Vivendi's Canal+ to Buy M7 Pay TV for $1.1 Billion
Purchase pushes Canal+ into seven European countries, bringing its total subscribers to almost 20 million.
(Bloomberg) -- Vivendi SA’s Canal+ agreed to buy pay-TV operator M7 Group for just over 1 billion euros ($1.2 billion) to expand in Europe, where it’s vying for subscribers with Netflix Inc.
The purchase of M7 from private equity firm Astorg Partners SAS pushes Canal+ into seven European countries, bringing its total subscribers to almost 20 million, Paris-based Vivendi said in a statement late on Monday. M7, with 3 million subscribers, operates a largely direct-to-home satellite business in central and eastern Europe, the Netherlands and Belgium.
The fast growth of Netflix in France has forced the once-dominant Canal+ to review its subscription offerings and introduce new products. Canal+, Vivendi’s biggest unit after Universal Music Group, also saw its sports proposition hit by Spain’s Mediapro, which won the broadcast rights for France’s Ligue 1 soccer games for the season starting next year.
While Vivendi said the M7 deal will help extend distribution for Canal+ content, analysts at Citigroup Inc. cast doubt on the rationale of acquiring the satellite business given the consumer shift toward on-demand streaming, and said in a research note that it’s a distraction for investors focused primarily on Vivendi’s attempt to sell a stake in its Universal Music Group business.
It “looks like another random Vivendi portfolio deal,” that might be a “Plan B” after Vivendi lost control at Telecom Italia, Conor O’Shea, an analyst at Kepler Cheuvreux, wrote in an email. He also questioned the appetite for Studio Canal content in French from M7 subscribers in central European countries.
Vivendi shares rose 0.4%to 23.48 euros as of 9:17 a.m. in Paris.
M7 distributes national programming as well international channels including Disney Channel, HBO, Eurosport, National Geographic, and Nickelodeon. The acquisition, which requires regulatory approval, will add more than 400 million euros in revenue and increase profit for both Canal+ and Vivendi, according to the Vivendi statement.
Netflix reached 5 million subscribers in France, Chief Executive Reed Hastings said in February, according to a report from Les Echos newspaper. That’s slightly more than the roughly 4.9 million that Canal+ had in the country as of March 31.
--With assistance from Blaise Robinson.
To contact the reporters on this story: Angelina Rascouet in Paris at arascouet1@bloomberg.net;Gaspard Sebag in Paris at gsebag@bloomberg.net
To contact the editors responsible for this story: Rebecca Penty at rpenty@bloomberg.net, Thomas Pfeiffer
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