French TV stocks slide after merger to challenge Netflix collapses

As with other local broadcasters in Europe M6 and TF1 struggle to remain competitive with global video platforms increasing their influence in the market as a merger was viewed as a solution to these problems.

“It is very disappointing that it shows the inability within France of pursuing a united initiative to establish an official French ambassador for the media,” said Mikael Jacoby the head of trading in Europe for Oddo Securities.

At 1424 GMT at 1424 GMT, shares of TF1 were down 3.3 percent, while shares of M6 were 3percent lower.

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The breakup in talks occurred in the midst of negotiations as Netflix and its competitor Disney+ prepare to launch an ad-supported subscription service to their users, possibly diminishing the market share of advertising of M6 and TF1. Kepler Cheuvreux analyst Conor O’Shea observed.

O’Shea said that German media company Bertelsmann (BTGGg.F) required to find a buyer before the beginning of next year for its 48.3 percent stake it owns of M6 by way of its RTL unit since an extension of the M6 broadcasting channel licence could result in an end to any deal.

“They must find a buyer that is less likely to cause competition issues,” a Paris-based competition lawyer explained, noting timing restrictions meant that terms of a deal could be less favorable in the case of Germany. German group.

On Friday Bertelsmann declared that”the “creation of champion media in the national level that can be able to compete with global platforms” was a key an aspect of its plan to which it is “firmly and firmly”. RTL stated on Monday that it was planning to meet M6’s management team to discuss its choices.

The shares of Bertelsmann fell 1.3 percent..

National consolidation vs. cross-border

The market is skeptical that a new buyer will be found soon and worries of a recession in the eurozone have hurt media stocks.

“Hedge funds do not want exposure to the advertising industry, and many are worried about the next year’s forecast,” a merger arbitrage analyst said.

The pressure was also putting on the TF1.

“One thing is for certain that a decision to end this M&A process is a bad choice for TF1, as it could – if M6 were to be sold to a competitor confront increased rivalry,” added Stephane Ekolo the global equity strategist of Tradition located in London.

The M6-TF1 deal is being slammed by French media giant Vivendi (VIV.PA) that is currently being quoted as well as Altice which is controlled by billionaire Patrick Drahi, as a possible buyer should Bertelsmann decide to sell its majority part of M6.

Italian Media conglomerate MediaForEurope that calls for cross-border agreements instead of national consolidation to solve the problems of the European television business, also being viewed as a possible candidate to sign deals by market analysts.

Formerly called Mediaset, MFE was in the race at the time M6 was first offered for sale.

MFE Shares were trading up more than 6 percent on Monday.

MFE, Vivendi and Altice did not respond to requests for comment.

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