Bouygues-owned TF1 Groupe, France’s leading commercial network, is on track to merge with M6 Groupe which is part of Berteslmann-owned RTL Group. The companies confirmed on Tuesday that they have entered into exclusive negotiations to merge the activities of TF1 and M6 to “create a major French media group” and “master the challenges arising from the accelerating competition with global platforms.”
Under the proposed deal, Bouygues would have a 30% stake in M6 Groupe, and RTL Group would retain 16% of the capital. Nicolas de Tavernost, the long-time CEO of M6 Groupe, would remain at the company as chairman, and Bouygues would have exclusive control over the merged company, acting in concert with RTL Group as a strategic shareholder.
Bouygues and M6 Groupe are being advised by Rothschild and JP Morgan, respectively. M6 Groupe is part of RTL Group, which is a subsidiary of Bertelsmann, and comprises seven TV channels and three RTL radio stations.
M6 Groupe ranks as the country’s second biggest commercial network, so an alliance between the two groups would mark an unprecedented consolidation within France’s TV landscape. The rationale behind the deal is to set up a European powerhouse that could have the scale and scope to compete with deep-pocketed global players like Netflix, Apple, Amazon, Disney and, soon, the merged WarnerMedia and Discovery entity.
The merged company would have 2020 pro forma revenue of €3.4 billion ($4.1 billion) and current operating profit of €461 million ($563 million). The synergies potential, meanwhile, is estimated at €250 million ($305 million) to €350 million ($427 million) per year within three years from closing of the pact. The combined group would largely dominate the advertising market in France. Le Figaro estimates that the entity would represent 70% of the ad market for the French TV business.
“The merger between Groupe TF1 and Groupe M6 is a great opportunity to create a French total video champion that will guarantee independence, quality of content, and pluralism – values that have long been shared by our two groups,” said Gilles Pélisson, chairman and CEO of TF1 Groupe. “It will be an asset in promoting French culture.” Pelisson said TF1 was now approaching a new stage in its development, “consistent with the strategic vision developed in the past five years.”
De Tavernost, meanwhile, pointed out “the consolidation of the French television and audiovisual markets is an absolute necessity if the French audience and the industry as a whole are to continue to play a predominant role in the face of exacerbated international competition, which is accelerating rapidly.”
The French industry veteran said the “combination of the two groups’ know-how will allow for an ambitious French response.”
The deal is subject to approval by anti-trust authorities, which will likely be a lengthy process. The companies said the transaction is expected to close by the end of 2022.
TF1 also owns Newen, an international film and TV production and distribution group comprising TF1 Studios, and production banners such as Telfrance, Capa, 17 juin média and Blue Spirit in France; Tuvalu and Pupkin in the Netherlands; Nimbus in Denmark; De Mensen in Belgium; and Reel One in Canada. Newen also launched in 2020 the production company Ringside Studios, in collaboration with “The Fall” producer Gub Neal and DoveTale Media.
Both TF1 and M6 took a hit in 2020 due to the pandemic. TF1 saw its consolidated revenues drop to €2 billion ($2.4 billion), an 11% year-on-year drop, while M6 posted a 12.5% year-old drop in consolidated revenue, at €1.2 billion ($1.5 billion).
The news was first reported by Le Figaro.