French groups TF1 and M6 propose merger

The melding will create a French audio-visual media giant.


MUMBAI: Fierce competition forces alliances upon nations, people, and companies. As it is doing in the media and entertainment globally today. Close on the heels of the announcement of the merger between AT&T’s Warner Media and Discovery, reports of another fusion between two media groups in France have emerged. The two in question are TF1 and M6 (pronounced Seez) groups.

TF1 is owned by the Bouygues group, while M6’s ownership lies with European production and TV broadcaster RTL, which is part of media giant Bertlesmann. The two will be housed in a new French company in which Bouygues would hold 30 per cent and RTL 16 per cent. The former will acquire 11 per cent equity from the latter for Euros 641 million.

The proposal has got the go-ahead from the RTL, Bouygues, TFI, and M6 boards, but has to get over the regulatory hurdles from French authorities and is proposed to close by the end-2022. The merged company would have a 2020 pro forma revenue of €3.4bn and a current operating profit of €461M. The synergies potential (EBITDA run-rate impact) is estimated at €250M to €350M per year within three years from the closing of the transaction.

M6 CEO Nicolas de Tavernost has been proposed as chairman & CEO of the merged entity while chairman and CEO of TF1 Gilles Pélisson will be nominated as deputy CEO of Groupe Bouygues in charge of media and development.

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.

What’s forcing the two to merge? Well a press release issued by RTL gives some insights.

It says the two groups are active in a growing total video market where increasingly rich, original, and exclusive content is driving long-term audience growth. Even as linear TV remains powerful, it is undergoing a structural transformation with a strong shift towards on-demand consumption which is being led by global platforms making deep pushes in the French advertising market.

“The combination of these two players, of the know-how of their employees and their strong brands, would allow the new group to invest more and to step up innovation. 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,” said the statement.

“The merger between Groupe TF1 and Groupe M6 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,” said Pélisson. “It will be an asset in promoting French culture. Groupe TF1 now approaches a new stage in its development, consistent with the strategic vision developed in the past five years.”

"The consolidation of the French television and audio-visual 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,” added de Tavernost. “The combination of the two groups' know-how will allow for an ambitious French response. Furthermore, this proposed merger of Groupe M6 and Groupe TF1 is the only transaction offering value creation for all Groupe M6 shareholders.”

“The audio-visual market benefits from long-term growth. In this context, Groupe Bouygues is pleased to contribute to the creation of a major French media group able to compete with the GAFANs,” highlighted Groupe Bouygues CEO Olivier Roussat. “We are pleased with this major development and partnership which confirms Groupe Bouygues' 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.”

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

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