PARIS — Vivendi Universal and German rival Bertelsmann are poised to merge their sports rights interests in a new pan-European outfit with annual revenues estimated at about 500 million euros ($455 million).
The Paris-based conglom confirmed Wednesday it was discussing a deal that would bring together Canal Plus’ Sports Plus, UFA Sports, the equivalent at Bertelsmann, and sports communications group J.C. Darmon.
Bertelsmann holds 67% of RTL Group, which owns 28% of J.C. Darmon.
The partnership, which would be a 50/50 venture, comes at a time when Euro broadcasters are being bled dry by escalating sports rights fees.
The RTL Group, as Europe’s leading over-the-air broadcaster, and Canal Plus, Europe’s No. 1 pay TV group, could have much to gain from joining forces.
They can split costs and spread sporting events over a variety of different platforms. The deal would bring together a range of sports including soccer, Formula One auto racing and tennis. It also means lots of leverage in acquiring additional rights.
“In terms of revenue, this may or may not be a huge player, but that’s not as important as the direction it represents, the symbolic importance of these two companies working together,” said David Carter, a principal with Sports Business Group in Los Angeles. “They’ve found it’s cheaper and more profitable to join forces to dominate this landscape.”
As they look to strengthen their links, Vivendi Universal and Bertelsmann remain fierce rivals in the worldwide music business. The competition and the collaboration resulted last week in Bertelsmann topper Thomas Middelhoff ankling the Vivendi Universal board of directors, despite his close friendship with Vivendi Chairman-CEO Jean-Marie Messier.
“Beyond the relationship of trust and respect that exists between Mr. Middelhoff and Mr. Messier, Vivendi Universal and Bertelsmann intend to continue cooperating in areas likely to increase the value of both companies,” Vivendi U said in a statement.
Middelhoff was appointed an independent director of Vivendi in May 1999, before the French group merged with Seagram and added Universal Music and Universal Studios to Vivendi’s repertoire. Bertelsmann oversees a giant publishing empire along with television through RTL and music company BMG Entertainment.
Bertelsmann shocked its rivals last year by announcing an alliance with maverick online music site Napster. Vivendi Universal has taken a strong public stance against Napster and announced its own alliance with Sony in the online catalogue joint venture Duet.
Separately Wednesday, Vivendi Universal said it has agreed to sell its 50% in France’s top mail-order book club France Loisirs to Bertelsmann and was in talks to buy the German group’s half of music site GetMusic.
Bertelsmann’s BMG music arm and Vivendi’s Universal Music Group launched GetMusic two years ago but have not invested much money in the online project. Vivendi is not expected to pay much for Bertelsmann’s 50% interest.
(Reuters contributed to this report.)