Pay-television broadcaster Al Jazeera’s new venture in France will lose €580 million ($766 million) before making its first profit in 2016, according to a forecast by financial investment analysis company Natixis.
Natixis estimated that Al Jazeera would have 1.5 million subscriptions for its two sports channels by 2016. The broadcaster has acquired rights for the Uefa Champions League, from 2012-13 to 2014-15, and French football’s Ligue 1, from 2012-13 to 2015-16, for the channels, which will launch in France in the first half of this year.
“We are, at this stage, very cautious about [Al Jazeera’s] success,” Natixis said.
The company predicted that Al Jazeera would invest €330 million in the French channels by the end of 2013. This would include €200 million on rights fees in deals that have already been agreed, an estimated €60 million on additional rights fees from deals yet to be agreed, €20 million on production costs, and further costs associated with marketing and subscriber management.
Natixis played down the potential adverse impact of Al Jazeera’s growth on rival pay-television broadcaster Canal Plus, which lost important football rights packages, for the Champions League and Ligue 1, to the Qatar-based broadcaster.
“While many investors are questioning the risk for Canal Plus, we believe that the loss of subscribers should be limited,” Natixis said. The company said that the Canal Plus’s broad offering of films, series and documentaries would restrict subscriber losses. Natixis added that Canal Plus’s sports portfolio “remains very strong with two main Ligue 1 games [to be shown live on Saturday afternoons and Sunday evenings] and the first-choice match of the Champions League.”
Natixis said that Canal Plus viewers were more likely to subscribe to Al Jazeera on top of their existing Canal Plus subscriptions, rather than replace Canal Plus with Al Jazeera. “Assuming that 50 per cent of households subscribing to Canal Plus are primarily interested in football, it creates a potential market of around 2.5 million homes for Al Jazeera,” Natixis added. Canal Plus said in its latest annual financial results that it had 5.4 million subscribers at the end of September 2011.