13/12/2005

The revelation on Sunday of negotiations for the merger of the two French satellite programme providers, CanalSat (around 3 millions subscribers) and TPS (1,7 million) has aroused concern among French cinema professionals. The manoeuvres in the backrooms by shareholders of the two outfits (Canal+, 100% owned by Vivendi Universal, controls at 66% by CanalSatellite, and Lagardère the rest; TPS belongs to TF1 at 66% and M6 at 34%) will no doubt be concluded quickly with Canal+ taking control which will create a veritable empire since the encrypted network has 5 millions subscribers. The reasons for this operation? The slowing down in the growth of these two networks following the start of TNT last Spring and the rise in power of the Internet access operators and telecoms who have huge ambitions (and very deep pockets) in the broadcast territory. Also, CanalSat and TPS battle for the rights to films and to football, as well as being caught in an escalation in publicity budgets with little return. The fusion envisages keeping both services (with probably a top layer of services), will bring Canal + to around 10 millions subscribers, at the same number as top European pay TV network, BskyB.

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But the key role played by Canal + in the financing of French cinema (136,6 M€ invested in 124 French features in 2004) leaves French film professional concerned about this merger. Ciné Cinéma (CanalSat) invested 9,4 M€ in 2004 and TPS Cinéma 31,8 M€. The total C+ - Ciné Cinéma – TPS represents a combined total of 177,8 M€ euros out of the 819,7 million invested in French film production in 2004. According to the Society of Authors-Directors-Producers (ARP), the merging of TPS and Groupe Canal + "which comes from a business logic, risks a strong reduction in pluralism and will strengthen the horizontal and vertical integration of the Groupe Canal + in the pay TV market", and which is "the point of departure for a substantial modification of our film world, allied with the risk of concentration and the risk of deregulation (arrival of the telecoms, de-localisation of the broadcast of certain TV channels)". Also the ARP demands that the authorities "look swiftly and profoundly into it and insist on the obligations of and by the pay TV operators and to reinforce the conditions of the maintenance and the development of independent film production".

(Translated from French)