PARIS (Reuters) - France's biggest telecoms operator Orange (ORAN.PA) said on Tuesday it had deepened its commercial ties with Vivendi's (VIV.PA) pay-TV Canal Plus in a bid to lure more customers with premium movies, sports and other TV content.
The announcement ends months of talks between the two groups, although it marks a scaling back from the Canal Plus buyout scenario which Orange Chief Executive Stephane Richard floated at the end of last year.
It also highlights the challenges of a rapidly-changing sector marked by new competition from providers of on-demand Internet streaming media such as Netflix (NFLX.O) and Amazon (AMZN.O), and the aggressive push in France of telecoms and cable group Altice (ATCA.AS) into sports broadcast rights.
Under the enhanced cooperation, Orange will in coming months distribute Canal Plus's French channels direct to ultra fast broadband customers, the firm said, without giving a price at which it would be offered.
It is the first time any entity other than Canal Plus has been able to charge directly for Canal Plus-owned TV content.
"It's the most attractive Canal Plus offer in France," the pay TV's chief executive Maxime Saada said. Canal Plus also has a distribution partnership with Orange's rival Iliad (ILD.PA).
Orange boss Richard told reporters there were 900,000 Orange customers who also subscribed to Canal Plus, adding that the company aimed to double this number by 2020 via the new deal, which includes a significant guaranteed minimum order value.
"There's obviously a guaranteed minimum that is binding for us and Canal Plus," Richard said, without providing any figure.
"It's an ambitious project, so the guaranteed minimum matches (this ambition)."
Orange Content, the new specialist unit within the group, would also consider acquiring distribution rights. Earlier this year, Orange said it was interested in working with Canal Plus on acquiring sports rights rather than trying to buy a stake in the pay TV business.
Orange is also planning to spend 100 million euros ($114 million) over 5 years to produce TV series, the company added.
Pressure has been mounting on Vivendi and Orange after big-spending Altice, owner of France's second-biggest telecoms operator SFR (SFRGR.PA), won the rights to broadcast European Champions League soccer matches until 2021 in France.
Competition is also fierce for original TV content.
Orange announced in March a new multi-year contract with U.S. broadcaster HBO, the owner of hit serial "Game of Thrones", allowing it to become HBO's sole distributor in France.
For its part, Altice signed exclusive distribution deals last year with Discovery Communications and NBCUniversal (CMCSA.O) for all SFR platforms.
Reporting by Mathieu Rosemain; Editing by Sudip Kar-Gupta and Andrew Callus