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Telenor, Canal+ Reach Deal

By | June 19, 2002

      Telenor Plus and Canal+ have settled their dispute surrounding the sale of Nordic digital television platform, Canal Digital. Telenor will acquire Canal+’s 50 percent stake in Canal Digital for 290 million euros ($274 million) in cash. This replaces the original agreement under which Telenor would have to pay an immediate 257 million euros ($243 million) with a deferred payment of 66 million euros ($62 million). The new deal was announced June 14. As part of the deal, Canal Digital will have exclusive distribution of Canal+’s Nordic premium channels and Kiosk PPV service on Canal Digital in Sweden, Finland and Denmark.

      Analysts have welcomed the deal. With a deal being struck in Italy with News Corp, it appears that Canal+’s parent Vivendi has decided to settle most of its disputes at the same time. Jean-Antoine Breuil, a media equity analyst at CDC-IXIS Securities, told Interspace: “I am more positive now on Vivendi. I think they have understood that the market wanted to see the debt level reduced in the major segments, but also to reduce the losses in the Canal+ Group and also in Internet activities. With the agreement in Italy and the payment from Telenor Plus, the merger between Sogecable and Via Digital in Spain, I think the group is making a lot of efforts to show the market that it is doing the right things for the next six to 10 months.”

      Rasmus Engberg, a media equity analyst at Handelsbanken, told Interspace: “Everybody knows the pressure Messier has been under. There have been a number of deals actually and there might be more coming still. They are quite desperate to get paid in cash. As soon as they get an offer to get paid in cash, they seem to take it. I am not surprised this has happened. The price seems to indicate they didn’t get as much as they might of.”

      Yet, despite the fact Telenor may ultimately be paying less than the original deal, the acquisition still raises a number of issues. By paying 290 million euros for Canal+’s 50 percent, the implication is that the business is worth close to 600 million euros ($567 million). The business is still loss making. Engberg believes Telenor has paid a high price. “I think it looks quite expensive. The only pay-TV operation that is high-priced today is BSkyB. It has very high multiples. Telenor does have something to prove here. I think Vivendi has got a good price. Getting paid in cash by a telecoms operators these days has got to be seen as a success,” he said.

      After months of wrangling over the deal, the agreement marks an important breakthrough for Telenor. Stig Eide Sivertsen, managing director of Telenor Plus, told Interspace: “We now have a definite agreement. We have settled everything between ourselves. We are very pleased with the outcome and we have settled on a lower price than what it was previously. We are now a 100 percent owner of Canal Digital. It was also very important for us to secure the Canal+ premium channels for distribution.”

      This announcement brings to an end a saga that has lasted almost a year. In July 2001, Telenor and Canal+ struck the original deal, which was to see Telenor gain complete control of Canal Digital. However, the deal has been dogged by controversy. In January 2002, The Oslo Court of Execution and Enforcement rejected Canal+’s demands for a temporary injunction. The dispute centred on the fact that deal had been approved by competition authorities in Sweden, Finland and Norway so Canal+ wanted to proceed with the deal and get paid up. Telenor had argued the deal could not be closed until the European Commission had approved the channel distribution agreements. These are still being reviewed by the commission, but Telenor has now decided to go ahead with the deal anyway.

      Nick Stubbs, director of international business development at Canal+, told Interspace’s sister publication, Inside Digital TV, at the time, “We are completely exasperated with them (Telenor). We don’t feel that they are acting in good faith over this agreement at all. We feel it is basically a bad faith argument on their part to try and delay and renegotiate things.”

      –Mark Holmes

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