Europe's first pay TV net invents new services

PARIS — The glass-walled, TV-consoled office of Bertrand Meheut, Canal Plus Group prexy-CEO, looks onto a leafy street by the Seine.

Modern but modest, it’s where the buck stops at one of Europe’s greatest TV gamechangers.

Launching Nov. 4, 1984, Canal Plus was Europe’s first big pay TV net.

Ramping up 1 million clients by 1986, it confounded skeptics. “Canal Plus changed the face of the TV industry, setting in course Europe’s multichannel revolution,” says Screen Digest’s Guy Bisson.

Paying large coin for exclusive rights, it helped make soccer a big business, Bisson adds.

And it powered Gaul’s movie biz. “French cinema’s continued health is very much the result of Canal Plus’ involvement,” says Francois Godard at Enders Analysis.

Canal Plus’ primetime yakker “Nulle part ailleurs” — a satirical show featuring the Guignol puppets and hosted by a facsimile of TF1 news anchor Patrick Poivre d’Arvor, whose long career ended in 2008 — broke in a generation of comedians, including Alain Chabat, Jamel Debbouze and Antoine de Caunes. The show also helped CP emerge as the voice of liberal independent irreverence in a country not accustomed to establishment criticism, observes Bertrand Villegas, co-founder of the Wit, a TV consulting and tracking service.

And CP pioneered the pay TV subscription model, “building a brand and platform, with simple but effective technology,” says Bisson.

Appointed in 2003, Meheut spent his early years turning CP Group around, then digesting rival TPS, owned by TF1 and M6, which merged with Canal Plus in 2007.

The Group — Canal Plus, CanalSat, StudioCanal and Canal Overseas — has proved recession-resilient.

At more than $700 million in operating profits on $3.4 billion in revenue, CPG’s first-half earnings were 34.5% up year-on-year, goosed by a 15% ad rise, increased subs and $523.25 million in TPS merger synergies. It has no debt.

CPG is exploring growth opportunities in the face of major challenges, including the French TV market’s growing maturity, Gallic telcos offering low-price pay TV to drive triple play, and the availability of free online content. A main challenge is moving households up the subscription ladder and raising average revenue per user through digital upgrades. To this end, CPG has forged two new low-pay packages: CanalSat’s Initial, with 50 channels, and a half-price offer, Canal Plus Week-End.

CPG has to reach out ever-more to specialized subscribers, says Meheut.

To upgrade current clients, CPG has hiked the number of its HD channels to 15 and last November launched Le Cube: an HD-capable, Internet-connected PVR.

Per-user revenue edged up by $1.20 year-on-year through June 30. “More customers are HD and PVR users,” Meheut says, adding that such customers undergo less churn.

International revenues, already 20% of income, also look set to rise.

While Gaul still has potential, Meheut says, “It’s more difficult to build market share in a country like France, where we’re already strong, than grow in countries where our market share is close to zero.”

Cyfra Plus, CPG’s Polish service, has added 290,000 net subs in a year, at an average per-user revenue of $30. In June, CPG announced its first Asian service, a joint satellite TV venture with Vietnamese pubcaster VTV.

Villegas says that, “at 25, Canal Plus remains one of France’s most prestigious TV brands.”

Abroad and in France, “Linear subscription TV is still the big, important moneymaker,” says Bisson.

“I believe we’ve really reshaped pay TV in France,” says Meheut. “Everybody was telling me the model was dead. I’m very proud to demonstrate they were wrong.”

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