Carlton Communications’ plans for a E250m pan-European internet alliance have collapsed after the media group failed to secure a financial commitment from Italy’s Mediaset, Telecinco of Spain and Germany’s Kirch.
Michael Green, Carlton chairman, had earlier this year announced plans for a “Grand @lliance” which would have seen the four media groups, plus TF1 of France, each invest E50m to develop US internet business models in Europe.
Carlton on Monday admitted it had scaled back its plans for the proposed alliance, but would focus on an earlier joint venture with TF1. Carlton is expected to pursue separate commercial opportunities with its rivals.
The news, which coincided with Carlton’s announcement that it had sold Technicolor, its video and film processing unit, to Thomson Multimedia of France for $2.07bn, underlines the complexity of cross-border media deals and reflects disaffection with the internet sector.
However, Carlton is forging a position in continental Europe via a minority stake in Thomson, which it acquired as part of the Technicolour deal. It will acquire 5.5 per cent of Thomson and Mr Green will take a seat on the Thomson board alongside representatives from other minority shareholders: NEC of Japan, Microsoft, Alcatel and DirecTV.
Carlton is keen to play a part in the development of digital terrestrial services and interactive products, in which Thomson aims to be a leading participant.
Following the disposal of Technicolor, Carlton said it had also agreed in principle to invest $15m in TAK, Thomson’s interactive TV joint venture with Microsoft.
The Thomson venture, focused on developing TV internet services, will remain separate from the TF1 joint venture.
Thomson will pay Carlton an initial $750m, and $600m over the next four years. The value of the deal was at the top end of expectations but below some estimates this year that Technicolor could fetch up to £1.7bn ($2.5bn).
Thomson, 35 per cent owned by the French government, will also issue Carlton 15.5m shares, released after one year, which represents a 5.5 per cent stake. Thomson, which said the acquisition would be strongly earnings enhancing in the first year, will add Technicolor to its digital media solutions arm.
The group, under Thierry Breton, chairman and chief executive, has been eyeing acquisitions on the services side of the media and entertainment industry and has particular interest in DVDs and digital cinema.
Carlton shares gained nearly 7 per cent to 615p.
UBS Warburg advised Carlton and Goldman Sachs advised Thomson.
