VIVHY Vivendi SE (PK)

By Nick Kostov 

The French antitrust watchdog has rejected an alliance between Vivendi' SA's pay-TV Canal Plus and Qatar-controlled beIN Sports, dealing a major blow to the French media company.

The deal, which had been under discussion for months, involved Canal Plus paying EUR1.5 billion ($1.7 billion) to distribute channels from the Qatari group exclusively for five years, people familiar with the matter said.

"This project to ally, of which we don't know everything, contained a risk of collusion in sports rights, as the two actors would have held 80% of sports right, and the football league was worried," antitrust chief Bruno Lasserre said.

"An agreement couldn't be found for concessions that would have limited competition risks. We preferred to say no," he added.

Thursday's verdict is a setback for Vivendi, which has described the deal as an essential part of its strategy to stem losses at its struggling French pay TV channels which have been losing money for the last four years.

In a statement, Canal Plus said it "acknowledged" the decision and would work on "alternative solutions" to stop the losses at its French channels.

BeIN Sports entered the French market in 2012, spending millions of euros scooping up live sports rights including the UEFA Champions League and French Ligue 1 soccer games and quickly becoming a formidable competitor to Canal Plus.

Although the channel now counts more than 2.5 million subscribers in France, turning a profit has proved more difficult. Analysts at Natixis estimate the channel is losing between EUR250 million ($282 million) and EUR300 million a year, partly because it charges subscribers just EUR13 a month for expensively acquired sports content.

For Vivendi, a lot is at stake in returning Canal Plus to financial health. The pay-TV group is currently Vivendi's largest business, accounting for more than half of its sales, and is a key cornerstone of the group's plans to build a media empire focused on southern Europe.

Write to Nick Kostov at Nick.Kostov@wsj.com

(END) Dow Jones Newswires

June 09, 2016 11:52 ET (15:52 GMT)

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