Canal Plus big bid OK’d

Gaul greenlights feevee merger

French competition authorities have greenlit Canal Plus’ $1 billion takeover of rival pay TV operator TPS and attached a major condition that will affect the Gallic group’s dealings with Hollywood.

The Competition Council ruled that output deals with the majors must be limited to three years; five years is currently the norm.

Condition, one of 59 thrashed out during eight months of talks between the paybox and the authority, is designed to curb the powers of what will be a giant satellite TV monopoly, boasting 9.5 million subscribers.

New entity will be 65% owned by Canal Plus parent company Vivendi, 20% by Lagardere; webs TF1 and M6, joint owners of TPS, will hold the rest.

Announcing the news Thursday, Canal Plus Group CEO Bertrand Meheut called the merger a fundamental step in Canal Plus’ development, adding, “Our aim is to give a new impetus to Canal Plus and to pay TV in France.”

He expects to take possession of TPS in November.

While paybox film arm StudioCanal and its massive 5,000-title film library fall outside the merger, the Competition Council asked Canal Plus for guarantees that it would sell its films to other broadcasters and not hoard content for itself.

StudioCanal prexy Olivier Courson, who is also secretary general of the Canal Plus Group, will be closely involved when the group lays its hands on TPS’ Hollywood output deals. Pacts coming up for renewal include those with Disney and Warner Bros., and Canal Plus folk admit they don’t know what contractual intricacies they are going to find until they read the fine print.

Canal Plus’ own Hollywood deals concern its as-yet-unchanged flagship channel, which falls outside the merger, and so should not be affected by the changes until they come up for renegotiation. Then, the three-year limit also will apply.

Ironically, video-on-demand and other market-altering developments in content distribution make shorter contracts a better option for all parties, a company exec mused.

Only a few years ago, the group was in the throes of a major restructuring designed to slash debt that had spiraled to $6.4 billion.

But the merger, which comes after more than a decade of costly rivalry between the two operators, together with StudioCanal’s recent acquisition of Brit theatrical distrib Optimum, shows the group is back on the offensive.

A key argument in favor of the merger was the evolving Gallic pay TV market, with the arrival on the scene of wealthy telcos such as France Telecom offering TV via Internet.

The complex merger is likely to take many months, involving decisions about the two platforms and their array of channels that have yet to be worked out, Meheut said.

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