France’s anti-trust regulator has withdrawn approval for local pay-TV firm Canal+’s 2006 acquisition of rival TPS, citing breaches to conditions attached to the decision.
As well as imposing a E30m fine on Canal+, which is owned by French media…
France’s anti-trust regulator has withdrawn approval for local pay-TV firm Canal+’s 2006 acquisition of rival TPS, citing breaches to conditions attached to the decision.
As well as imposing a E30m fine on Canal+, which is owned by French media giant Vivendi, regulator Autorité de la Concurrence has ordered the group to resubmit its merger application within a month for approval.
According to the authority, Canal+ has not fulfilled ten out of a total 59 commitments that it laid out in 2006 to address competition concerns.
These include a commitment to make several channels (TPS Star, Cinéstar, Cinéculte, Cinétoile, Sport+, Piwi and Télétoon) available to other distributors as part of their own TV offerings.
“The objective of this whole set of commitments was to grant pay-TV distributors that would still remain after the transaction (mainly internet access providers) the access to programmes/channels that are sufficiently attractive to enable them to constitute competitive pay-TV channels packages, which would help to make competition livelier on the downstream market of subscription based pay-TV,” explained Autorité de la Concurrence in a statement dated 21 September.
Canal+ described the move as “highly unusual and disproportionate given the alleged breaches identified” by the regulator.
The group said: “It is naturally not conceivable to call into question a merger five years after it was completed. The Competition Authority clearly sees this decision as a means to force Canal+ Group to enter into new commitments, which would extend beyond those imposed under the authorisation given in 2006.
“However, Canal+ Group welcomes the opportunity given to it to open new discussions with the Autorités de la Concurrence as part of the new notification it has been requested to file. The conditions of competition prevailing in 2006 have completely changed and the Autorités de la Concurrence’s decision fails to account for the disruption caused to the TV market by the arrival of global internet companies and telecom operators.”
According to IHS Screen Digest senior analyst Richard Broughton, while the Autorités de la Concurrence will likely be able to back claims of violations to conditions that Canal+ had committed to, the French firm is justified in saying that the TV market has changed since 2006.
“At a pay-TV platform level, [Canal+ digital platform] CanalSat and TPS satellite services ended 2006 with a 40% share of pay TV households in France; however by end 2011, we expect CanalSat’s share to have dropped to just 27%,” wrote Broughton in an investors note.
“The rise of telco IPTV services has been the main driver behind this, with France one of the leading markets internationally in terms of IPTV distribution. Nonetheless, Canal+ remains the key premium brand in France.”
The development comes at an awkward time for Canal+, which is seeking approval from the same regulator to acquire a 60% stake in local rival Bollore Media in a deal worth E279m (US$383m).
By acquiring a majority stake in Bollore, the group would assume control of two DTT channels, Direct 8 and Direct Star, allowing it to further move into the free-to-air (FTA) market. The satellite TV broadcaster already owns FTA DTT news channel I>Tele.
Bertrand Meheut, CEO of Canal+, has also been quoted saying that his group could buy the rest of Bollore within the next few years for around E186m (US$255m).
Broughton told SatelliteFinance that it was by no means certain that this acquisition would have been rubber stamped even before the latest developments, as its plans for a new FTA channel, channel 20, have already been delayed by regulatory scrutiny.
“Canal+, for its part, points out that the channels covered by the Bollore transaction command a sub 5% audience share, which in its opinion hardly constitutes a major competitive threat; however with a potential influx of additional content from Canal+, a stronger programming line-up could boost the channels’ competitive profile – any regulatory scrutiny of the Bollore acquisition would have to bear this in mind, and any re-review of the market situation surrounding the Canal Plus/TPS deal will have to consider the impact of the Bollore acquisition if it were to be permitted,” he said.
But a spokesman for Canal+ insisted that although its application to acquire a share of Bollore will be filed and discussed with the Autorités de la Concurrence at the same time as its renewed merger, they will be dealt with in “two separate negotiations”.
He also said that the developments were unlikely to disrupt the IPO plans of French conglomerate Lagardere, which in April decided to delay listing its 20% stake in Canal+’s pay-TV operations amid the market volatility that stemmed from the natural disaster in Japan.
The markets are still too volatile for this to happen soon, he added.
