Canal+, Kirch pact

Details of Premiere-Telepiu stake swap unveiled

PARIS — French pay television giant Canal Plus revealed details of its deal to sell a 37.5% interest in German pay TV channel Premiere to the Kirch Group, while also acquiring Kirch’s 45% share in Italian pay television outfit Telepiu.

In a statement released July 4, Canal Plus said that the sale of its stake in Premiere would yield three billion francs ($517 million) in profit for the French company. Canal Plus insiders told Daily Variety that the profit is based on a $689 million value for the 37.5% stake, less the $103 million the French premium channel has invested in Premiere since 1991 and taxes due to be paid on the sale.

Canal Plus and Kirch definitively signed the deal on July 3. The agreement now goes to the German antitrust and media authorities as well as Premiere’s other main shareholder, CLT-Ufa (a joint venture of Bertelsmann and Luxembourg broadcaster Audiofina). The Italian authorities must agree on the Telepiu pact.

Tallying Telepiu stake

According to Canal Plus, Kirch and the French group agreed that each subscriber to Premiere and Telepiu should be valued at $1,250. Telepiu has just under 900,000 subs, meaning that Kirch’s 45% stake in the company is worth over $500 million.

Speaking to shareholders in Paris recently, Canal Plus chairman Pierre Lescure said he believed the value of Premiere had peaked. Lescure and his team appear to have decided that doing business in the crowded German market is something that is best left to the Germans, unless Canal Plus intended to take an extremely long-term position.

In contrast, the French believe that Italy offers quicker short and medium-term profits via Telepiu’s pay television and digital operations.

The next step in the complicated shift in alliances is expected to be Canal Plus’ sale of part of its 90% share in Telepiu to a combo of Italian pubcaster RAI, the STET telco and Silvio Berlusconi’s Mediaset. This deal is widely expected to be closed before the end of the summer.

Meanwhile, after the Canal Plus deal closes the Kirch Group has confirmed it will sell 12.5% of its stake in Premiere to CLT-Ufa, thus giving both companies 50% of the venture.

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