Conseil supérieur
de l’audiovisuel
CONSEIL SUPERIEUR DE L’AUDIOVISUEL
17-05-2007
MERGER CONTROL IN
AUDIOVISUAL SECTOR
IN FRANCE
Prague
Thursday, May 17, 2007
Bernard CELLI
Deputy Head, Studies Department
CSA
Agenda
Conseil supérieur
de l’audiovisuel
CONSEIL SUPERIEUR DE L’AUDIOVISUEL
BERNARD
DEP – Pierre PETILLAULT, Didier GUILLOUX,
Bernard CELLI -–17-05-2007
20/10/2006
The current presentation intends to describe the French merger
control process thanks to the description of two case studies:
On the pay TV market
The TPS-Canal+ Merger in 2006-2007 ;
On the free to air TV market
The acquisition by TF1 of a 33.5% stake in AB Group in 2007
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Agenda
Conseil supérieur
de l’audiovisuel
CONSEIL SUPERIEUR DE L’AUDIOVISUEL
BERNARD
DEP – Pierre PETILLAULT, Didier GUILLOUX,
Bernard CELLI -–17-05-2007
20/10/2006
The current presentation intends to describe the French merger
control process thanks to the description of two case studies:
On the Pay TV market
The TPS-Canal+ Merger in 2006-2007 ;
On the Free to air TV market
The acquisition by TF1 of a 33.5% stake in AB Group in 2007
-3-
The TPS-Canal+ Merger 1/2
Conseil supérieur
de l’audiovisuel
THE PLAYERS
CONSEIL SUPERIEUR DE L’AUDIOVISUEL
BERNARD
DEP – Pierre PETILLAULT, Didier GUILLOUX,
Bernard CELLI -–17-05-2007
20/10/2006
CANAL +
Canal+ is the French pay TV leader. Mainly active in :
Satellite pay TV distribution (CanalSat) ;
French pay TV premium rights dealing (Cinema and Sports) ;
Premium and thematic channels edition (Cinema and Sports).
TPS
TPS was created by TF1, M6 in 1996 to compete against CanalSat.
Before the merger, TPS was mainly active in :
Satellite pay TV distribution (second satellite distributor) ;
French premium pay TV rights dealing (Cinema) ;
Premium and thematic channels edition (Cinema).
-4-
The TPS-Canal+ Merger 2/2
Conseil supérieur
de l’audiovisuel
THE SCOPE OF THE MERGER
CONSEIL SUPERIEUR DE L’AUDIOVISUEL
BERNARD
DEP – Pierre PETILLAULT, Didier GUILLOUX,
Bernard CELLI -–17-05-2007
20/10/2006
The merger
Canal+ France Shareholders
Vivendi Universal
• Announced End 05
• Effective as of Jan. 07
100%
Groupe Canal +
Lagardère
65%
Canal+
Group
20%
TPS
TF1
9,9%
M6
5,1%
Canal + France
(TF1, M6)
Source : CSA
(Vivendi)
Canal+ France includes :
TPS, CanalSat (=100% of French satellite pay TV)
48,48% share of Canal+ SA (premium channel)
Thematic channels edition
Canal+ France
Pay per view activity
7 M pay TV subscribers
Canal+ Distribution
Source : CSA
Media Overseas
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Authorities involved in the merger process
DGCCRF (Ministry), Competition council, CSA
Conseil supérieur
de l’audiovisuel
Independannt
administrative authorities
Conseil Supérieur de
l’Audiovisuel (CSA)
French Electronic
Communications regulator
(ARCEP)
RECOMMENDATION
RECOMMENDATION
Competition Authorities (Conseil de la concurrence)
RECOMMENDATION
Economy, Finance and Industry
Minister (DGCCRF)
Government
CONSEIL SUPERIEUR DE L’AUDIOVISUEL
BERNARD
DEP – Pierre PETILLAULT, Didier GUILLOUX,
Bernard CELLI -–17-05-2007
20/10/2006
DECISION
Appeal before the French
Highest administrative Court
(Conseil d’État)
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Impact of the merger on the value chain
Conseil supérieur
de l’audiovisuel
CONSEIL SUPERIEUR DE L’AUDIOVISUEL
BERNARD
DEP – Pierre PETILLAULT, Didier GUILLOUX,
Bernard CELLI -–17-05-2007
20/10/2006
Upstream
market
Content
production
and dealing
Intermediate
market
Programming
Downstream market
Pay TV services
distribution
Transmission
Broadcasting
Viewers
Rights
Holders
TV channels
Pay TV services
providers
Transmission
services
providers
Main issues from a competition point of view
Upstream market:
Intermediate market:
Canal+ France holds
major Cinema and Sports
rights (French Premier
League, Studio Canal…)
Canal+ France controls
the 2 French premium
channels Canal+ and TPS
Star and most of the
most attractive thematic
channels (Planète…)
Downstream market:
a unique satellite pay TV
distributor left in France
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The Ministry Decision
Conseil supérieur
de l’audiovisuel
CONSEIL SUPERIEUR DE L’AUDIOVISUEL
BERNARD
DEP – Pierre PETILLAULT, Didier GUILLOUX,
Bernard CELLI -–17-05-2007
20/10/2006
The Aug. 06 Ministry Decision: a clearance under conditions
Based on the CSA and the competitions authorities recommendations.
Canal+ France agreed to comply with 59 obligations to protect competition.
Fostering competition on the innovative downstream market (ADSL, VoD…)
was seen as key by the competition authorities who therefore imposed
some structural obligations (unbundling) on the intermediate market.
Some key obligations:
Unbundling of TPS Star premium channel and 3 former TPS thematic
channels in order to allow competitive distributors (especially ISPs) to
create their own pay TV offer
No exclusive rigths on VoD
All obligations may last
up to 5 years
Independent channels protection
-8-
CSA decisions
Conseil supérieur
de l’audiovisuel
FROM A PLURALISM PERSPECTIVE
CONSEIL SUPERIEUR DE L’AUDIOVISUEL
BERNARD
DEP – Pierre PETILLAULT, Didier GUILLOUX,
Bernard CELLI -–17-05-2007
20/10/2006
The CSA reviewed the operation from a pluralism perspective in
March 2007.
CSA merger control mechanism (article
39 of the French Broadcasting Law)
Licences transfer of control (article 42-3
of the French Broadcasting Law)
OK
OK
Canal+ France is below the
Some of the obligations
maximum number of
imposed by the Minister
authorisations that a player
(regarding the content of the
can hold
channel) are attached to the
new TPS Star authorisation in
order to protect the content
quality level.
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Agenda
Conseil supérieur
de l’audiovisuel
CONSEIL SUPERIEUR DE L’AUDIOVISUEL
BERNARD
DEP – Pierre PETILLAULT, Didier GUILLOUX,
Bernard CELLI -–17-05-2007
20/10/2006
The current presentation intends to describe the French merger
control process thanks to the description of two case studies:
On the Pay TV market
The TPS-Canal+ Merger in 2006-2007 ;
On the Free to air TV market
The acquisition by TF1 of a 33.5% stake in AB Group in 2007
- 10 -
TF1 Acquisition of a 33.5% stake in AB Group Conseil supérieur
THE PLAYERS
de l’audiovisuel
CONSEIL SUPERIEUR DE L’AUDIOVISUEL
BERNARD
DEP – Pierre PETILLAULT, Didier GUILLOUX,
Bernard CELLI -–17-05-2007
20/10/2006
TF1
The French free to air TV leader
AB Group
The biggest independent* French Broadcasting group. AB Group:
Owns a library of more than 1,300 French speaking programmes
representing 37,000 hours of programmes (Friends, Navarro…).
Edits free to air channels: TMC (40% stake) et NT1 (100% stake) in
France and AB 3 and AB 4 in Belgium.
Edits pay TV channels distributed on satellite, cable, DTT and
ADSL, with among others RTL 9 (65% stake) and AB1.
Generated revenue of € 202 M and a net profit of € 46 M in 2005.
*Independent: which is not controlled by another broadcasting group
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TF1 Acquisition of a 33.5% stake in AB Group Conseil supérieur
MARKET CONDITIONS
de l’audiovisuel
CONSEIL SUPERIEUR DE L’AUDIOVISUEL
BERNARD
DEP – Pierre PETILLAULT, Didier GUILLOUX,
Bernard CELLI -–17-05-2007
20/10/2006
Viewers share
Parts d'audience novembre-décembre 2006
(Nov-Dec 06)
(4 ans et + vivant dans un foyer équipé d'un adaptateur TNT)
Autres
Lagardère 6,6%
5%
M6
13,5%
Groupe TF1
29,9%
Advertising market shares
January
2007 gratuit, janvier 2007)
Parts du marché publicitaire
(hertzien
Autres
4%
Canal+
3,7%
M6
23%
Groupe AB
4,7%
France
Télévisions
36,6%
Source : Mediamétrie
Groupe TF1
53%
France
Télévisions
19%
Groupe AB
1%
Source : TNS MediaIntelligence, traitement CSA
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The public authorities decisions
Conseil supérieur
de l’audiovisuel
CONSEIL SUPERIEUR DE L’AUDIOVISUEL
BERNARD
DEP – Pierre PETILLAULT, Didier GUILLOUX,
Bernard CELLI -–17-05-2007
20/10/2006
Economy, Finance and Industry Ministry (DGCCRF) viewpoint
This is not a merger therefore the competition authorities do not have to
be involved
CSA Decision: no need to apply article 42-3 on the transfer of control of terrestrial licenses
The operation does not place AB Group under the economic dependence of
TF1 Group
The CSA took under consideration that:
There is no change in the format of TMC, NT1 (DTT free to air channel) and AB1
(DTT pay channel)
The common advertising saleshouse between TMC and NT1 will not be extended
to other AB Group channels.
The CSA will be very vigilant on the evolution of financial relations between
TF1 and AB Group.
- 13 -
CONCLUSION
Conseil supérieur
de l’audiovisuel
CONSEIL SUPERIEUR DE L’AUDIOVISUEL
BERNARD
DEP – Pierre PETILLAULT, Didier GUILLOUX,
Bernard CELLI -–17-05-2007
20/10/2006
Two structuring operations affecting the French audiovisual market.
The market impact is likely to be significant on the long run.
A way for the CSA to intervene in the future: the dispute resolution
process :
Any TV channel or a distributor can go before the CSA to solve a
dispute regarding TV distribution ;
It is the only way for the CSA to have an influence on the
financial conditions of the contracts between TV channels and
distributors.
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