Talks Could Bring CLT-Ufa Into Pay TV Again

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Luxembourg-based CLT-Ufa may be on its way back to pay
television's big leagues, even while its future is said to be in the free-to-air
realm.

This would be the case if Belgian banker Albert Frere --
who controls one-half of the company through a complex network of holdings -- sells his
indirect stake to Vivendi S.A., the French utility that owns 36 percent of Canal Plus S.A.

Frere is speculated to have spoken with Vivendi about
selling his stake in Audiofina, which owns one-half of CLT-Ufa, but according to banking
sources, the talks are currently on hold.

Canal Plus is Europe's largest pay TV operator, and it
could make sense for Vivendi to coordinate the two ventures' businesses.

The other one-half of CLT-Ufa is controlled by
Germany's Bertelsmann A.G. Frere, meanwhile, controls France- and Belgium-based
Audiofina, in which Vivendi also has a minor stake.

"Right now, everybody talks to everybody," an
international media consultant said of the speculated discussions, "and it is hard to
find out who's serious."

In another move that could bring CLT-Ufa and Canal Plus
closer, the two companies are in talks that may lead to cooperation with Eureka, a
pan-European, free-to-air TV alliance led by Germany's The Kirch Group and
Italy's Mediaset SpA.

CLT-Ufa and Canal Plus only confirmed talks about
coproductions, "but you don't need to become a shareholder for that," said
CLT-Ufa co-CEO Remy Sautter, who is in charge of its French and international operations.

When CLT-Ufa agreed to sell its 42 percent stake in German
pay TV programmer Premiere to Kirch, it unloaded its biggest money-losing asset and
improved its own balance sheet, and it was on its way to concentrating on free-to-air TV.

Most analysts believe that Frere was waiting for the
Premiere stake to be sold before shopping his share of Audiofina.

"In the last 15 years, since I've been in the
company, these rumors keep coming, and nothing happens," Sautter said.

Frere is reportedly displeased with the way Bertelsmann
runs CLT-Ufa. Bertelsmann chairman Thomas Middelhoff has taken a marked turn toward the
Internet and e-commerce, while the traditional TV business has lost influence.

At the same time, the relationship between Bertelsmann and
Vivendi was strained earlier this year after the two companies scrapped a merger of
certain business-publishing assets.

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