French telecom company Orange and Vivendi's television channel Canal+ are considering setting up a new commercial venture to confront strong competition from SFR, Les Echos reported.
Canal+ and Orange have already teamed up in television and high-speed internet offers. They compete on the French market with other internet and TV players such as SFR, Free or Bouygues.
Executives from Vivendi and Orange have been meeting to discuss how to better align the two companies' interests, the Les Echos newspaper reported on its website on Sunday.
Neither Orange nor Vivendi could be reached for comment.
SFR has said it aims to be a strong player in the telecom market but it also wants to move into the financing of French cinema, a closely guarded segment where Canal+ has been very active for years.
"One of the scenarios on the table is the establishment of a new commercial entity for Canal+ in France whose main shareholder would be Orange," Les Echos said, adding that the two companies could then study other joint work but that, at this stage, no exchange of stakes had been agreed.
Les Echos had no other details but said a deepened alliance between Canal+ and Orange - which is approximately 23 pct-owned by the French state - could raise regulation obstacles.
There has been speculation in financial markets that Vivendi could sell Canal+, which has been losing money in France, and Orange said in December that it would be interested in making a bid if the French TV channel ever came up for sale. Vivendi, however, has repeatedly said "Canal" is not for sale.