- Deal faces antitrust hurdles as combined company would control 70% of French TV ad market
- TF1 and M6’s sports rights portfolios largely made up of high-profile French national team soccer
German media group Bertelsmann has announced it has entered exclusive talks regarding a merger of its M6 French commercial TV business with Bouygues-controlled domestic rival TF1.
According to the Financial Times, the auction process for M6 attracted bids from Vivendi and Mediaset, among others. The two parties confirmed that it will see Bouygues initially pay €641 million (US$782 million) for 11 per cent of Bertelsmann’s shares in TF1.
M6 shareholders would receive a €1.50 (US$1.80) exceptional dividend in the transaction, according to which 2.1 TF1 shares would be exchanged for each M6 share.
The terms of the deal in France will see Bouygues combine its 44 per cent stake in TF1 with Bertelsmann’s 48 per cent holding in M6, which is managed via the German company’s Luxembourg-based RTL Group media subsidiary.
If approved by French authorities, Bouygues would then take a controlling 30 per cent stake in M6, with Bertelsmann retaining 16 per cent via RTL. The remaining shareholding, approximately 54 per cent, will be publicly held. The as yet unnamed new company would be based in France and listed on the Euronext Paris stock exchange.
Combining TF1 with M6 would create a media company controlling roughly 70 per cent of the French broadcast advertising market, meaning the deal faces a lengthy antitrust review that could last about 18 months and has no guarantee of success.
M6 and TF1 sports rights portfolios include contracts for national team soccer. They are splitting broadcasting duties for the upcoming Uefa Euro 2020 tournament. They also have domestic broadcast partnerships for France’s Uefa European Championship and Fifa World Cup qualifiers, along with the Uefa Nations League.
TF1 has free-to-air rights for 28 matches at the 2022 Fifa World Cup and split a €13 million (US$15.8 million) deal with pay-TV network Canal Plus for the 2022 Uefa Women’s European Championship.
In their joint statement, Bouygues and Bertelsmann said that the deal would ensure that they could better compete with the US-based streaming giants.
The statement read: ‘This market, where linear TV remains a powerful media, is undergoing a structural transformation, with a strong shift towards on-demand consumption.
‘The combination of these two players [TF1 and M6], of the know-how of their employees and of their strong brands, would allow the new group to invest more and to step-up innovation. The proposed merger is critical to ensure the long-term independence of French content creation and to continue to offer diversified and premium local content to the benefit of all viewers.’
Nicolas de Tavernost, current M6 chief executive, would take on that role in the new company, leading a team of executives from both broadcasters. Bouygues would hold four seats on the 12-member board of directors and RTL would hold two.
The owners estimate the deal would add €250 million (US$305 million) to €350 million (US$427 million) annually to earnings before interest, taxes and amortisation.
The companies aim to close the deal by the end of next year.
Bertelsmann has announced it has entered exclusive talks regarding a merger of M6 and RTL's TF1
