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November 03, 2011
Polish media group ITI Holdings and its broadcasting subsidiary TVN are negotiating a strategic partnership with the Canal Plus that is expected to lead to the merger of the N and Cyfra Plus satellite platforms. The merged platform will have a subscriber base in excess of 2.5m.
The proposed deal will see TVN's ITI Neovision merge with Cyfra Plus in exchange for a significant minority stake. TVN Group is not expected to make any cash payment.
At the same time ITI wants to sell a minority stake in TVN to Canal Plus, together with an option for the French group to acquire full control of TVN over time. This part of the deal will mean Canal Plus first acquires a minority stake in N-Vision B.V., the parent company of Polish Television Holding which in turn owns 51 per cent of TVN Group.
ITI started preparations to sell its assets in June 2011. Recently it has been negotiating only with Vivendi and Time Warner, finally giving the former exclusive rights for the negotiations. The final agreement should be reached by the end of 2011.
ITI is one of the largest media groups in Poland. In addition to the TVN channels and satellite TV platforms, N and Telewizja Na Karte, ITI owns internet portal onet.pl. N, launched in 2006, focused on high-end content and the newest technologies. Currently it is offering 30 HD channels.
N's rights portfolio includes the Champions League until 2012 and deals with a number of Hollywood film studios, including exclusive contracts with MGM, DreamWorks, and Paramount. TVN's group of channels includes of one of the major commercial stations in Poland, TVN, a group of thematic channels and premium channels nFilm HD and nFilm HD 2. In December 2012 it is planning to launch two more HD channels branded nPremium.
Vivendi-owned Canal Plus has rights for the Polish Football Premiership League (2011-14). In addition to contracts with Hollywood studios 20th Century Fox and Universal, it also has deals with local film distributors Kino Swiat and Monolith.
TVN will be the Canal Plus group's second major acquisition and pay TV merger in Poland. It bought Wizja TV in 2002.
The two operators have similar business models, both targeting high-end market with rich premium, HD and VoD offerings, although N offers technologically more advanced set top boxes. It remains unknown whether TVN's premium channels will continue broadcasting after Canal Plus becomes TVN's owner, or be rebranded.
Also, it is not quite clear how Telewizja Na Karte will be incorporated in the new business. ITI's satellite TV pre-paid platform launched in 2008, targeting a low-budget market. In June 2011, TNK had 300,000 subscribers out of 750,000 registered cards. It appears most likely that it will continue operating as a separate project while the two high-end players merge.
Another question is the commercial agreement between n and incumbent telco TPSA, which came into effect earlier this year. N subscribers are now offered fixed telephony and internet from TPSA, while nearly all the pay TV channels offered to TPSA's subscribers come from N transponders. At the current phase of the negotiations between ITI and Canal Plus it remains uncertain what will happen with this agreement. Most likely also Cyfra Plus subscribers will be offered internet from TPSA and TPSA's subscribers will be offered channels from the newly created operator.
Satellite TV is now Poland's largest pay TV platform. At the moment however, multichannel penetration has exceeded 90 per cent of homes and growth on satellite has considerably slowed. N reported a slight decrease in the second quarter this year. As digital terrestrial continues to extend its coverage, gaining new subscribers becomes even more difficult for pay TV operators and mergers become more likely. From next year, there will be only two satellite TV players on the Polish TV market: the operator which will emerge from the deal between Cyfra Plus and N, and Cyfrowy Polsat.
Cyfrowy Polsat, with 3.5m subscribers, is currently the largest platform on Polish pay TV market, and similarly to TVN owns a group of TV channels. The Polsat Group has expanded into mobile telecommunications, recently agreeing to buy Poland's largest mobile telephony operator, Plus and Info TV FM, which owns a licence to operate mobile television.
Overall, the two merged platform will create a much stronger competition to Cyfrowy Polsat, with exclusive premium content, both on linear TV and in VoD. Their co-operation will also help to improve their financial results, especially in the case of ITI's satellite platform, which made an operating loss of 35m zloty (€8m) in Q2 2011.
Tags:
Companies: Canal Plus Vivendi ITI TVN N Telewizja Na Karte TPSA Cyfrowy Polsat Cyfra Plus
