TF1 and M6 shares slide after French TV groups abandon merger

PARIS (Reuters) -The collapse of talks to form a French TV giant to challenge U.S. streaming services such as Netflix knocked shares in M6 Group and TF1 on Monday.

A view shows French television group M6 headquarters in Neuilly-sur-Seine, near Paris, France, May 21, 2021. REUTERS/Sarah Meyssonnier/File Photo

France’s two biggest private broadcasters gave up their merger plan on Friday citing French antitrust requirements that rendered the deal unworkable.

TF1 shares were down 3%, while M6 traded close to 5% lower at 0754 GMT.

Under the initial merger plan, French conglomerate Bouygues would have ended up controlling the merged group with a 30% stake while M6’s parent, German media group Bertelsmann, would be the second biggest shareholder with 16%.

Bertelsmann shares fell by around 1% on Monday morning.

“It is extremely disappointing (the outcome of the merger), it shows the incapacity in France of pushing a unifying project to create a French media champion”, said Mikael Jacoby, head of continental trading at Oddo Securities.

The companies have been facing stiff opposition from media group Vivendi which is now itself being cited by market observers including Oddo’s Jacoby as a potential buyer, should Bertelsmann pursue its plans to sell its controlling stake in M6.

The trader also mentioned Altice, owned by billionaire Patrick Drahi, as a potential fit. Altice declined to comment.

On Friday Bertelsmann, which controls M6 through it’s unit RTL, said the “creation of national media champions to compete with the global platforms” was still part of its strategy to which it remains “firmly committed”.

An RTL spokesman said on Monday: “We will meet with M6’s leadership team and assess the options going forward”.

“It seems that the two have pre-empted the decision which was due on 17 October, in order to give more time for (Bertelsmann-controlled) RTL to find a buyer for its 48.3% stake in M6, which was the original plan, before TF1 outbid other parties,” said Kepler Cheuvreux analyst Conor O’Shea.

“The timeframe to find a buyer remains very constrained though,” he added, saying any deal would need to be completed by early next year before a renewal of M6’s broadcasting channel license leads to a five-year ban on any sale.

Italian media conglomerate MediaForEurope, formerly known as Mediaset, which was in the race when M6 was first put up for sale, is also seen as a potential candidate for a deal by market observers.

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

Vivendi and Mediaset declined to comment.

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