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Vivendi welcomes tougher French cinema laws for Netflix, SVOD players

France media conglomerate Vivendi SA welcomed tougher rules for competing at the Cannes Film Festival as a way of balancing the playing field between traditional and online media players such as Netflix Inc..

This follows the streaming giant's decision to pull five films it had planned to debut at the event due to a new requirement to distribute competition titles in French movie theaters and a separate rule forbidding films released in theaters from being made available on subscription video-on-demand platforms for three years.

Speaking during a May 17 earnings call, Hervé Philippe, CFO and member of Vivendi's management board, said the changing media landscape and the consumer shift to digital platforms in recent years had given new entrants an unfair advantage in the fight for viewers' attention.

Vivendi's pay TV unit Canal Plus Group SA has been a "key player in financing France's movie industry," Philippe said, adding that "[unlike Netflix], we are developing our business in [a very] regulated environment."

"When you've got a competitor [that] doesn't think that the local so-called French rules are compliant with [their] vision of the world and that [they] can compete in your market [without] using the same rules of the game, it creates a differentiation in terms of competitive positioning," he told investors.

However, during a conference call earlier this month, Netflix's chief content officer denied that the company was trying to "disrupt" the law and described the festival organizers as "out of step" with the consumer shift to the "what I want, where I want, when I want" model of programming.

Nevertheless, Philippe noted that Netflix and other subscription video-on-demand platforms are also facing tougher laws at European level.

European regulators recently announced that they had reached a preliminary agreement on proposals aimed at reforming the Audiovisual Media Services Directive (AVMSD).

Key changes include the extension of the scope of the AVMSD to cover SVOD services such as Netflix, as well as user-generated video platforms including Alphabet-owned YouTube and Facebook. The AVMSD will also usher in content quotas, among other requirements, requiring online on-demand catalogs to have at least 30% of their content originating in the European Union.

Negotiations over media reform between the European Parliament, Council and Commission are expected to conclude in June.

Vivendi announced a 16% increase in first-quarter revenue to €3.11 billion, with revenue at its TV unit up 2.1% to €1.3 billion. It was up 620,000 TV subscribers year over year to 15.3 million.