French broadcaster TF1 has ended its talks with film major Pathe, aimed at merging the two groups' interests in the areas of movie management, acquisition and sales, reportedly because of conflict between TF1 chairman Patrick Le Lay and Pathe's Jerome Seydoux.
The merger would have created a French competitor to StudioCanal, with a catalogue of about 1,200 titles.
TF1 had already attempted to buy a 29% chunk of Pathe in early 1999, but was blocked by Canal Plus and its main shareholder Vivendi, which acquired Pathe, only to re-sell it to Seydoux, minus Pathe's stake in UK satellite broadcaster BSkyB.
TF1 is the second largest backer of French film production, after Canal Plus. It acquired a controlling stake in prolific French production house Telema last April, and owns 49% of another French producer, Film Par Film.
Pathe is a major producer, distributor and exhibitor in France and has developed these activities in other territories, a dimension that TF1 is lacking. Both companies are developing cable and satellite broadcasting businesses in France.
Although neither side explained why the talks broke down, one potential conflict of interest is Pathe's close links to Vivendi Universal. TF1, which is a major shareholder in digital platform TPS, has been locked in an on-going battle over pay-TV rights with Canal Plus. Teaming with Pathe would help TF1 strengthen its hand against its rival, but Pathe has several links to Canal Plus, including a joint movie acquisition venture, C+P. Pathe is also the UK partner of StudioCanal's fledgling European distribution network.