Market Insight

Belgian cable operator Telenet to acquire stake in SBS Belgium channels

June 18, 2014

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Belgian cable operator Telenet has reached agreement to buy a 50% stake in De Vijver Media, the owner of the Vier and Vijf commercial TV channels. The stake in De Vijver comes from the purchase of shares previously owned by Finnish media group Sanoma for €26 million. Telenet is also contributing an additional cash investment in De Vijver of €32 million. Existing shareholders Corelio and W&W are remaining on board with a 25% shareholding each.

The agreement is subject to approval by the European Commission on competition grounds. Telenet is the largest cable operator in Belgium, with just over two million subscribers at the end of 2013, according to IHS Television Intelligence, equivalent to 45% of TV homes. Vier and Vijf (in English, Four and Five) are not the top-rated free-to-air channels in the Flemish-speaking region of Belgium, with a smaller market share than public broadcaster VRT and leading commercial channel VTM. 

In addition to Vier and Vijf, the transaction will provide Telenet with an interest in the independent Belgian production house Woestijnvis. Telenet has stated that it does not plan to consolidate De Vijver Media's activities.

Our Take

The purchase of a stake in linear TV channels appears on the face of it to be an unusual decision for Telenet when viewed alongside its majority shareholder Liberty Global’s sale of pay TV channel group Chellomedia earlier this year. Liberty Global did retain Dutch premium channels Film1 and Sport1, while Telenet has a similar position in premium TV with its movie channel Prime and sports channel Sporting Telenet (bolstered last week by Telenet’s securing of non-exclusive football rights to the Jupiler Pro League for three years). 

In contrast to these premium channels currently in Telenet’s portfolio, Vier and Vijf are commercial channels predominately funded by advertising. However, Telenet is portraying its investment in De Vijver Media as providing further opportunities to expand the group's investment in locally-produced content as well as acting as a 'counterweight' to strong foreign players. Telenet has backed local production companies including Studio 100, Apartment TV and has supplied €30 million in funding for local films through its Telenet STEP initiative, launched in 2012.

It should also be noted that in Belgium's densely-cabled market, Vier and Vijf are currently encrypted and hence only available on pay TV. While Telenet does hold the licence to commercially operate digital terrestrial television (DTT) multiplexes, its use of this via its Teletenne pay DTT service was closed in March 2014 following insufficient interest.

The investment also partly mirror's Liberty Global's planned acquisition (alongside Discovery Communications) of UK-based production company All3Media - a shift in strategy towards content ownership and to production. As well as potential threats from OTT (over-the-top) services, Telenet is faced with the risk of increased competition from the continued implementation of cable regulation in Belgium. This requires the cable operator to provide access for third parties to its cable networks, and will begin with the entry of Mobistar later in the year. While Telenet have appealed for the reversion of this ‘Open Cable’ regulation, the expansion of the media and content arm to its business will provide an opportunity for diversification beyond traditional pay TV services, should it successfully gain regulatory approval. It will also allow Telenet to compete more effectively in the TV channel and content sector.

Belgium Benelux
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