INTERNATIONAL: French digital satellite leader looks at ways to turn itself into Europe’s own Time Warner - Canal Plus is a pioneer of pay-TV technology on top of its film and sport interests

This is the media group that pioneered pay-TV, driving subscriptions through premium films and sport - it even had the audacity to buy one of the country’s top football clubs. It is pouring investment into digital and has international expansion plans that often arouse the hostility of foreign governments.

This is the media group that pioneered pay-TV, driving

subscriptions through premium films and sport - it even had the audacity

to buy one of the country’s top football clubs. It is pouring investment

into digital and has international expansion plans that often arouse the

hostility of foreign governments.



Sound familiar? But in this case, the company is French and the football

club is Paris Saint-Germain. Canal+ is the leading pay-TV company, not

just in France, but in Spain, Italy, Benelux, Scandinavia, Poland and

North Africa. It launched Europe’s first digital platform, Canal

Satellite Numerique, as far back as April 1996 and has gone on to launch

digital systems in all of its other major markets.



Although we tend to give Rupert Murdoch sole credit for being able to

see round corners, Canal+ is a genuine pioneer. It launched its original

French analogue pay-TV service in 1984, when Sky was still a low-budget

pan-European cable channel broadcasting nature documentaries. Canal+ has

always been at the forefront of developing pay-TV technologies - its

subscriber management systems, produced by a 150-strong broadcast

engineering division, are exported around the world. ONDigital in the

UK, for instance, will use a Canal+ system.



But in terms of ownership - as opposed to systems - it has become a true

international player only in the last two years. Until the mid-90s,

expansion had been cautious, the highlight being a joint venture

start-up in Spain in 1990. But then, in 1996, it surprised everyone with

the pounds 1.2 billion acquisition of Nethold, a pay-TV group covering

Benelux and Scandinavia.



Many analysts believed that Canal+ was playing out of its league and

would get its fingers burned. It didn’t.



The group’s next move was to double its stake in Italy’s biggest pay-TV

group, Telepiu, to 90 per cent. Since taking control it has rebranded

the operation as Tele+, reinvigorated its marketing strategies and

launched the digital platform, D+.



Now, with all the obvious European expansion routes already explored,

Canal+ faces big strategic decisions in which internal politics are

assuming huge proportions.



Canal+ was originally launched as a subsidiary of the French

communications conglomerate, Havas, and though it was floated on the

stock market as a separate entity in 1987, Havas retained a controlling

stake. Earlier this year, Havas was acquired by Vivendi (formerly CGE),

an ambitious engineering and telecoms group determined to become a major

player in media.



Vivendi is now managing its Canal+ stake directly and there has been

speculation that this will bring Vivendi’s chairman, Jean-Marie Messier,

into conflict with the Canal+ chairman and chief executive, Pierre

Lescure.



Lescure had grown used to calling the shots. Now, as part of the vast

Vivendi group, he has someone looking over his shoulder.



However, both men do agree on one thing - the need for Canal+ to join

the super-league of media owners sooner rather than later. Earlier this

year, Messier stated that he envisaged Canal+ evolving into ’a European

Time Warner’. It has a long way to go.



Despite recent guerrilla attacks by rival media owners, it remains

strong in sports - outside of the UK and Germany it owns the pay-TV

rights to most domestic football leagues in Europe. But it is not a

world player in entertainment. Granted, it owns Canal Studio+, is a

major supporter of the French film industry, and invests in independent

productions (like the English Patient, for instance) around the world,

but it is acutely aware that, to play at the top table, it needs a big

studio, preferably a Hollywood major.



Its efforts down that road have so far been fitful - earlier this year

it backtracked on plans to acquire Polygram Filmed Entertainment.

Messier has made much of the fact that he has a war chest of pounds 600

million - but Polygram’s asking price was pounds 612 million.



Plan B now looks the more likely option. Lescure and Messier have let it

be known that they would look favourably on a strategic alliance with a

large UK or US media group. Time Warner, for instance, has a stake in

the Canal Satellite digital platform in France and possible areas of

future co-operation have been discussed.



The quickest way for Canal+ to become Europe’s Time Warner would be a

merger. The City and Wall Street clearly believe that’s a possibility -

fund managers in the two centres now hold 22 per cent of Canal+

equity.



But a protectionist French government would have something to say about

that and, in any case, Messier and Lescure are probably still too

ambitious on their own accounts to want to sell out quite yet.



Understandably, given the pioneering heritage of Canal+, they believe

that developments such as the convergence of TV and the internet will

transform the media landscape. With that in mind, Canal+ is working with

AOL on new multimedia products.



Lescure’s catchphrase is: ’Anticipate change in order not to submit to

it.’ As Canal+ seeks to join the super league, change, one way or

another, is inevitable. The only real issue is just how much

’submission’ that is likely to involve.



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