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Canal merger: One Plus one equals one

Potential monopoly could decide fate of many film projects

PARIS — The French film industry is in full-scale lobby mode right now as Canal Plus’ $1 billion acquisition of rival pay TV operator TPS is being examined by Gaul’s Competition Council, which will give its verdict on the deal by July 13.

It’s Canal Plus’ biggest deal since the Universal merger six years ago and will turn the company into a BSkyB-sized pay TV giant with more than 8 million subscribers.  

At issue is a potential Canal Plus monopoly that could singlehandedly decide the fate of many film projects, which rely on the paybox for capital gained from pre-selling TV rights to their features; whereas before, the existence of two pay TV operators gave indie producers another door to knock on when their projects were nixed.

“We are giving the council our opinion on an array of concerns,” says producer Jean-Francois Lepetit, president of the Chambre Syndicale des Producteurs de Films, one of several orgs repping every interest group from the big film companies Gaumont, Pathe and UGC to the smallest indie.

Jean-Bernard Levy, chairman of Canal Plus parent company Vivendi, maintains the film industry has “nothing to worry about,” because of Canal Plus’ legal obligation to invest 9% of its revenues in French cinema. After all, offers the chairman, if the company is bigger and better off when it no longer has a rival pushing up the cost of marketing and TV rights, that will automatically translate into more movie coin.

Last year Canal Plus shelled out E126 million ($160 million) for the pay TV rights on 120 films — of all the French movies produced. Rival TPS invested a more modest $43 million on some 45 films.

Industryites are divided over whether the merger will serve their interests, and what kind of demands they ought to be making.

Some in the biz — including potential buyers — believe the company should be forced to sell a part of its library as the price for gaining monopoly status. They also would like guarantees that Studio Canal won’t be able to gobble up any of Canal Plus’ French film acquisitions budget.

“Competition is always better than a monopoly,” says Lepetit, “but we must be realistic. As is the case in other European countries, we’d rather have one strong, healthy pay TV operator — just as long as it respects its obligations to French cinema. We want to obtain guarantees on that.”

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