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  • TV platform forecasts to 2026: DTT and pay-lite set to grow
    TV platform forecasts to 2026: DTT and pay-lite set to grow
    June 6, 2018

    Football embraces Chinese ‘hot’ money – at a risk

    In a display of chutzpah, Mediapro acquired the Ligue 1 domestic broadcasting rights from 2020-24 in what is the most disruptive shock to the French broadcasting industry in a generation; one that is likely to accelerate Canal+’s decline, force a review of the outdated regulatory framework, and possibly spur an M&A spree. The Mediapro move only makes sense as a highly speculative bid to resell the rights, or a dedicated channel, to French platforms in 2020. The odds are high that the broker ultimately fails to fulfil the contract, as just happened in Italy, where Sky is now expected to get the Serie A licence. Precedents of new entrants acquiring domestic top-flight rights bode poorly for Mediapro, and for the league. The Ligue 1 may live to regret the introduction of a ‘re-sell right’ into its licensing terms.  
  • May 31, 2018

    French, Spanish and Italian telcos won’t bankroll further footb [...]

    The rights auction for France’s Ligue 1 will be held on 29 May. With Altice’s struggling subsidiary SFR unlikely to bid, Canal+ and BeIN Sports may not offer enough to meet reserve prices, triggering a postponement of the auction. In Spain, stiff fixed-line competition is shifting battlegrounds from football to scripted content. The Champions League has yet to sign up a platform for next season, while the upcoming 2019-22 La Liga rights auction may well fail to increase domestic revenues. With just 12 weeks before next season kicks off, Italy’s Serie A is also yet to secure a broadcaster, although we expect the league to back down and settle with Sky. In this deflationary environment, top clubs are eyeing a new Club Word Cup as an extra revenue stream – running the risk of further widening the financial chasm between themselves and smaller clubs.    
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  • May 24, 2018

    European video-on-demand: Playing catch-up to the UK

    The UK continues to lead the EU5 in take-up and consumption of video-on-demand services, with close cultural alignment and a historic williness to pay for TV content making it a receptive home for US SVODs. Netflix dominates in most markets, benefiting from high-profile US imports and big-budget local productions. Local SVODs are struggling, with those operated by FTA broadcasters facing considerable challenges. Collaboration between local broadcasters and pay-TV platforms is essential if they are to hold at bay the threat of Netflix and co., with an increasingly favourable regulatory environment opening the door for unprecedented collaboration.      
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  • TV platform forecasts to 2026: DTT and pay-lite set to grow
    TV platform forecasts to 2026: DTT and pay-lite set to grow
    July 26, 2017

    European subscription and pay-TV monitor

    Across Europe, markets are becoming more competitive. Incumbent pay-TV paltforms (e.g. Sky or Canal+) face increasing threats from both internet-based services (e.g. Netflix and Amazon), and telecoms operators.Telecoms providers are proving the most potent challengers as they enter the premium football rights market to create attractive triple and quad play bundles – examples include BT, SFR and Telefónica. The latter is now the main pay-TV operator in Spain whereas France’s Canal+ has entered into a strategic alliance with Orange. Across the top five markets (UK, France, Germany, Spain, and Italy), Sky remains the leading operator with an estimated 21.5m video subscribers, twice as many as Netflix
  • European scripted content - Rising demand and consolidation
    European scripted content - Rising demand and consolidation
    July 11, 2017

    European scripted content

    The US scripted content boom is spilling over into Europe: Free-to-air TV drama ratings have proven resilient but as costs and audience expectations have risen budgets are under pressure, necessitating flexible co-financing arrangements with American broadcasters, and Netflix and Amazon. Pay channels have boosted output—with uneven results. Long-term IP control is a key factor behind independent production consolidation, led by broadcasters seeking a secure stream of content and diversification away from advertising. Notable developments include the new wave of Berlin-based, internationally-financed series, the rise of domestic French content and Sky Italia’s edgy originals, Telefónica’s giant leap into Spanish dramas, and the continuation of Britain as an export powerhouse.

  • December 11, 2015

    Canal+: things will get worse before they get better

    Booming sales in Africa offset the steady decline of the Canal+/CanalSat subscriber base in France, delivering low but positive group revenue growth. Canal+’s management, now firmly under Vincent Bolloré’s control, is committed to reversing the French decline by investing €2 billion in new set top boxes and content – but production of original series is hampered by corporatist regulation and the market for sports rights is increasingly competitive. Earnings are slipping – under a high fixed cost model any revenue decline depresses profit margin. The trend will worsen under the weight of the increase in domestic football costs next year as well as the planned extra spend on content and set-top boxes.

  • April 20, 2015

    Free-to-air TV business models

    Prospects for European free-to-air commercial broadcasters are clouded by a weak advertising recovery, decline in TV set viewing by younger age groups and increased competition from pay-TV and international operators. Growth opportunities are nevertheless to be found in fine tuning families of channels to sustain audience shares, increased production of differentiating original content, wider HD and catch-up programmes distribution and smart pay-TV developments – broadcasters must focus on strengthening the quality gap between the TV set experience and online entertainment. ITV has shown the greatest increase in profitability, benefitting from its global production strategy. RTL and ProSiebenSat.1 have a modest upside from carriage fees for HD channels but production and pay-TV initiatives have yet to pay off. TF1 and M6 have withdrawn from pay-TV and face regulatory obstacles to launching channels and production investments. Mediaset in Italy should benefit from the ad market stabilising, but risks large pay-TV losses. In Spain, Mediaset and Atresmedia enjoy an ad boom.

  • December 18, 2014

    Canal+ at 30: time for a strategic review

    In 2014 Canal+'s core premium French pay-TV business has continued to lose subscribers and swallowed a VAT increase. But this was offset by growth in FTA ad sales, in ARPU, in overseas subscriptions and by acquisitions. EBITDA has continued the decline which commenced in 2013. Eleven years ago Canal+ in France and Sky in Britain had the same household penetration, but since then a gap has opened up and now Canal+ lags behind at 21% compared to Sky's 34%. The French platform suffers from its regulated focus on films and its neglect of hardware. A deep revision of Canal+'s model is needed, through building a library of scripted series, and a revamp of the consumer proposition to differentiate on quality and user experience. Building on recent initiatives, mediocre IPTV services should be bypassed by OTT bundles on fibre, and the satellite offering upgraded.

  • April 9, 2014

    Sensible duopoly carve out French football rights

    As we expected, Canal+ won the broadcast rights to the Ligue 1 top three weekly games in 2016-20 and beIN Sports have the seven remaining fixtures Sensibly, the two competitors avoided a bidding war but ended up paying 28% more than the 2012-16 agreement – the first substantial increase since 2005 The new contract will help Canal+ sustain pricing and marketing. Meanwhile, even if it completely lost the ongoing Champions' League auction, Canal+'s football prominence would remain.

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  • November 28, 2013

    Canal+’s options to revive domestic growth

    France's Canal+ faces an increasingly challenging domestic market, due to IPTV expansion, competition from Al-Jazeera's beIN Sport and the threat of a Netflix launch – on top of sluggish consumer demand in a dull economy. Inflated promotional activity has brought rising churn and failed to stop subscriber base erosion, while denting profitability. Headline revenue growth comes from international channels, film production and FTA TV. Anxious to avoid interference from its owner Vivendi, Canal+ has followed a conservative investment policy that may have undermined growth. The spin-off of SFR and possible dissolution of the conglomerate would leave Canal+ free to contemplate more aggressive moves, in IPTV, set-top boxes and possibly through acquisitions.

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  • Orange
    July 11, 2012

    Orange premium TV R.I.P.

    France's Orange Sport closed last month after France Télécom declined to bid for a renewal of its four-year licence to broadcast Ligue 1 football. The future of its sister film channel, Orange Cinéma Séries, remains unclear. The strategic aim for Orange Sport was confused from the start – standalone profit centre or loss leader, fully fledged alternative to Canal+ or add-on to it. Orange's premium TV project was a failure: we estimate its cumulative losses at €1.2 billion, while Orange's broadband market share and retail price premium shrank during the four years of its operation. But it did arguably strengthen Orange's hand in carriage negotiations with Canal+.

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  • January 18, 2012

    Al Jazeera needs Canal+

    Qatar's Al Jazeera will launch its French pay-TV channel by this summer, showing weekly Ligue 1 and Champions League games, but it has yet to disclose a business plan and distribution deals. The new channel is a complement to Canal+, which broadcasts the most attractive games. Al Jazeera would need to obtain distribution on the Canal+ platform. Even if such a deal were to be struck, Al Jazeera would struggle to break even.

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  • September 15, 2011

    Canal+ bursts into free TV

    Advancing its free-to-air TV project, France's Canal+ is to buy Bolloré TV's national channels for €465 million to gain (scarce) licences for FTA terrestrial broadcast. Canal+ plans to leverage its library of original programming to attract upscale audiences, neglected by commercial rivals. However, the Vivendi investment case of a 9% return on capital is built on incompatible assumptions about profit margins and market share – to grow the latter in a mature market, a channel needs to sacrifice the former.

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  • August 1, 2011

    Sky FY 2011 results: excellent year of delivery

    Fiscal 2011 was a vintage year for Sky, which reported a 23% growth in operating profit and 51% increase in free cash flow as it started to reap the full benefits of its investment in multi-product growth. Q4 2011 showed signs that tougher economic conditions are starting to bite, although the sharp fall in TV product additions was balanced by a fourth consecutive bumper quarter in home communications, in which Sky outperformed the rest of the market. Strong focus on operating efficiencies and product innovation combined with big investment in UK originated content should position the company well as competitive pressures build in the medium- to long-term, at the same time as allowing continuing strong profit growth.

  • June 27, 2011

    Football auction unsettles Canal+

    France's Canal+ has won the rights to show two Ligue 1 games a week from 2012 to 2016 for €420 million per year. A surprise (and skilful) bid by Qatar's Al Jazeera won two lower profile games for €90 million per year. We believe Al Jazeera could, at best, reach EBITDA break even by the end of the four year licence. Merging with CFoot and Orange sport would help. No bidders met the reserve price for the package of lower tier six games, but Canal+ would be well advised to bid in order to avoid the strategic risk of leaving competitors with most Ligue 1 games. Without this package, Canal+ faces limited subscriber and ARPU erosion balanced by €45 million savings on the current licence.

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  • March 2, 2011

    Canal+ France prospectus

    Canal+ France has issued a prospectus in view of the April flotation of Lagardère's 20% stake, which could still reach an agreement to sell with majority owner Vivendi. The prospectus provides a unique insight on the performance of Canal+, which has increased ARPU and profitability in the past three years, despite erosion of its subscriber base due to competitive pressures and the recession. Management's revenue and profit targets for 2013 appear within reach, and we also see potential upsides.

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    December 2, 2010

    France: Update on free-to-air and pay-TV

    The digital transition is almost complete in France, five years after the launch of DTT. After undergoing an audience share decline, TF1's share is stabilising. In contrast, M6 improved its audience share during the transition. Both groups are likely to remain dominant in the FTA TV market, thanks to the partial withdrawal of public TV from advertising sales. The advertising recovery in 2010 was strong. Thanks to its diversification, M6 is less exposed to the cycle than TF1, which is rebounding more strongly. M6 is also structurally more profitable. Pay-TV platform growth has stalled, with subscription decline at Canal+ somewhat balanced by growth of low cost packages of IPTV providers. Canal+ will benefit from the withdrawal of Orange from premium TV and a new distribution deal with Orange. Combined with the roll out of new set-tops with PVRs, we are moderately optimistic on Canal+ prospects.
  • Vivendi
    November 4, 2010

    Vivendi scenarios for 2011

    Vivendi is close to being in a cash position to buy out minority shareholdings in SFR and Canal+, shedding the image of a ‘conglomerate' of partly owned and diverse assets, which has weighed on valuation Acquiring Vodafone's 44% stake in SFR (now only a question of price) would allow Vivendi to rebrand itself as a telecoms story, serving France, with Maroc Télécom and mainly Brazil's GVT supplying the upside To fully acquire Canal+, Vivendi's offer will need to consider Lagardère's option of floating its 20% stake. Owning 100% of Canal+ and SFR opens the narrative of a ‘French media/telecoms champion' – which we find less credible.
  • Orange
    July 7, 2010

    Orange sets exit strategy from premium TV

    FT has put majority stakes in Orange Sport and Orange Cinéma Séries on the block, and claims to have held discussions with News Corp. We think it unlikely that an investor would be interested in entering the French pay-TV market, dominated by Vivendi's Canal+. We believe FT could find a buyer for Orange Sport in Disney's ESPN, which could prove viable if a cross-retailing deal is reached with Canal+. A Eurosport merger is another option. Orange Cinéma Séries could be viable under a new owner, if it widens it distribution to other platforms. Now officially on the way out of the pay-TV production business, a welcome decision in our view, Orange can focus on improving the consumer value of the basic TV offering on the triple play marketplace.
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  • March 16, 2010

    Canal+ thinking positive

    Vivendi's pay-TV unit Canal+ posted flat revenues in 2009, as international growth balanced domestic erosion. Driven mainly by growth internationally, we anticipate recovery to annual revenue growth barely above 2% by 2012, with a slightly deteriorating EBITA margin. Canal+ could do better if it invests in the latest generation of set-tops and, possibly, free to air television.

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  • January 28, 2010

    Orange possible U-turn on pay-TV and Canal+

    France Télécom's forthcoming Chief Executive Officer, Stéphane Richard, is considering a radical shake up and potential U-turn of Orange's TV ‘content' strategy, initiated and driven by CEO Didier Lombard. Orange could withdraw entirely from supplying premium pay-TV channels (sports and film) and distribute only third party content, as has been the focus of other broadband suppliers. A retreat of Orange from TV content would enable a more active cooperation with the Canal+ Group, benefiting both partners, who have largely overlapping subscriber bases.
  • March 11, 2009

    Canal+ FY 2008 results

    Vivendi's Canal+ Group overshot its 2008 EBITA target, despite sluggish subscription growth, delivering to shareholders some of the promised post-merger gains from “synergies” with TPS. For 2009, Vivendi has issued cautious revenue and EBITA guidance that, on current trends, will easily be met. However, management has now recognised that initial targets for 2010 will be “hard to reach” – as we have already warned. In the medium term, a further downside risk for Canal+ Group is the likely loss of exclusivity for the distribution of themed channels, which could be the outcome of the anti-trust investigation of CanalSat, with a ruling expected in 2009.

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  • January 9, 2009

    Orange and Canal+ make peace

    Ending a simmering commercial dispute, Vivendi's Canal+ has agreed to distribute its packages to France Télécom's Orange TV satellite customers, allowing Orange to relaunch its DTH platform (targeting 4 million customers off the DSL TV footprint) after its dismal ‘do-it-alone' first six months. Canal+ recruitments will benefit from the resumption of active marketing for its packages over Orange TV platforms, after a poor year for subscriber growth. Canal+ catch-up TV will now be available to all Orange Canal+ DSL TV subscribers, as it is to those on Free, where it is very popular, plus Orange satellite subscribers, thus giving Orange back the leadership position on IPTV in France.

  • June 8, 2008

    Orange threat to Canal+ targets

    Canal+ is entering a critical phase of growth following the recent merger with its former rival Télévision Par Satellite (TPS). Vivendi has set short term guidance targets for 2010 of 11.5 million subscriptions, turnover above €5 billion and more than doubling of EBITA from €490 million to over €1 billion. This presentation examines these targets and concludes that Canal+ will fall short of all them. In the best case baseline scenario of least competition from other pay-TV and free-to-air (FTA) services, it projects EBITA in 2010 of just €890 million.

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