WB takes stake in Canal Satellite
First investment in Euro digital platform
The move, which had been widely touted last year, means that Warner Bros. now lines up alongside Canal Plus (70%) and Jerome Seydoux's Pathe group (20%) in France's leading digital platform.
In a two-part deal, Warners' entry into Canal Satellite came about via a capital increase which diluted the stakes of the original three shareholders to 63% for Canal Plus, 18% for Pathe and 9% for Compagnie Generale des Eaux (CGE). Pathe and Canal Plus then bought up CGE's 9%, paying around $96 million.
Sources at Canal Plus noted that the difference between the price paid by Warner Bros. and that paid by Canal Plus and Pathe was due to an increase in the estimated value of Canal Satellite. At the time the U.S. giant signed up for its option, Canal Satellite was reckoned to be worth $868 million. Today, the figure is nearer $1.3 billion. In addition, Warner Bros. benefited from a 25% minority stake discount.
Commenting on the agreement, Warner Bros. chairman and co-CEO Terry Semel noted, "While this deal is significant because it is a smart investment and our first in a European digital platform, it is equally important as a strategic initiative for Warner Bros. as it assures us a place in a burgeoning outlet in a crucial international market."
Launched in April 1996, Canal Satellite currently has nearly 800,000 subscribers and is tipped to hit breakeven in 1999, despite stiff competition from rival digital platform Television Par Satellite (TPS).
The arrival of Warner Bros. into the Canal Satellite fold is the latest step in an ongoing relationship between the Hollywood major and Canal Plus. Canal Plus chairman Pierre Lescure, who has an almost legendary regard for loyalty towards his company, threw some light on the new agreement by saying, "Canal Plus and Warner Bros. is the story of a historic alliance and a longstanding friendship. Warner Bros. was our first partner in France and in Spain."
