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. Last Updated: 07/27/2016

Europe's Pay-TV Deal in Doubt


Doubt swirled last week over the future of a major European pay-TV alliance between Rupert Murdoch's British Sky Broadcasting, Canal Plus SA of France and Bertelsmann of Germany.

The head of Bertelsmann television unit Ufa Film- und Fernseh GmbH last Wednesday said Murdoch had written to Bertelsmann expressing concerns about the alliance. "It is correct that the alliance is being questioned and discussed by the partners," Rolf Schmidt-Holtz told Reuters. Both the Financial Times and the Wall Street Journal dailies said Thursday that the alliance was dead.

At BSkyB there was no official comment. But Canal Plus said last week that the digital satellite television alliance was not dead.

A Canal Plus spokeswoman said that Rupert Murdoch, head of News Corp, which is a main shareholder in BSkyB, had written a letter to Bertelsmann chairman Michael Dornemann, which could be interpreted in many ways. "He says in the third and last paragraph that 'this can't go on any longer.' At Canal Plus we see this as a severe warning, but whether this will lead to a split, nobody is able to say so at the moment," she said.

French industry sources said that "the teams of Canal Plus, Bertelsmann and BSkyB are still working on the launch of digital satellite television in Germany in the autumn."

The March 1996 alliance between BSkyB, controlled by News Corp, Britain's Pearson Plc and France's Chargeurs, Canal Plus, Havas and Bertelsmann created a strong European team to invest and exploit the future market for digital satellite television.

The market for digital television could be worth billions of dollars in the future. Germany, France, Italy and Britain will be the biggest of these markets in Europe.

The alliance snatched BSkyB and Murdoch away from earlier talks with CLT and at the same time boosted Bertelsman's position on the German market compared to its rival Leo Kirch.

CLT and Belgian businessman Albert Frere, whose companies have a big stake in CLT next to Havas, cried foul and promised to retaliate.

In April, CLT announced the merger plan with Bertelsmann and said the two would cooperate in digital satellite television in France where Canal Plus had just launched Canalsatellite.

Meanwhile the hold of two of the partners in the alliance on program rights was reinforced. BSkyB said last Thursday it had secured the future rights to screen English Premier League football in a four-year deal worth ?670 million (just over $1 billion). BSkyB also said Monday it had won the live television rights to England's home rugby union internationals in an ?87.5 million five-year deal.

On Friday, Canal Plus said it was making a friendly offer for UGC-DA, which owns the rights to an important film catalogue, in a transaction worth about 2.5 billion francs.

UGC-DA is France's biggest and Europe's second largest broadcasting rights company and the transaction will boost the power position of Canal Plus in the European media industry.