Enders Analysis

Canal+ France has issued a prospectus in view of the April flotation of Lagardère’s 20% stake, which could still reach an agreement to sell with majority owner Vivendi

The prospectus provides a unique insight on the performance of Canal+, which has increased ARPU and profitability in the past three years, despite erosion of its subscriber base due to competitive pressures and the recession

Management’s revenue and profit targets for 2013 appear within reach, and we also see potential upsides

Jeremy Hunt announced on 25 January his intention to refer News Corp’s bid for BSkyB to the Competition Commission

However, he is first providing News Corp with the opportunity to address Ofcom’s concerns, and in so doing protecting his department and Ofcom from any legal threats

If Ofcom or the OFT say the News Corp remedies don’t go far enough, Jeremy Hunt will be then almost obliged to refer the transaction to the CC

Since free DTT launched in 2005, Spain’s free-to-air broadcasters Telecinco and Antena3 have broadly managed to preserve audiences at group level. In 2010, they benefited from the rebound in advertising and from the withdrawal of public TV from airtime sales

By the end of 2010, Telecinco will close its acquisition of loss making competitor Cuatro. Telecinco will be able to realise some synergies, but we expect Cuatro's business model may require change to break even

In this presentation we highlight Mediaset's star position among European FTA broadcasters, enjoying the highest share of its national advertising market (and profit margin), stable throughout digitalisation and secure for the future

Facebook Messaging adds email, IM and SMS to Facebook messages. Some portion of the social network’s 600+ million users will switch to Facebook for an all in one text-based communications service

Switchers to Facebook Messaging in the US will reduce the display ad revenues of traditional portals, like Yahoo! and Microsoft, which use such tools to drive traffic

Less affected is Google. Some Gmail users will switch, but Google’s core business model is selling search advertising, where it is not challenged by Facebook (yet)

Vivendi is close to being in a cash position to buy out minority shareholdings in SFR and Canal+, shedding the image of a ‘conglomerate’ of partly owned and diverse assets, which has weighed on valuation Acquiring Vodafone’s 44% stake in SFR (now only a question of price) would allow Vivendi to rebrand itself as a telecoms story, serving France, with Maroc Télécom and mainly Brazil’s GVT supplying the upside To fully acquire Canal+, Vivendi’s offer will need to consider Lagardère’s option of floating its 20% stake.

Germany, the UK and France are the three largest advertising markets in Europe, worth €40.3 billion in 2009, of which €8.9 billion was spent on internet ads, 65% of the total across the continent (based on IAB Europe survey of 19 countries)

In per capita terms, the UK and Germany spend the most on advertising: in 2009, roughly €200 per head was spent in the UK and Germany, 40% more than in France

FT has put majority stakes in Orange Sport and Orange Cinéma Séries on the block, and claims to have held discussions with News Corp. We think it unlikely that an investor would be interested in entering the French pay-TV market, dominated by Vivendi’s Canal+

We believe FT could find a buyer for Orange Sport in Disney’s ESPN, which could prove viable if a cross-retailing deal is reached with Canal+. A Eurosport merger is another option. Orange Cinéma Séries could be viable under a new owner, if it widens it distribution to other platforms

Google is almost certain to close its China site, Google.cn, foregoing much of the revenue and potential upside from the world’s largest internet population and fifth biggest market for internet advertising

Google.cn has performed reasonably well to date, taking about 20% of spend on paid search compared to c65% for market leader Baidu. We would expect Google’s future performance to improve but not to displace Baidu