune, “It is clear that the financial constraints currently weighing on Warner cable prevent it from taking a position in CGV.”
Within his own shareholder lineup, Lescure also confirmed that South African pay TV group MIH has parted with its 4.9% stake in Canal Plus, which was acquired earlier this year when the French group bought NetHold — which was owned by MIH and the Swiss-based Richemont Group.
Canal Plus sources told Daily Variety that MIH’s stake is now in the hands of institutional investors, although it could be bought up by existing Canal Plus backers which include Havas, Richemont, Societe Generale and Pathe.
Observers believe that MIH, which has virtually no other European investments, preferred to cash in its Canal Plus stake rather than hold on to a position which had little strategic interest.