French pay TV giant CanalPlus, owned by Vivendi, is adding online producer and YouTube network operator Studio Bagel to its portfolio.

Studio Bagel founder Lorenzo Benedetti will continue as president. The firm will become part of a new mobile and web division of CanalPlus.

“We are very excited about this merger with Canal Plus Group, which will allow us to take a major step in our development,” said Benedetti. “This merger will allow us to benefit from the expertise of advertising sales Canal Plus.” The studio will devote its new financial resources to developing talent and innovative film formats, he said.

“We are proud to support the development of Studio Bagel, one of the most creative start-ups in France,” added CanalPlus Group CEO Rodolphe Belmer. “With Studio Bagel, CanalPlus Group increases its already strong presence in the YouTube universe and its millions of users.”

The investment recognizes the pay TV giant’s focus on growing on the web. In Septemver, the group took a minority stake in Culver City-based startup Maker Studios, the largest producer of YouTube and other online content and launched online channel Canal Factory to nurture young talents before promoting them to traditional television programs.

The latest purchase signals that Canal Plus is adopting a diversification strategy and shoring up its free content offerings as the traditional pay TV business has reported subscriber losses. CanalPlus and CanalSat lost 355,000 subscribers in 2013.

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