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Industry Report: Financing

Canal Plus chief Bertrand Meheut sounds alarm for French cinema


- Meheut says international operators such as iTunes, Google and YouTube as well as Al Jazeera's sporting ambitions pose threat to France's unique film finance model.

Bertrand Meheut, president of French pay-TV giant Canal Plus, has warned the funding model underpinning French cinema is under threat from the emergence of global Internet companies not subject to the same legislation as France's broadcasters.

"Our industry faces unprecedented challenges that could destabilize a system that has helped our sector develop," Meheut wrote in an open letter in Le Monde newspaper on Tuesday.

(The article continues below - Commercial information)

"For the first time in France, a significant portion of the revenues related to the delivery of audiovisual content is not being put back into the production of new content," he wrote.

Under French legislation, local broadcasters are obliged to plow a percentage of their turnover into the production of French series and films.

"Every year, the group invests €600 million in the French audiovisual sector. It is France's leading cinema backer, present in two-thirds of the films made each year, 40 of which are first-films," wrote Meheut of Canal Plus' contribution.

Meheut said global Internet groups making film and television content available in France but based outside its boundaries, threatened to undermine the country's finely tuned audiovisual financing model.

"There has always been fierce competition between the French media groups but the rules were the same for everyone: a single regulatory and fiscal framework aimed at supporting creativity, a common economic logic aimed at balancing costs and revenues," he explained.

"But new forms of competition are emerging which tend to avoid these rules," he continued. "I'm thinking in particular of the major global Internet players who, with the arrival of connected TV, have started offering standardized packages. Some are not content with just offering VOD services: YouTube has announced the creation of 20 television channels!"

"Make no mistake. It is not in the name of Internet freedom that they seek to exempt themselves from these constraints, but for economic reasons. Why has Apple set up its European base in Luxembourg? Why did Google choose Ireland to develop its business in Europe? To benefit from favourable tax regimes and lighten their obligations," he added.

In addition to the global Internet players, Meheut also pointed a finger at the arrival of Qatari-based media group Al Jazeera in the sports rights arena.

Last year, Al Jazeera struck deals for the media rights to screen Uefa Champion League matches in France as well as most of the top domestic French fixtures. It reportedly doubled the offers made by Canal Plus, which held the rights at the time.

The coup was a huge blow for Canal Plus. It remains to be seen what impact the loss of the games will have on subscriber numbers for the group.

Meheut said the consequences of Al Jazeera's acquisition strategy with a "different logic of profit" would result in the disappearance of sport from free channels.

"At the same time, the pay channels that want to continue broadcasting sport must make trade-offs at the expense of other content, like movies or fiction," he wrote.

Muheut concluded his letter with an appeal to the French authorities to "define rules that apply to all market participants."

"Given the changing environment, governments need to be creative to adapt our principles and our regulatory framework, in a way that is realistic and pragmatic," he concluded. 


in this industry report


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