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Canal Plus Group Sued by French Guilds Over Failure to Pay Royalties

PARIS – Canal Plus Group, the pay-TV group owned by Vivendi, is being sued by French guilds representing authors, composers and music publishers, which contend that the company breached its contracts by failing to pay royalties for several months.

The SACD (authors and composers society), SACEM (authors, composers and music publishers guild), SCAM (multimedia authors guild), and ADAGP (Society of Authors in the Graphic and Plastic Arts), which collect royalties and redistribute them to authors, have filed a lawsuit in the Paris high court seeking Canal Plus’ payment of overdue royalties amounting to an estimated 50 million euros, according to an industry insider.

The suit alleges that Canal Plus stopped paying authors in order to spur a renegotiation of its contracts with the guilds and to obtain a bargain on overdue royalties as part of the company’s plan to save 300 million euros by 2018. Over a year, those royalties amount to approximately 100 million euros, according to a source working at the SACD.

Canal Plus Group declined to comment on the allegations.

When Vivendi unveiled its half-year results in August 2016 and announced losses of 106 million euros for Canal Plus Group, Vivendi said it aimed to have the pay-TV company save 300 million euros by 2018, half of it in production costs and programming. Then in February, when announcing its annual results for 2016, Vivendi said Canal Plus Group was on track to increase revenues by more than 5% and core operating profit by 25% in 2017.

During the previous financial year, Canal Plus’ pay-TV operations fell by 6.1% due to its plummeting subscriber base, which lost 492,000 subscribers in 2016 and totaled 5.2 million subscribers by year-end. Its revenue fell to $320 million (compared to $573 million in 2015), while its net profit dropped to $254 million (compared to $480 million in 2015).

All the guilds, apart from the SACD, have had to stop distributing royalties owed by Canal Plus to authors in the absence of payments from Canal Plus. The SACD has said that they will continue paying authors on behalf of Canal Plus until September and will lobby for the government to step in if the situation with Canal Plus is still deadlocked.

It’s the first time since Canal Plus Group’s launch in 1984 that the company has failed to pay authors for several consecutive months. No other media company has stopped paying those royalties, with the exception of Numero 23, a small TV channel, and the amount due in that case was minor.

Several industry insiders, notably Mathieu Debusschere, the managing director of the French film guild ARP, allege that the move is a deliberate ploy by Vivendi chief Vincent Bolloré, who has been vocal about his intention to put “Canal Plus on a diet.”

In the coming months, Canal Plus Group is expected to start negotiations with film guilds and authors societies over its window of exclusivity for new releases and digital distribution as part of ongoing efforts to modernize the France’s window release system.

Debusschere said Canal Plus Group’s alleged breach of contract with authors was perceived as an alarming sign by film bodies ahead of negotiations.

Separately, the French Animation Producers’ Union is also threatening legal action against Canal Plus, accusing the company of having failed to honor deals signed with French animation producers four months ago. Some French reports said Canal Plus was trying to renegotiate some deals downward by about 20% of commissioned budgets.

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