PARIS — Time Warner Inc.’s bid to become a major player in the Gallic cable sector appears to have run into difficulties, according to press reports over the weekend.

Utilities giant Generale des Eaux (CGE) is looking to sell a 35% stake in its cable division to Time Warner. Part of the deal would involve pay television concern Canal Plus increasing its stake from 20% to 35%.

However, Canal Plus is reportedly reluctant to agree to terms unless Generale des Eaux holds on to 1.5 billion francs ($263 million) in debts run up by the cable division.

Last April, Generale des Eaux chairman Jean-Marie Messier said talks were under way and predicted a deal could be inked within two months. At a shareholders meeting last week, he would only confirm that the talks are continuing.

Messier is looking to unload the unprofitable cable division, Compagnie Generale de Videocommunication, as part of a double strategy to reduce Generale des Eaux’s debts — which were around $7.5 billion last year — while concentrating its communications business around the Havas group, in which CGE is the main shareholder.

However, CGE doesn’t want the cable division to fall into the hands of Lyonnaise des Eaux, which is not only CGE’s main rival in the lucrative waterworks services industry but also has its own ambitious communications strategy.

Canal Plus chairman Pierre Lescure is widely believed to be unwilling to take on the cabler’s debts at a time when his traditionally profitable pay TV group is absorbing NetHold — a process that is expected to see Canal Plus profits reduced to zero in 1997.

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