Page 21 - 2012 Annual Report

VIVENDI l 2012 l Annual Report 21
GROUP PROFILE – BUSINESSES – LITIGATION – RISK FACTORS 1
1
SECTION 2 - BUSINESSES
CANAL+ GROUP
2.1.9.3. ACQUISITION OF DIRECT 8 AND DIRECT STAR
Notice of the acquisition of the channels Direct 8 and Direct Star by Canal+
Group was given to the French Competition Authority on December 5, 2011
and approved by the Authority on July 23, 2012, subject to compliance
with several commitments by Canal+ Group for a period of five years
renewable once after a new competitive analysis is performed by that
Authority.
These commitments involve:
✱ a limit on acquisitions by Canal+ Group of combined free-to-air
and Pay-TV rights to US films, US series and recent French films;
✱ the separate negotiation of these rights;
✱ a limit on acquisitions by Direct 8 and Direct Star of French film
releases from StudioCanal; and
✱ the sale of free-to-air broadcasting rights for major sporting events.
TF1 and M6 have filed an appeal before the French Council of State on the
basis that the decision of the French Competition Authority that approved
the acquisition of these two channels exceeded the Authority’s powers.
2.1.9.4. PARTNERSHIP IN POLAND
The Canal+, ITI and TVN groups entered into a strategic partnership
agreement to combine their Pay-TV channel packages in Poland and for
the acquisition by Canal+ Group of a significant interest in the capital
of TVN. This partnership was approved without conditions by the Polish
Competition Authority on September 14, 2012 and by the European
Commission on November 30, 2012.
2.1.9.5. COMPETITIVE ENVIRONMENT IN FRANCE
The French Pay-TV market is changing rapidly due to:
✱ new players entering the market and offering premium content.
For example, Orange, which has positioned itself in the upstream
market for the acquisition of audiovisual rights and in the intermediate
market comprising the production and distribution of movie and
drama channels (“OCS” channels). In addition, Al Jazeera, which has
substantial financial backing and has recently launched the BeIN Sport
channels, allowing it to offer a significant quantity of premium sports
content;
✱ the proliferation of distribution platforms and technologies;
✱ the development and improvement of deals offered by ISPs;
✱ new non-linear services, offering quality and premium content in VoD
and SVoD. They represent, for ISPs in particular, real growth areas
insofar as they allow the providers to rapidly build Pay-TV offerings for
viewers without the editorial or regulatory constraints resulting from
the production of a television service;
✱ the growing consumer appetite for these services. This encourages
the entry into this market of ISPs, often global in reach and currently
very active in the audiovisual creation economy. There is a fear that
this distortion of competition will intensify as the growth of connected
television facilitates even greater access to delinearized services;
✱ the competitive pressure exerted by the cable operator Numericable,
which also remains strong due to the development of fiber optic
networks. The trend towards very-high-speed Internet allows it
to diversify and expand its services. It is also investing resources
to acquire the rights to produce and broadcast sports-themed
channels; and
✱ the undeniable and growing success of DVB in France is helping to
drive radical change in the audiovisual landscape and has opened the
market to brand new competition from the producers of free television.
2.1.10. Research and Development
Canal+ Group Research and Development (R&D) policy primarily focuses
on innovations in new services, new uses and new technologies.
The development of an idea or concept from the monitoring phase into
the prototyping phase, and then to deployment, is determined by a cross-
disciplinary committee consisting of the operational directors (Distribution,
Programming, Technologies and Information Systems).
Some of the projects carried out within this framework benefit from
research tax credits.