Newsflow around a possible deal with BeIn Sports is accelerating. We think the market would welcome a deal. Under the right terms, this would underpin our positive view on a Bolloré-driven turnaround of Canal+. Stay OW.
A deal would make strategic sense for Vivendi.
We sense the Canal+ issues fuel a large part of the bear case on Vivendi. We estimate securing BeIn Sports content through an acquisition or distribution could unlock cost synergies worth €1.4-2.5bn, reduce churn and grow the subscriber base and ARPU. Assuming a return to peak profitability and valuing Canal+ France at 10x EBITDA – in line with our Sky UK SOTP – would add as much as €3ps/15% to our Vivendi SOTP.
Potential hurdles to any deal.
i) Regulation: Canal+ cannot broadcast exclusively premium channels before 2017. A straight purchase of BeIn Sports
would likely result in a lengthy regulatory review. For example, it took 18 months for Vivendi's purchase of TPS gain approval.
ii) Valuation: BeIn