Discovery to create strategic alliance with TF1

Discovery Communications and France’s TF1 Group have entered exclusive negotiations to create a strategic alliance whereby Discovery would make investments in TF1’s businesses.

The pair are focusing on Eurosport, cooperation in pay TV offerings in France and developing a content production partnership. The Wall St Journal has reported that Discovery could invest several hundred million dollars in a minority stake in Eurosport.

TF1’s chief financial officer, Philippe Denery, was reported by French financial daily Les Echos as saying that TF1 didn’t yet know if Discovery’s investments would involve the creation of new channels and added that the two groups could look to realise synergies.

The pair’s announcement, without revealing further details, came as TF1 revealed new plans to cut costs by a further €85 million between now and 2014, on top of the €155 million in savings realized over the last four years.

The move to make further cost savings followed a poor third quarter for the commercial broadcaster.

Third quarter revenues stood at €551.7 million, down 1.7%, with advertising sales for the main TF1 channel down 10.2% to €266.3 million. Non-traditional revenues were up 7.9% for the quarter to €285.4 million, however. TF1 turned in a net loss of €5.9 million compared with a profit of €6.6 million for the same period last year.

Eurosport turned in a strong performance over the first nine months of the year, with revenue growth of 14.9% to €309.8 million on the back of its Olympic Games coverage.