Canal Plus Says It’s in Talks With BSkyB on Possible Venture

Canal Plus, Europe’s No. 1 pay-TV company, said it’s in talks with British Sky Broadcasting Group, the second-biggest, on a possible linkup.

The announcement follows comments by BSkyB Chairman Jerome Seydoux, who told reporters Friday that the companies are “talking about everything, but the talks principally cover a merger--a merger between BSkyB and Canal Plus.”

Canal Plus and Vivendi, its parent company, later said the discussions are at a “very preliminary stage.”

Combining BSkyB’s British satellite customers with Canal Plus’ viewers in France, Italy and Spain would create a European TV superpower with about 14.5 million subscribers. Seydoux warned, however, that a merger would face many regulatory obstacles as well as cultural hurdles. It would control an estimated 75% of Europe’s pay-TV market. Seydoux is also chief executive of Pathe, which has a 17% stake in BSkyB.

“We confirm that several meetings took place over the past few weeks between Canal Plus executives, their English counterparts and their main respective shareholders,” Canal Plus said in a statement.

A cooperation “can reinforce Europe’s pay-television industry. Canal Plus will seriously study this project as long as it helps develop its identity and national and European commitments,” the company added.

Canal Plus and BSkyB have so far declined to officially confirm whether talks between the two companies include discussion of a merger, which was first reported Tuesday in the Wall Street Journal.

Rupert Murdoch, whose News Corp. owns 40% of BSkyB, has so far failed to forge alliances with TV companies in Italy and Germany--in part because of regulatory obstacles. An agreement with Canal Plus would give Murdoch access to the French market as well as to Italy, Spain and the Netherlands.