Carayol Seeks ‘Active’ Role In Industry Consolidation

By | June 5, 2002 | Feature

Canal+ Technologies CEO Francois Carayol is looking to take participate actively in the consolidation of the conditional access (CA) system and middleware industry consolidation. He told the PricewaterhouseCoopers’ European Media & Entertainment summit in London, “We have never been so well positioned strategically. But, we would be foolish not to consider a combination. The market is in a consolidation phase. We will take an active part in that. In terms of consolidation, it is a small world. We go to the same exhibitions. We meet and talk to each other. It is unavoidable.”

The question of consolidation is particularly pertinent given Liberty Media’s recent acquisition of a controlling interest in OpenTV from MiH.

The deal announced May 8 has lead to speculation that Canal+ Technologies could be next in line to take part in a merger.

A combination with Liberate Technologies would appear to make sense, although with the upcoming courtroom battle with fellow CA system supplier NDS, Canal+ Technologies may not be thinking that far ahead yet. Canal+ Technologies’ focus on both middleware and CA systems is a key factor. Carayol certainly gave credence to such a strategic combination by saying, “We don’t view it as two different businesses. We believe there are a lot of synergies between the two businesses. There is a competitive advantage. We are able to offer a fully integrated package. I certainly think that will be the way forward.”

Carayol was understandably reluctant to talk about the conflict with NDS, although he told the summit that he was confident that the company had the evidence to help it win the case, but admitted it was “a complex situation.”

Despite the high-profile court action, Canal+ Technologies has been getting on with the job of swapping out its entire smart card base.

It has already turned off the old systems in Spain and Poland, so there is no piracy in these countries. During the course of 2002, the operator expects to swap out all eight million cards at a cost of $80 million.

Canal+ has also put a mechanism in place whereby each system in each country is different. For example if the system was compromised in Poland, it should not affect the system in Spain. A general shelf life for a system is around three to five years. The smart card swap out is one of the biggest undertakings that Canal+ has undertaken and one it hopes will prove the validity of its systems.

Carayol also admitted the operator hopes to take advantages of opportunities in the United States. Its affiliation with Canal+ means its opportunities in Europe are limited. So, it is now turning its attention to the United States and hopes to be in a position to take advantage of the merger of DirecTV and EchoStar. Carayol comments: “We have a major agreement with EchoStar. NDS is the CA vendor for DirecTV. We believe if the merger between EchoStar and DirecTV goes through, they will restructure the whole entity and therefore this will present a big opportunity for us. We believe they will harmonize the technology. It is clear there is a big opportunity for us.”

–Mark Holmes

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