French pay-TV operators Canal Plus and TPS are to merge to form a new group controlled by Vivendi Universal SA, an Associated Press report said.
The report said the tie-up of the former rivals is aimed at countering the threat from the country's telecoms, cable and Internet companies as they roll out digital TV.
The likes of France Telecom SA and Neuf Telecom are looking to TV via broadband as a new revenue source, the report said.
Vivendi announced the tie-up in a statement issued jointly with TPS shareholders Societe Television Francaise 1, operator of TF1, France 's biggest TV station, and Metropole Television SA, which owns popular youth station M6, the report said.
Vivendi will ultimately own 85% of the combined entity, the statement said. Television Francaise 1 will own 10% and Metropole Television, which is 48% owned by Bertelsmann AG unit RTL Group, will own 5%, the report said.
The report further said Vivendi's effective takeover of TPS is also subject to regulatory approval by both France 's antitrust watchdog and the national broadcasting authority.