Bertelsmann expected in pounds 1.3bn joint bid for CLT

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The Independent Online
US-style media merger mania last night crossed the Atlantic with a vengeance, as speculation mounted that the German TV and the publishing giant Bertelsmann and two French partners would bid more than $2bn (pounds 1.3bn) for control of CLT, the Luxembourg-based broadcaster.

Although the companies insisted a bid was not imminent, they shied from outright denial of strong rumours in Germany.

Analysts on the Continent and in London said the potential bid could mark the start of a wave of mergers and cross-shareholdings, as media companies prepare for the next stage in television's revolution - the transition to digital TV.

The possibility of a bid for CLT, which owns stakes in UK Talk Radio and in the consortium that won the Channel 5 licence battle, also fuelled speculation that Rupert Murdoch would soon enter the fray, perhaps in league with the German media magnate, Leo Kirch. There have already been rumours that Mr Murdoch would seek to take a 30 per cent stake in CLT through his 40 per cent-owned BSkyB, the UK satellite and cable broadcaster.

Mr Murdoch's senior European television executive, BSkyB's Sam Chisholm, travelled to Germany two weeks ago and was believed to have discussed media joint ventures with Mr Kirch.

One of Bertelsmann's likely partners in any CLT bid, the French media company Canal Plus, has invested heavily in digital satellite broadcasting, and is already Europe's largest pay-TV broadcaster, with 34 per cent of the market. BSkyB, second in the market, has about 30 per cent.

Bertelsmann's other partner is Havas, the French publishing group, which has shareholdings in both Canal Plus and CLT.

A near-60 per cent indirect stake in CLT is owned by Group Bruxelles Lambert, which is eager to trade out of what it views as a risky and expensive business. Havas has the remaining 40 per cent of CLT.

The European pay-TV market could grow by as much as 25 per cent a year by the end of the decade, according to a just-published study by Daiwa Securities. The main driver is likely to be digital television, which will bring as many as 200 channels to European viewers.

Three large but so far loosely tied pay-TV groups have emerged in Europe. CLT already has close ties to Bertelsmann and Canal Plus through joint ventures in Germany and, like Canal Plus, has Havas as one of its main shareholders. All three broadcasters have agreed common standards for transmission and encryption, a factor believed to be key to the overall success of new digital services.

In the UK, BSkyB has gone its own way, at least to date. It could, however, develop closer ties to the third big force, the Kirch Group, which in turn has ties with Silvio Berlusconi in Italy and the Richemont Group's Filmnet/Nethold operations. But digital television is likely to be very expensive to develop, and that is one factor fuelling the takeover speculation.

Mr Kirch, BSkyB and Canal Plus have already secured nearly all the slots available on the Astra digital satellites, to be launched in the next 18 months.