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Week of April 15, 2019

Telecoms want TV to be free… for them
where's the money?

The taste for mergers and acquisitions has reach the avaricious. The big reason is cheap money. Ask your neighborhood investment banker for details. The media sector is the spice.

There are four big telecoms in France; Bouygues Telecom, Altice France, Orange and Iliad. Each are deeply entrenched in internet services, mobile service and media. Bouygues Telecom is a subsidiary of huge construction/industrial complex Bouygues, which also principally owns television broadcaster TF1 Group which, in turn, owns a minority stake in free sheet Metro.

Altice France, also known as SFR Altice, is a subsidiary of multinational telecom holding company Altice, principally controlled by serial investor Patrick Drahi. It does its telecom business in France under the Numericable brand. A year ago SFR Altice took complete financial control of broadcaster NextRadioTV, owner of several TV and radio channels. Altice also owns French weekly news magazine L’Express. (See more about media in France here)

Iliad was founded by serial tech investor Xavier Niel and owns Free Mobile as a subsidiary. M. Niel, separately, is a principal owner of daily newspaper Le Monde. Multinational telecom Orange appeared through the privitization of France Telecom, the French state holding a minority stake. It holds stakes in video platform Dailymotion and streaming music portal Deezer. A few years ago Orange, Iliad and Altice tried to takeover Bouygues Télécom. It didn’t work out.

Keeping in mind that these are very big companies with the usual competence at managing debt in the age of cheap money, the latest dust-up among them seems like small potatoes. The no-fee agreement between Free (Iliad) and Altice France for carriage rights to BFM TV, BFM Business, RMC Story and RMC Discovery expired about a month ago. Altice France wants a new agreement, meaning €5 million a year. Free (Iliad) said “non, merci,” explaining that those TV channels are free-to-air. Media regulator CSA has been called in to mediate. Orange chief executive Stéphane Richard has not indicated great interest in changing terms of the carriage contract with Altice France that expires in July.

"We can not give in to the diktat of Free,” said Altice France chief executive Alain Weill, quoted by Le Parisien (April 11). “It would call into question the agreements already signed with Bouygues and M6,” referring to Bouygues owned TF1 Group and RTL Group owned M6, which pay the carriage fees. “Our view is that soon DTT (digital terrestrial television) will no longer exist. There will no longer be DTT channels on the one hand and cable and satellite on the other, all of which will have to be paid by the distributors because they bring services with high added value.”

But the real story is telecom consolidation. Bouygues Telecom, owner of broadcaster TF1, has been making eyes at Altice-SFR. It’s all about deal-flow.

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