The deal will create a new group, in which Canal owner Vivendi Universal will take an 85% share. TPS owners TF1 and M6 will take 9.9% and 5.1% respectively.
Theagreement is subject to approval by the French broadcasting authority (CSA) and competition regulators as well as discussions with the companies' respective labour relationscommittees.
Astatement from Vivendi has tried to allay fears of producers worried about the effect of the merger on thefilm investments of both Canal Plus and TPS.
Itsaid the new company would "support French film and broadcastingcreativity."
TPSand Canal each currently invest 9% of their annual revenues in the acquisitionof French films.
Local industry lobby groups have been vocal this week urging a high level of commitment to cinema.
TheIndependent Producers' Union said it was vital that the deal was not made "tothe detriment of the current contribution of the two groups to independentcreatitivy."