Canal+ Buying Broadcaster To Defend Against Online Upstarts

Vivendi’s pay TV arm Canal+ is to acquire Vincent Bollore’s free-to-air television business in a €465m (£404m) deal, a move the company said is designed to help it prepare to defend its business against the arrival of Netflix (NSDQ: NFLX), Apple (NSDQ: AAPL) and Google.

Under the deal Canal+ will intially take a 60% stake in Bollore Group’s TV business, which owns the Direct 8 and Direct Star channels, in exchange for €279m in Vivendi (EPA: VIV) shares.

Canal+, which will take over the operational management and TV sales of the channels, has an option in three years to buy the remaining 40% stake for €186m in cash.

“This partnership is intended to prepare the Canal+ Group for the arrival in the television sector of new operators such as Apple, Netflix, Google (NSDQ: GOOG), etc,” said Bertrand Meheut, the head of Canal+ Group.

Meheut said that these new global technology players have enormous resources offering the consumer an abundance of choice.

“The company’s entry into the free television market will enable it to strengthen its capacity to produce distinctive content and enhance its editorial lines with high-quality programmes, while using all available operating media to exploit those programmes,” he said.

Canal+ had sought to launch its own free-to-air channel this year but the initiative got held up after questioning from European Commission regulators.

Canal+, in which Lagardere Group owns a 20% stake, was launched in 1984 and owns about 20 channels.

Taking over Bollore’s channels will mean Vivendi will own more than the maximum seven terrestrial frequencies that French law allows. Meheut said that the company will have to return “one, perhaps two” frequency bands.

Vincent Bollore is also the largest shareholder in advertising group Havas and media planning and buying network Aegis.

This article originally appeared in MediaGuardian.