Returning to the tube

Lagardere inks digital deal with Canal Plus

PARIS — Eight years after it suffered the humiliation of seeing its national network La Cinq go bankrupt, France’s Lagardere group is back in television — in a big way.

After weeks of speculation as to when the deal would be inked, Lagardere finally pacted with Canal Plus to take a 34% stake in the pay television group’s digital platform Canal Satellite.

The deal will cost Lagardere some 5.7 billion francs ($896 million), most of which will be paid in cash, putting a value on Canal Satellite at $2.7 billion.

Good timing

Lagardere joins Canal Satellite at a time when the digital platform is about to turn its first profit. With 1.4 million subscribers, the digital operation saw revenues leap 33% last year to hit nearly $490 million. Lagardere’s 34% comes from Time Warner, Canal Plus’ main backer Vivendi and Canal Plus, which has reduced its stake to 66% from 70%.

As part of the deal, Lagardere and Canal Satellite will jointly develop interactive services for digital television.

In a second agreement, Lagardere has taken a 27.42% stake in MultiThematiques at a cost of around $235 million.

MultiThematiques is a joint venture of Canal Plus (27.42%), TCI subsid Liberty Media (27.42%), Vivendi (9%) and Gallic financial holding company Part’com (8.64%). The company creates thematic cable and satellite channels that air across 14 countries in Europe and is about to make a big push to get its channels in North and South America, as well as Japan.

Similarities seen

While the deal may not be in the same league as recent events in the States, there are similarities with Time’s earlier alliance with Warner. Lagardere Medias, headed by Arnaud Lagardere, publishes around 200 magazines in 35 countries via Hachette Filipacchi Medias, including the likes of Elle, Premiere and Car and Driver, and plans to develop thematic channels and interactive services based on its leading brand names. Company sources said the group will unveil two or three new channels in 2000.

Since taking command of Lagardere Medias 18 months ago, Arnaud Lagardere has been acquiring thematic channels, including music services MCM and MCM Africa, jazz specialist Muzzik, children’s channel Canal J and weather service Meteo.

By allying himself with Canal Satellite, Lagardere has guaranteed a digital outlet for these and future channels. MultiThematiques and Lagardere have also formed a joint company to develop and export new channels derived from Lagardere brands.

Speaking in Paris on Thursday, Arnaud Lagardere described the deal as “a historic moment in our development. We are involved in Internet (the group controls access provider Club-Internet), publishing and now digital television with the European leader in that sector.”

While the Canal Plus group will be relishing the prospect of accessing Lagardere’s huge portfolio of magazines as well as the promotional opportunities offered by the latter’s sizable radio interests, the marriage will also provide a heavyweight international partner in Canal Satellite’s ongoing battle with rival French digital platform Television Par Satellite (TPS).

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