French media groups to fend off broadband TV

12th December 2005, Comments 0 comments

PARIS, Dec 12 (AFP) - French media groups Vivendi Universal, TF1 and M6 announced that they were in talks to link up their satellite television operations to compete with Internet and mobile telecom services, driving up their shares on Monday.

PARIS, Dec 12 (AFP) - French media groups Vivendi Universal, TF1 and M6 announced that they were in talks to link up their satellite television operations to compete with Internet and mobile telecom services, driving up their shares on Monday.

The negotiations were aimed at creating "a possible combination" between pay television Canal Plus owned by Vivendi Universal, and satellite channel operator TPS, a subsidiary of French terrestrial television channels TF1 and M6, they said.

In early afternoon trading, shares in media conglomerate Vivendi Universal were showing a gain of 3.58 percent to EUR 26.03, in TF1 television 7.23 percent to EUR 23.74 and in M6 television 6.82 percent to EUR 24.42.

In a statement issued on Sunday, the companies said that a venture between Canal Plus and TPS, which are presently competitors in the French satellite TV market, would help them to compete against Internet and mobile phone providers, which have emerged as alternative sources of television content.

Subscribers to high-speed Internet services, known as ADSL, are now able to receive television content through their computer connection. Mobile phone companies have also begun to offer content directly to the phones of subscribers.

A possible merger between Canal Plus and TPS was welcomed on the stock exchange. Analysts said that the groups could reduce costs and boost their profit margins. But it could have implications for the French film industry and television landscape.

Both channels have up until now competed to provide content, often bidding up the price of rights to broadcast events such as football, and Canal Plus is an important distributor and source of finance for French film-makers.

Some analysts said that a merger between Canal Plus and TPS had been expected for four years and made sense given changes in the television market.

An analyst at Global Securities, Stephane Lefevre-Sauli, said: "The emergence of digital terrestrial television and the rise in power of ADSL since the beginning of the year have speeded up a merger that seemed unavoidable."

In France, 350,000 households now receive television content via their Internet connection, mirroring a fast-developing trend in the United States, and high-speed Internet subscribers are expected to number 9.7 million by the end of the year.

Analysts at US investment bank Merrill Lynch described the potential merger of the channels as "clearly good news for all the players involved".

The possible merger was also endorsed by French Culture and Communication Minister Renaud Donnedieu de Vabres, who said that a combined satellite platform would not necessarily mean less diversity for viewers.

"I think that it's about an economic strategy that is founded on a new technological environment and I understand the desire of two big groups ... to adapt themselves," he said.

In the statement issued on Sunday, the companies gave no timescale for the conclusion of the talks.

In a brief statement, they said: "No further comments or information will be provided by any of the three companies until the potential conclusion of these negotiations".

Copyright AFP

Subject: French news

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