(Bloomberg) -- French pay-television company Canal+ plans to announce job cuts next week, according to a union official, as it comes under growing commercial pressure from U.S. streaming giant Netflix Inc.
Employee representatives at the company, a unit of Vivendi SA, received a letter asking them to attend a meeting Tuesday about an internal reorganization of its French operations that will include “voluntary job cuts,” said Laurent d'Auria, who represents the +Libres union.
Canal+ is aiming to cut around 500 jobs, according to a report by state news agency Agence France-Presse. The company has about 2,600 employees in France.
A representative for Canal+ declined to comment.
Netflix Inc. launched in France just over five years ago and already has more than 5 million subscribers, overtaking Canal+, whose French direct paying user base has fallen by almost a quarter to 4.6 million in the five years to the end of March.
That's forced the once-dominant Canal+, Vivendi's biggest business after Universal Music Group, to review its subscription offerings, introduce new products and look abroad for growth. In May it agreed to buy pay-TV operator M7 Group for just over 1 billion euros ($1.13 billion), bringing it additional subscribers in central and eastern Europe, the Netherlands and Belgium.
The job cuts and M7 deal make sense, Thomas Coudry, an analyst at Bryan, Garnier & Co., wrote in an email: “They need to lower the cost base in order to restore margins and make room for content spend, and then amortize it over the largest customer base possible.”
Canal+ suffered a setback when Spain's Mediapro won broadcast rights for France's Ligue 1 soccer games for the season starting next year.
To contact the reporter on this story: Angelina Rascouet in Paris at arascouet1@bloomberg.net
To contact the editors responsible for this story: Rebecca Penty at rpenty@bloomberg.net, Thomas Pfeiffer
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