French TV shares plummet after merger to fight Netflix collapse


PARIS/MILAN: The collapse of a deal to form a French TV giant to challenge US streaming services such as Netflix hit shares in M6 Group and TF1 on Monday.

France’s two largest private broadcasters abandoned their merger plan on Friday citing French antitrust requirements that made the deal unworkable.

Like other local broadcasters in Europe, M6 and TF1 struggle to stay competitive as global video platforms increase their dominance in the industry and a partnership has been seen as a response to those challenges.

“It is extremely disappointing, it shows the inability in France to drive a unifying project to create a French media champion,” said Mikael Jacoby, head of continental trading at Oddo Securities.

At 1424 GMT, TF1 shares were down 3.3 percent and shares in M6 were down 3 percent.

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The failure of the talks came as Netflix and rival Disney+ prepare to launch an ad-supported subscription offer to their viewers, potentially eroding TF1 and M6’s ad market share, Kepler Cheuvreux analyst Conor O’Shea noted.

O’Shea added that German media group Bertelsmann will have to find a buyer early next year for its 48.3 percent stake in M6 through its RTL unit, as the renewal of M6’s broadcasting license will lead to a ban. of five years on all sales.

“They need to find a buyer who will raise fewer competition concerns,” said a Paris-based competition lawyer, who noted that the timing restrictions meant the terms of a new deal would likely be less favorable to the German group.

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On Friday, Bertelsmann said the “creation of national media champions to compete with the global platforms” is still part of his strategy, to which he remains “determined”. RTL said Monday it would meet with M6’s leadership team and assess options.

The Bertelsmann share fell 1.3 percent.


Investors doubt whether a new candidate can be found in time and fears of a recession in the eurozone have hit media stocks hard.

“Hedge funds don’t want exposure to the advertising industry, people are very concerned about next year,” said a merger arbitrage analyst.

Pressure also mounted on TF1.

“One thing is certain, giving up this M&A operation is bad for TF1, which – if M6 were sold to a competitor – would face increased competition,” said Stephane Ekolo, global equity strategist at Tradition in London.

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The M6-TF1 deal is facing fierce opposition from French media group Vivendi, which is now citing itself, along with billionaire Patrick Drahi-owned Altice, as a potential buyer should Bertelsmann pursue his plans to sell his majority stake in M6.

Italian media conglomerate MediaForEurope, which advocates cross-border deals rather than national consolidation to tackle the problems of the European TV industry, is also seen by market observers as a potential candidate for a deal.

Formerly known as Mediaset, MFE was in the running when M6 was first offered for sale.

MFE shares rose more than 6 percent on Monday.

MFE, Vivendi and Altice declined to comment.


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