Canal Plus

A Billionaire in La La Land

He can't rely on Orange to rescue Canal Plus. He needs to fix it himself.
At Closing, April 19th
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At Closing, April 19th
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Corporate raider Vincent Bollore is engaged in wishful thinking if he believes Stephane Richard of Orange SA is about to ride to his rescue in France.

Switching Off

Vivendi shares sank after the French conglomerate reported a decline in earnings

Source: Bloomberg

Intraday times are displayed in ET.

The chairman and largest shareholder of Vivendi SA has taken a hands-on approach to sorting out the mess at Canal Plus, the pay-TV unit that brings in half of the company's cash flow.

But his efforts have so far come up short. It’s too early to know if a revamp of the pricing and structure of Canal Plus's subscriber packages will stem losses in France, and competition for TV sports rights is getting tougher now that Patrick Drahi’s Altice NV as entered the game.

Canal Plus's weakness helped drag Vivendi's full-year earnings down 35 percent and sent the stock down as much as 6 percent on Friday.

Canal Minus

Vivendi's pay-TV business is shrinking in France but growing abroad

Source: Bloomberg

There's been plenty of speculation that France’s leading telecom operator Orange might take Canal Plus off Bollore's hands. It has the financial means to do so. But it's doubtful whether Richard really wants to since he’d have to pay about 7 billion euros for a declining business. 

If Orange were to fund part of the deal in stock, Richard would be unlikely to want Bollore on his shareholder register, given the Breton billionaire’s form for taking creeping control of companies. Neither will the French state, which still owns 23 percent of Orange.

Canal Plus is one problem that Bollore can't solve through deal-making. His first attempt last year to do so was an exclusive distribution deal with Al Jazeera’s beIN Sports that was rejected by competition regulators. Orange may be amenable to some sort of partnership in which it helps Canal Plus bid for sports rights, but how that would work is still being debated.


Canal Plus revamped its pay-TV offers, which will weigh on average revenue per user

Source: Company reports

So Bollore is going to have to prove his operational chops. He needs to keep growth going at the international business of Canal Plus, which accounts for 40 percent of its sales, while nursing France back to profitability. He also can't afford to lose any more sports rights to rivals: the next test will be the sale of Formula 1 motor racing later this year. 

Vivendi has predicted Canal Plus in France will break even by the end of next year, but losses actually widened to 399 million euros last year from 264 million euros in 2015. The number of customers paying to view the French channels is shrinking and the rate at which they leave -- the churn rate -- is accelerating. It climbed to almost 17 percent last year from 15 percent in 2015.

Turning this around is going to be difficult. Canal Plus is simply no longer must-see TV in France -- even at the lower prices set last year. A big chunk of the best sports content is now on beIN Sport or Altice’s SFR. And unlike in the heyday of the channel a decade ago, people now have a dizzying array of alternatives for entertainment from Netflix to YouTube.

Bollore long ago proved he was a canny financier, having carried out profitable campaigns at manufacturing group Vallourec SA and Bouygues SA. The challenge before him now requires a different set of skills.

This column does not necessarily reflect the opinion of Bloomberg LP and its owners.

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    Leila Abboud in Paris at

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    Edward Evans at

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