French Satellite TV Firms Set to Merge

03 January 2007

PARIS: Tomorrow (Thursday) will see the consummation of a satellite TV marriage between Vivendi owned pay-television group Canal Plus and French rival TPS.

The €1.8 billion ($2.38bn; £1.21bn) catalyst for the merger was Canal's successful gamble in securing the 2005-08 TV rights to matches in the leading French soccer league - a move that enabled the Vivendi company to siphon customers from TPS and compel it to cede to merger.

Despite an outlay of €600m annually for the soccer rights, Canal Plus expects 2006 to produce an operating profit similar to the €203m recorded in 2005.

Chief executive Bertrand Meheut says the merged company will not seek growth via the current magic bullet of packaging TV with broadband. Instead expansion is likely to be achieved cross-border rather than cross-category.

Although weak foreign subsidiaries have traditionally corroded Canal's bottom line, Meheut insists there are opportunities to acquire or partner pay-TV operators in other countries - unlike the days of yore when, he says, the company lacked the management talent to revive its foreign businesses.

That situation has been rectified, Meheut insists, presumably referring to his own recruitments as ceo in 2002.

Meantime, back on its home patch, Canal has to contend with the growing popularity of digital terrestrial television.

Data sourced from Financial Times Online; additional content by WARC staff