Vivendi adventure

Ups stake in Canal Plus, BSkyB with $2.7 bil in deals

By ADAM DAWTREY

LONDON -- The ambitious French media group Vivendi has swooped in to raise its stakes in Canal Plus and British Sky Broadcasting in three separate deals worth $2.7 billion.

The triple whammy leaves Vivendi with 24.5% of BSkyB and 49% of Canal Plus, reigniting speculation that Vivendi plans to broker a merger between the two European pay TV giants.

Rupert Murdoch, BSkyB's main shareholder, recently tried to play down such a prospect (Daily Variety, July 2), but Vivendi's Jean-Marie Messier has remained noncommittal on the subject.

As part of Wednesday's announcement, Vivendi also said it is seeking an "an international strategic partner" to take a small stake in Canal Plus.

Seeking U.S. investors

In a clear invitation to U.S. investors, Canal Plus chairman Pierre Lescure said, "I would like to take this opportunity to strengthen Canal Plus' international strategy and identity by bringing in a partner who does not have a strong presence in Europe and who aims to share our future development in new media."

Vivendi, which already owns 34% of Canal Plus, has agreed to buy Richemont's 15% stake in the Gallic pay TV service for $1.4 billion.

But the company said it intends to sell off about 9% of Canal Plus to an international partner "as a source of complementary value added alongside Vivendi."

Vivendi simultaneously struck deals with Granada and Pearson to buy their remaining stakes in BSkyB. Granada and Pearson each held 4% in BSkyB, and will receive $655 million and $640 million, respectively, from the sale.

All of these deals will go into effect Sept. 10, when the merger between Vivendi and Pathe is due to be approved at a shareholders' meeting. That merger will see Pathe transfer its 17% stake in BSkyB to Vivendi.

Murdoch's News Corp. remains BSkyB's largest shareholder with a 40% stake. Lacking a strong presence in continental Europe, News Corp. or BSkyB may be candidates to pick up the 9% stake which Vivendi is offering in Canal Plus.

Analysts immediately interpreted Messier's move as a bid to seize the initiative from Murdoch in brokering a closer liaison between BSkyB and Canal Plus, a possible prelude to a full merger.

Richemont will swap its 15% stake in Canal Plus for a 2.9% stake in Vivendi. Richemont has pledged to hold that stake for at least a year.

Granada and Pearson have both been selling down their BSkyB stakes in the past couple of years, and these transactions complete their exit from the British satcaster.

(Nancy Tartaglione in Paris contributed to this report.)