Canal Plus scraps TV venture with Germans

Canal Plus has called off its pay-TV joint venture with Bertelsmann, the German media giant, following weeks of tension and disagreement.

The two insisted yesterday, however, that they would continue to pursue other common projects in the media sector, and that their decision should be seen more as a separation than a divorce.

The move follows a chess game of great complexity among the Continent's main pay-TV hopefuls, particularly in the potentially lucrative German market.

The seeds of the dispute between Canal Plus, operator of France's digital pay-TV network, and Bertelsmann date from the German company's announcement earlier this year that it would merge its TV interests with those of CLT, the Luxembourg-based broadcaster that has established a competing pay- TV service in France.

The situation was further complicated by the swift moves of BSkyB, the UK cable and satellite broadcaster, which joined a grand alliance made up of Bertelsmann, Canal Plus and Havas early this year, only to dump the group in favour of an equity joint venture with Bertelsmann's chief German rival, the Bavarian mogul Leo Kirch.

Since then, Bertelsmann has dropped attempts to develop a competing digital TV platform in Germany, and instead will support a plan to add the Premiere pay-TV channels, in which it has a 37.5 per cent stake, into the Kirch DF-1 digital bouquet.

As part of the truce with Kirch, Bertelsmann is also prepared to sell half its Premiere stake to BSkyB, in a bid to cement the new relationship.

If agreed, the deal will see Premiere split among four companies - Kirch, Bertelsmann, Canal Plus and BSkyB.

The digital TV market has expanded rapidly, both in the US and in continental Europe. Kirch and BSkyB launched their German service last weekend, with 17 channels, and plan to add more in the course of the coming year.

Separately, BSkyB has said it would introduce digital television in the UK late next year, and has confirmed it would welcome an equity investment by Kirch.

BSkyB is expected to use its experience with Kirch in the German market to fine-tune plans to launch digital satellite services in the UK. Its initial goal is to offer as many as 200 channels, many of them devoted to pay-per view film and sport services.