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Birds set to nest

Rivals TPS an dCanal Satellite mulling merger

PARIS — France’s rival satcasters Canal Satellite and TPS may join forces, shareholders hinted last week, merging into a single entity worth an estimated $5 billion and boasting 2.8 million subscribers.

Until recently cooperation between the Canal Plus Group and arch rivals TF1, the private web that owns a 25% stake in TPS, would have been unthinkable.

But the economic downturn, along with other European satcaster mergers and the imminent arrival of digital terrestrial TV in France, which will create even more competition, has moved the goalposts.

The first suggestion of a merger came in a bolt out of the blue last week, when Canal Plus chief operating officer Denis Olivennes said a single French satcaster would be “logical.”

“Germany has a single operator, both Italy and Poland are to have a single operator,” Olivennes told Variety at the Deauville Film Festival Sept. 2; “whether or not it would be politically or legally allowed in France is another matter.”

TPS sources confirmed that some form of alliance was being taken seriously, and if the many issues at stake could be resolved swiftly, an announcement could come “within months.”

Canal Plus Group owns 70% of Canal Satellite; the other 30% belongs to Lagardere Media. With a much more complex shareholder structure, TPS is owned 25% by TF1, 25% by the utilities and communications group Suez, 25% by M6 (in which Suez and Germany’s Bertelsmann are major shareholders), 17% by France Telecom and 8% by pubcaster France Television.

Based on the number of subscribers — 1.67 million for Canal Satellite and 1.04 for TPS — analysts speculate that a combined platform might be owned 40% by Vivendi Universal, 20% by Lagardere, 10% each for TF1, Suez and M6, 7% by France Telecom and 3% by France Television.

The rapprochement, if it happens, comes at a time when a new realism is sweeping European television.

The Canal Plus Group, now under Vivendi Universal, has for months been putting its house in order, announcing the mergers of loss-making pay TV operations in Italy and Poland with those of its rivals; while in Scandinavia, where it also was up against a competing platform, it has sold its stake to its partner Telenor, which will continue to distribute Canal Plus’ premium channel. In Spain, the group is expected to pool some of its operations, with 49% Telefonica-owned rival Via Digital.

In these economically gloomy times, other operators are lowering their sights, ditching projects they were hyping 12 months ago and looking hard for cost savings. At TF1, which posted record profits of $250 million last year, plans to launch a financial news channel with CNBC have been quietly dropped, and the focus once again is on TF1’s main channel.

The same economic realities make a merger of France’s two satcasters politically far more acceptable. Although European antitrust authorities have held up France as an example of a country where two satellite platforms can co-exist, the reality is different, with fierce competition costing both Canal Satellite and TPS dearly. While Canal Satellite broke even last year, TPS has pushed back its breakeven date.

But there are plenty of hurdles on the way to a deal — not only regulatory and political, but technical difficulties posed by the incompatibility of Canal Satellite and TPS’ systems.

Expect much jockeying for position as the shareholders in both platforms seek the best deal for themselves. All would have to agree on the terms of the deal — and whether they want to stay in, or allow themselves to be bought out, before it went ahead.

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