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Conseil supérieur de l’audiovisuel 17-05-2007 CONSEIL SUPERIEUR DE L’AUDIOVISUEL MERGER CONTROL IN AUDIOVISUAL SECTOR IN FRANCE Bernard CELLI Deputy Head,

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Presentation on theme: "Conseil supérieur de l’audiovisuel 17-05-2007 CONSEIL SUPERIEUR DE L’AUDIOVISUEL MERGER CONTROL IN AUDIOVISUAL SECTOR IN FRANCE Bernard CELLI Deputy Head,"— Presentation transcript:

1 Conseil supérieur de l’audiovisuel CONSEIL SUPERIEUR DE L’AUDIOVISUEL MERGER CONTROL IN AUDIOVISUAL SECTOR IN FRANCE Bernard CELLI Deputy Head, Studies Department CSA Prague Thursday, May 17, 2007

2 Conseil supérieur de l’audiovisuel DEP – Pierre PETILLAULT, Didier GUILLOUX, Bernard CELLI – 20/10/ CONSEIL SUPERIEUR DE L’AUDIOVISUEL BERNARD CELLI Agenda The current presentation intends to describe the French merger control process thanks to the description of two case studies: The TPS-Canal+ Merger in ; The acquisition by TF1 of a 33.5% stake in AB Group in 2007 On the pay TV market On the free to air TV market

3 Conseil supérieur de l’audiovisuel DEP – Pierre PETILLAULT, Didier GUILLOUX, Bernard CELLI – 20/10/ CONSEIL SUPERIEUR DE L’AUDIOVISUEL BERNARD CELLI Agenda The current presentation intends to describe the French merger control process thanks to the description of two case studies: The TPS-Canal+ Merger in ; The acquisition by TF1 of a 33.5% stake in AB Group in 2007 On the Pay TV market On the Free to air TV market

4 Conseil supérieur de l’audiovisuel DEP – Pierre PETILLAULT, Didier GUILLOUX, Bernard CELLI – 20/10/ CONSEIL SUPERIEUR DE L’AUDIOVISUEL BERNARD CELLI The TPS-Canal+ Merger 1/2 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). THE PLAYERS

5 Conseil supérieur de l’audiovisuel DEP – Pierre PETILLAULT, Didier GUILLOUX, Bernard CELLI – 20/10/ CONSEIL SUPERIEUR DE L’AUDIOVISUEL BERNARD CELLI The TPS-Canal+ Merger 2/2 Canal+ France 7 M pay TV subscribers Canal+ Group (Vivendi) TPS (TF1, M6) Announced End 05 Effective as of Jan. 07 Canal+ France Shareholders The merger Source : CSA Canal+ France includes : TPS, CanalSat (=100% of French satellite pay TV) 48,48% share of Canal+ SA (premium channel) Thematic channels edition Pay per view activity Canal+ Distribution Media Overseas THE SCOPE OF THE MERGER

6 Conseil supérieur de l’audiovisuel DEP – Pierre PETILLAULT, Didier GUILLOUX, Bernard CELLI – 20/10/ CONSEIL SUPERIEUR DE L’AUDIOVISUEL BERNARD CELLI Authorities involved in the merger process DGCCRF (Ministry), Competition council, CSA Conseil Supérieur de l’Audiovisuel (CSA) French Electronic Communications regulator (ARCEP) Competition Authorities (Conseil de la concurrence) Economy, Finance and Industry Minister (DGCCRF) DECISION Appeal before the French Highest administrative Court (Conseil d’État) Independannt administrative authorities Government RECOMMENDATION

7 Conseil supérieur de l’audiovisuel DEP – Pierre PETILLAULT, Didier GUILLOUX, Bernard CELLI – 20/10/ CONSEIL SUPERIEUR DE L’AUDIOVISUEL BERNARD CELLI Impact of the merger on the value chain Content production Programming Pay TV services Rights Holders TV channels Pay TV services providers Upstream market Intermediate market Downstream market Transmission services providers distribution and dealing Broadcasting Viewers Downstream market: a unique satellite pay TV distributor left in France Upstream market: Canal+ France holds major Cinema and Sports rights (French Premier League, Studio Canal…) Intermediate market: Canal+ France controls the 2 French premium channels Canal+ and TPS Star and most of the most attractive thematic channels (Planète…) Main issues from a competition point of view

8 Conseil supérieur de l’audiovisuel DEP – Pierre PETILLAULT, Didier GUILLOUX, Bernard CELLI – 20/10/ CONSEIL SUPERIEUR DE L’AUDIOVISUEL BERNARD CELLI The Ministry Decision 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: The Aug. 06 Ministry Decision: a clearance under conditions 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 Independent channels protection All obligations may last up to 5 years

9 Conseil supérieur de l’audiovisuel DEP – Pierre PETILLAULT, Didier GUILLOUX, Bernard CELLI – 20/10/ CONSEIL SUPERIEUR DE L’AUDIOVISUEL BERNARD CELLI CSA decisions The CSA reviewed the operation from a pluralism perspective in March CSA merger control mechanism (article 39 of the French Broadcasting Law) Licences transfer of control (article 42-3 of the French Broadcasting Law) OK Canal+ France is below the maximum number of authorisations that a player can hold OK Some of the obligations imposed by the Minister (regarding the content of the channel) are attached to the new TPS Star authorisation in order to protect the content quality level. FROM A PLURALISM PERSPECTIVE

10 Conseil supérieur de l’audiovisuel DEP – Pierre PETILLAULT, Didier GUILLOUX, Bernard CELLI – 20/10/ CONSEIL SUPERIEUR DE L’AUDIOVISUEL BERNARD CELLI Agenda The current presentation intends to describe the French merger control process thanks to the description of two case studies: The TPS-Canal+ Merger in ; The acquisition by TF1 of a 33.5% stake in AB Group in 2007 On the Pay TV market On the Free to air TV market

11 Conseil supérieur de l’audiovisuel DEP – Pierre PETILLAULT, Didier GUILLOUX, Bernard CELLI – 20/10/ CONSEIL SUPERIEUR DE L’AUDIOVISUEL BERNARD CELLI TF1 Acquisition of a 33.5% stake in AB Group 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 THE PLAYERS *Independent: which is not controlled by another broadcasting group

12 Conseil supérieur de l’audiovisuel DEP – Pierre PETILLAULT, Didier GUILLOUX, Bernard CELLI – 20/10/ CONSEIL SUPERIEUR DE L’AUDIOVISUEL BERNARD CELLI TF1 Acquisition of a 33.5% stake in AB Group Source : Mediamétrie MARKET CONDITIONS Viewers share (Nov-Dec 06) Advertising market shares January 2007 Source : TNS MediaIntelligence, traitement CSA

13 Conseil supérieur de l’audiovisuel DEP – Pierre PETILLAULT, Didier GUILLOUX, Bernard CELLI – 20/10/ CONSEIL SUPERIEUR DE L’AUDIOVISUEL BERNARD CELLI The public authorities decisions 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.

14 Conseil supérieur de l’audiovisuel DEP – Pierre PETILLAULT, Didier GUILLOUX, Bernard CELLI – 20/10/ CONSEIL SUPERIEUR DE L’AUDIOVISUEL BERNARD CELLI CONCLUSION 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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