CSA to employ nuclear arms against Canal+?
April 13, 2012 08.25 Europe/London By Robert Briel

The French media authority CSA is looking to propose significant changes in the way Canal+ distributes and markets its channels, writes Fabienne Schmitt in Les Echos.

The competition authority l’Autorité de la concurrence has asked the CSA to come up with solutions in the case regarding the TPS-CanalSat merger.

According to Schmitt, the CSA is now considering – among other solutions – to force Canal to hand over the marketing and selling of its own channels (Canal+, Canal+ Sport, Canal+ Cinéma) to its distributing platform.

At the moment, Canal is maintaining its own relation with its subscribers, also if distribution takes place on another platform, such as Orange, SFR and Numericable. This would seriously damage the current business model of Canal, hence the term ‘nuclear arms’.

To have the right to distribute its channels on these platforms and have access to their subscribers, Canal + pays a royalty to its distributing partners. This process is very expensive to Canal +, but for the group, it is worth it: managing everything from A to Z (pricing, promotions), enables the operator to maximise pricing and selling subscriptions.

If every distributing partner who buy the Canal channels wholesale, could individually decide on pricing, packaging and promotion – this would most likely lead to a downwards pressure on the price point.

The CSA has to provide its opinion to the competition authority before the end of April. The Autorité de la concurrence will publish it sfinal decision on the Canalsat/TPS merger before the summer.

And if Canal + lost its ability to distribute its own channels? The threat is still very far from being acted. But it is a working hypothesis which is not totally excluded by the Higher Audiovisual Council (CSA), sought an opinion from the Competition Authority in connection with the merger of two satellite packages TPS and CanalSat.