Canal keeps rising

Bertelsmann rumors boost paybox's stock

PARIS — Canal Plus shares continued to rise Wednesday, despite growing skepticism over rumors that German group Bertelsmann is in talks to take a stake in Europe’s largest pay TV group.

As trading closed on the Paris stock exchange Wednesday, Canal Plus shares hit $71.70, up 4% on the day.

Canal Plus stock had already surged upwards on Tuesday, gaining 7% to close at just over $69, amid speculation that the company’s main backer, Vivendi, was in talks to sell 9% of Canal Plus to Bertelsmann. Vivendi currently holds 49% of Canal Plus and has said it intends to reduce that stake to closer to 40%.

Canal Plus, Vivendi and Bertelsmann refused to comment on the rumors Wednesday, but sources doubted that Bertelsmann would take a stake in Canal Plus.

Bertelsmann chairman Thomas Middlehoff is not a great fan of pay television, having recently extricated his group from the struggling German paybox Premiere.

In addition, while relations are said to be cordial between Vivendi chairman Jean-Marie Messier and Middlehoff, Canal Plus execs still fume over Bertelsmann’s decision in the mid-’90s to unilaterally abandon a strategic alliance with Canal Plus in favor of a merger with CLT.

“Vivendi and Bertelsmann’s interests seem to converge on publishing and the Internet, rather than television,” a Paris-based financial analyst said.

Vivendi upped its stake in Canal Plus to 49% in July by acquiring the 15% share held by the Swiss-based Richemont group.

Searching for a partner

Both Messier and Canal Plus chairman Pierre Lescure indicated in July that Vivendi would look to reduce its stake in the paybox by finding a strategic partner who does not have a major European presence. This was widely interpreted as meaning an American backer — possibly Time Warner — would step up to the plate.

While analysts who talked to Daily Variety were unable to trace the source of the Bertelsmann rumor, some opined that the strong interest in Canal Plus stock may be put down to traders returning from vacation with the conviction that the shares were simply undervalued.

“This sudden jump in the stock price is very much a mystery, but I don’t believe the Bertelsmann theory,” a London-based media analyst said.

Some observers believe that the Canal Plus shares have been driven up by expectations that the group is about to announce that it has found a buyer for part of its stake in Italian pay television group Telepiu.

Canal Plus holds 100% of Telepiu, although Italian pubcaster RAI will soon take 10%.

“I wouldn’t be surprised if a Telepiu deal was done soon, but I would be surprised if the French get a great price, so I can’t see why Telepiu would push up Canal Plus shares,” the London analyst said.

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