Page 20 - 2012 Annual Report

VIVENDI l 2012 l Annual Report 20
GROUP PROFILE – BUSINESSES – LITIGATION – RISK FACTORS 1
1
SECTION 2 - BUSINESSES
CANAL+ GROUP
Firstly, there is a November 2010 decree regarding the duties of
investment in the production of audiovisual and cinematographic works
and obligations related to offers and advertising and, secondly, there is
a December 2011 CSA decision on the protection of young people and
program ethics and accessibility.
Pursuant to the law of June 2009, the release and broadcast windows for
video-on-demand media (which requires compliance with the distribution
window for films after their release) was readjusted. Canal+ Group
complies with the agreement entered into on July 6, 2009 and extended
by the order of July 9, 2009, which provides for the following required
window periods:
✱ for films available via pay-per-view video-on-demand (primarily the
CanalPlay service) and on DVD: four months minimum after theater
release and three months for films which sold less than 200 tickets in
their fourth week in theaters;
✱ for movie channels:
– first window: ten months for an original broadcast if an agreement
is entered into with film organizations, 12 months otherwise,
– second window: 22 months if agreed with the film organizations,
24 months otherwise;
✱ on unscrambled television channels and on other pay television
channels:
– 22 months if the channel contributes at least 3.2% of its revenues
to film production,
– 30 months otherwise; and
✱ for on-demand video films by subscription (CanalPlay Infinity): 36
months.
2.1.8. Piracy
Canal+ Group actively battles against audiovisual piracy. It gives priority to
innovation and technological watch and to the pursuit of violators in order
to protect its commercial interests and those of its licensees.
2.1.9. Competition
2.1.9.1. CANALSATELLITE/TPS MERGER
On September 20, 2011, the French Competition Authority issued a
decision relating to the non-compliance by Canal+ Group with several
commitments to which it was subject under the August 30, 2006 decision
authorizing the merger between CanalSatellite and TPS. As a result, it
withdrew the decision to authorize the transaction, thereby forcing Vivendi
and Canal+ Group to give notice of the transaction again within a month.
Additionally, the French Competition Authority ordered Canal+ Group,
together with all of its subsidiaries, to pay a fine of €30 million.
On October 24, 2011, notice of the transaction was again given to the
French Competition Authority, which, on July 23, 2012, issued its decision
on the new notice. This decision makes the merger between CanalSatellite
and TPS subject to compliance with 33 injunctions, which are imposed for
a period of five years and renewable once. They mainly affect:
✱ the acquisition of film rights from US studios and French producers;
✱ the interest of Canal+ Group, through its subsidiary SAS
MultiThématiques, in “Orange Cinéma Séries ”; and
✱ the availability and distribution of independent or internal premium
and specialty channels as well as non-linear services (VoD and SVoD).
Canal+ Group and Vivendi filed two appeals before the French Council
of State to have the decision of the French Competition Authority, dated
September 20, 2011, and the 33 injunctions set aside.
Both appeals were dismissed by two decisions dated December 21, 2012.
The French Council of State decided, however, to reduce the amount of the
fine imposed by the French Competition Authority by €3 million.
Canal+ Group is prepared to comply with these injunctions in the future.
2.1.9.2. OTHER TRANSACTIONS RELATED
TO CANAL+ GROUP
Canal+ Group is also impacted by certain transactions conducted by other
Vivendi Group subsidiaries.
Notice of the acquisition of sole control of Télé 2 by SFR, a Vivendi
subsidiary, was given in November 2006 to the European Commission.
The Commission approved the transaction in July 2007, subject to
compliance with commitments, some of which concerned Canal+ Group.
These commitments were made for a period of five years and thus ended
in July 2012.
Commitments relating to the Pay-TV market were also made by Vivendi
in connection with the merger of the business activities of SFR and Neuf
Cegetel. Notice of the transaction was given in February 2008 to the
Minister of Economy, Finance and Industry, who authorized it subject to
certain conditions. In this context, Canal+ Group is required, for a period
of five years (until 2013), to make two of the channels it produces (Jimmy
and Ciné+ Famiz) available to any distributor at its request on ADSL or
fiber optics. This decision also reinforced the opening of the intermediate
market for the production and distribution of specialty channels. Exclusive
distribution rights for xDsl held by Canal+ Group over the channels
produced by the M6 group were effectively lifted.