beIN problems for Canal Plus?
March 24, 2016
A French TV report says that the recent agreement between Vivendi and sports rights-holder beIN Sport, and which sees Canal Plus gaining access to some of beIN’s sports events, is going to extremely expensive for Canal Plus Group.
Canal Plus is paying beIN more than €300 million annually for access to beIN’s rights, with Canal NOT having exclusivity. beIN will maintain its own independent structure outside Canal Plus.
Equity analysts at Exane-BNP/Paribas, in a ‘flash note’ to investors, say the TV report – as yet unconfirmed – suggests that the deal is going to be loss-making for Canal Plus, and “hugely positive” for beIN “and will not attract many subscribers”.
The analyst’s note adds: “It appears that the journalist reporting the story has sources within Canal so the story or part of the story should not be discounted, but it also takes the view that Vivendi management iswilling to destroy shareholder value and offering beIN a bail out for 5 years, despite the fact that the latter is in a weak position. We expect a negative initial market reaction.”
However, the bank’s note also contains a warning caveat: “That said, we are always doubtful about press reports that suggest a company is preparing to do a deal that appears to be irrational strategically and financially. There is probably more to this than the story covers. As an example, for the kind of money (and conditions) mentioned in the article we think Vivendi could instead lower its prices by €8 per months for ALL clients and would most likely retain/attract more subscribers than in the scenario mentioned while putting even more pressure on beIN and drive them out of business […]”