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France’s TF1, M6 agree to merge

Europe’s RTL Group is set to merge its French business M6 Group with rival TF1 Group to create a new French media giant.

Nicolas de Tavernost

RTL Group owner Bertelsmann and TF1 owner Bouygues Group have entered into “exclusive negotiations” to create the new player, which is intended to take on the likes of Netflix, Disney, Apple, Amazon, Comcast and the emerging WarnerMedia-Discovery entity.

Bertelsmann has this year been searching for a buyer for its shares in M6 Group, with Vivendi and Mediaset among the other companies to have joined TF1 Group in the running.

Paris-based Bouygues Group would hold a 30% stake in the as-yet-unnamed France-based company, with Fremantle owner RTL Group involved as a strategic shareholder with a 16% stake.

Creating a new media giant would allow the two to better compete with the powerful US-based streaming platforms in France, they said in a joint statement announcing the merger.

The move has been unanimously approved by the boards of TF1, Bouygues, RTL and M6, but could face a lengthy battle for regulatory approval from anti-trust authorities in France due to the mammoth size of the outfit and its dominance of the advertising market. The proposed merger is due to close by the end of 2022.

A new ad-supported service, combining catch-up and live streaming and based on existing services MyTF1 and 6play, would be developed, alongside an SVoD service and a production hub for local and international content.

Thomas Rabe

It is unclear how the newly proposed streamer would sit alongside Salto, the SVoD platform set up by TF1 and M6 along with public broadcaster France Télévisions, which launched last year.

The deal would bring together flagship channel TF1, France’s leading free-to-air broadcaster, and the group’s expanding European production business Newen with commercial network M6 plus a host of channels M6 Group acquired from Lagardère Active in 2019.

“The combination of these two players, 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,” RTL and Bouygues said in a joint statement.

“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, CEO of M6 Group, will be proposed as chairman and CEO of the merged entity, with Gilles Pélisson, chairman and CEO of TF1 Group, to be nominated as deputy CEO of Bouygues Group, in charge of media and development.

The management of the combined group would include members of the current top teams at the M6 and TF1 groups. The two companies suggested the merged entity could save an estimated €250m (US$304m) to €350m in running costs within three years from the closure of the transaction, and earn €3.4bn in annual revenue.

Olivier Roussat

Pélisson said: “The merger between TF1 Group and M6 Group is a great opportunity to create a French total video champion that will guarantee independence, quality of content and pluralism – values that have long been shared by our two groups.

“It will be an asset in promoting French culture. TF1 Group now approaches a new stage in its development, consistent with the strategic vision developed in the past five years.”

De Tavernost added: “The consolidation of the French television and audiovisual markets is an absolute necessity if the French audience and the industry as a whole are to continue to play a predominant role in the face of exacerbated international competition, which is accelerating rapidly.

“The combination of the two groups’ know-how will allow for an ambitious French response. Furthermore, this proposed merger of M6 Group and TF1 Group is the only transaction offering value creation for all M6 Group shareholders.”

Olivier Roussat, CEO of Bouygues Group, said: “We are pleased with this major development and partnership which confirms Bouygues Group’s commitment to the media since 1987. As shareholders with exclusive control over the new group, we will continue to provide it with our full support.”

Thomas Rabe, CEO of RTL Group, added: “The proposed merger of TF1 Group and M6 Group would be a major step in implementing our strategy to create national media champions across our European footprint. It demonstrates how in-country consolidation creates significant value. As a strategic investor we will be long-term industrial partners of Bouygues Group.”

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