With France soon to have only one pay TV operator, the news is that they may be negotiating with Hollywood studios to cut the cost of its deals by as much as 30%.
The company, Canal Plus, is about to be the only French pay TV operator through its merger with rival TPS in the next few weeks. It will create a large company with 8 million subcribers. At this time, the two companies spend around $467 million between them on deals for Hollywood content. If they get their wishes, it could drop costs by $133 million a year.
The major reason is that U.S. films don't do very well on French TV. The competition between the two companies drove the prices up in 2004, which resulted in some of the other studios hiking their prices as well. Warner Bros. (TWX) alone cost over $40 million a year; considered excessive in the French market.
For most companies this won't be something done overnight, as Disney (DIS), the first company that will come of for renewed negotiations, is due for talks in 2007. No other company will be up until 2008. Warner Bros. will be next, then MGM in 2009, Sony (SNE), Paramount and Dreamworks will all be subject to negotiations in 2010. Fox (NWS) and Universal aren't scheduled until 2012.
The question is if they will be required to participate in new negotiations before there renewal dates. This can't be good news for the studios as they continually fight to find new sources of revenue.
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