French watchdog deepens probe into Canal+ free TV buys

PARIS, April 17 Tue Apr 17, 2012 7:48am EDT

PARIS, April 17 (Reuters) - The French competition regulator will launch an extensive probe into Vivendi pay-TV unit Canal+'s takeover of television channels Direct 8 and Direct Star from French billionaire Vincent Bollore.

The inquiry, which the regulator announced on Tuesday, follows an earlier decision last year to deepen its probe into a 2006 deal that saw Canal+ buy its main satellite rival TPS.

Canal+ declined to comment. It said in September it planned to take a majority stake in Bollore's channels as part of a push into free TV where the majority of advertising dollars are spent.

The proposed deal would give Canal+ 60 percent of two free channels -- Direct 8 and music-focused Direct Star -- in exchange for Vivendi shares and pose a new challenge to France's two biggest broadcasters, TF1 and M6.

Canal+ has acknowledged that it might have to give up one or two channels in its portfolio to comply with regulatory ownership limits.

"The commitments proposed by Canal+ are not sufficient to remove the risks to competition identified at present," the watchdog said in a statement, adding it would investigate whether the strong positions that Canal+ holds in pay TV could affect competition in free TV.

Since its debut as France's fourth TV channel in 1984, Canal+ has grown to offer about 20 channels covering movies, sports, family programming and news via its i-Tele brand.

(Reporting by Caroline Jacobs)