Consolidation Isn’t Just A Plan: It’s The Only Plan

Michael Hedges May 17, 2021 Follow on Twitter

It’s one of those seasons when everybody is a buyer and everybody is a seller. Marketplace changes have run smack into new technologies and a whole different media consumer. On top of that, money is no object.

For a few weeks earlier this year the French media sector was, at the very least, tense. Fourth quarter financial results were pandemic dismal for the major participants. Creation of the Salto streaming video service to compete with Netflix and others collapsed. Activist investors were circling publisher/broadcaster Lagardère.

Then in March RTL Group, in sync with its principal shareholder Bertelsmann, announced it would be seeking a buyer for French broadcaster M6 Groupe, in which it holds a controlling stake. Bertelsmann chief executive Thomas Rabe had “approached potential bidders” in January. Herr Rabe, also RTL Group chief executive, touted “our strategy to be pro-active on consolidation, and to actually do something.”

The list of potential bidders was long; broadcaster TF1 owner conglomerate Bouygues, pay-TV Canal+ owner Vivendi, Italian broadcaster Mediaset, BFM TV owner telecom Altice Europe as well as major daily Le Monde shareholders Daniel Kretinsky and Xavier Niel. All have piles of cash and access to more. French media watchers saw RTL Group’s exit from France. German media watchers saw Herr Rabe looking for a merger partner. Herr Rabe also put broadcaster RTL Belgium up for sale. And it’s not that Bertelsmann needs the money.

After a series of visits from suitors, Herr Rabe drew that phase to a halt saying his only interest is a deal with Bouygues/TF1, reported Reuters (March 30). “A merger with TF1 would fit with our strategy of actively pursuing market consolidation.” French media regulator CSA said it could be flexible. The competition authority (Autorité de la concurrence) said the merger would be “difficult,” citing dominance of the television advertising market as well as property rights issues. Originally, Herr Rabe wanted a deal wrapped up by the middle of May.

At the end of April Lagardère shareholders - Vivendi principal Vincent Bolloré, Amber Capital founder Joseph Oughourlian, the Qatar sovereign wealth fund, LVHM principal Bernard Arnault and Arnaud Lagardère - called a truce, a “peace agreement.” Lagardère Group will become a joint-stock company (société anonyme). Arnaud Lagardère remains chief executive with no changes to the operations for five years. Publishing subsidiaries Hachette Livre and Lagardère Travel Retail remain intact. All of this is set to be confirmed at a June shareholders meeting.

The fate of remaining assets - three national radio channels, magazine Paris Match and weekly newspaper Journal du Dimanche (JDD) - remains cloudy. The radio operations have long been under the watchful eyes of French media watchers. Over several weeks, M. Ballorè made clear his interest in long suffering general interest channel Europe 1, rumored to pair the radio channel with the Canal+ right-wing TV news/talk channel CNews. All of this was not quite clarified at a staff meeting this week (May 11) to “present the transformation of Europe 1,” reported first by news portal Les Jours (May 11) then amplified by OZAP (May 12).

Leading the meeting was Constance Benqué, general director of Lagardère News, the division operating the three radio channels. Typical with meeting such as this in France, the Europe 1 staff had questions; actually just one, the intentions of Vincent Ballorè. “He does not have a pointed hat. He is not here to eat everyone,” she offered, to the relief of all. “Bolloré does not need to buy Europe 1, we offered it to him,” she said to remove all doubt. Those employees unhappy with this, she reportedly added, can visit with union representatives to discuss separation.

On the possible tie-up with CNews, Europe 1 news director Donat Vidal-Revel said there are possible synergies, such as with sports, but dodged questions about far-right xenophobic show host Eric Zemmour joining the radio channel. M. Zemmour has other less than charming attributes recently exposed. "In five years, Europe 1 has lost 40% of its listeners,” noted Mme Benqué in conclusion. "If thanks to Vincent Bolloré, we can also build bridges, that can be a force.”

In the meantime, Vivendi and Mediaset “resolved” a years-long spat over a pay-TV deal gone bad. Vivendi has a 29% stake in Mediaset and wanted shareholder rights issues settled, to which Mediaset agreed. Vivendi agreed to reduce its Mediaset shareholding. The new friends seem to be plotting their own big deal.

"After five years of stagnation, Mediaset will finally be able to found a pan-European television company that we have been planning for a long time and invest new resources in technology,” said Mediaset chief executive Pier Silvio Berlusconi, quoted by German media news portal DWDL.de (May 6). Mediaset hold a 23.6% stake in German pay-TV company ProSiebenSat1 through direct holdings and options. A merger with or takeover of ProSiebenSat1, only suggested so far, would involve support from Vivendi. Then too, Bertelsmann might come into a new pile of cash in the next months and turn its sights to a German broadcaster.

See also...

• Hot Topics - Media Mergers and Acquisitions

• Hot Topics - Media in France