Lack of cable regs weds Canal Plus, Telefonica giants

Spain’s long-on-hold cable market looks to be sewn up even before official cable legislation is passed.

In July, the government authorized national telecom Telefonica to operate cable services in Spain. The same week, Telefonica and pay TV operator Canal Plus Espana announced a joint venture to launch cable TV services from September, starting in Madrid and Barcelona. Both companies say they welcome new partners, both Spanish and foreign, especially program providers or established cable/multimedia companies.

Problem is, law regulating the sector still has to be passed by the government.

Canal Plus Espana’s Pio Cabanillas claims any talk of a monopoly is misguided. “There’s plenty of room for the competition,” he says, though observers are already drawing parallels with Germany’s Bertelsmann/Telekom union, which was dissolved by the European Commission.

One difference is that, while Germany’s Telekom was 100% state-owned, Telefonica is a mix of golden shares and private. The whole question may eventually end up being resolved by the European Commission.

The combination of Telefonica and Canal Plus Espana would hit the industry with a powerful one-two. Telefonica has a monopoly on basic voice-telephone services until 1998, and, by the end of 1995, aims to have connected 7 million homes by optic fiber. Canal Plus Espana, the third-largest subscription TV channel in Europe, is a co-venture including Spanish media-empire Prisa and France’s Canal Plus. The channel is likely to act as a programmer, with Telefonica as cable carrier.

Cautious municipal authorities and utility companies would like to see the long-awaited national legislation on cable finally passed before the launch of any services. However, the Cable TV-Communications bill is still languishing in Parliament and may not be passed until after the country’s next general election. This is penciled in for next spring, although Prime Minister Felipe Gonzalez’s shaky government may well fall before then.

Others believe the present lack of any legislation isn’t such a stumbling block. “Whoever creates the infrastructure will eventually get the licenses,” says one knowledgeable observer.

Claire Quintin, VP sales (Western Europe) at Turner Intl., notes there are already committed operators in Spain who need good programming, which Turner wants to provide, with or without a law. In Spain since 1994, Turner currently offers movies on TNT and children’s programming on the Cartoon Network, in addition to CNN Intl.

Television Programas Satelites beams four channels into Spain from national bird Hispasat. TPS marketing director Carolina Godayol, responsible for Canal Infantil (cartoons) and Channel Hollywood (movies), says during the past year she’s come to place less importance on whether there is a law or not.

Godayol says the Spanish Constitutional Court ruled this year that cable operators can function legally and that the government is to blame for legislation not being passed. TPS’ signal is distributed by 115 cable operators, and the company aims to reach 200 by year’s end.

Potential rivals to the Canal Plus Espana/Telefonica include United Intl. Holding, (UIH), which has merged with a/v giant Philips in Europe, and Spain’s Multitel, set up in 1992 with links to the Cope radio network and regional newspapers.

Multitel is partnering UIH in two local fiber-optic cable services, which opened earlier this year in the towns Santander and Jerez. (Israeli cable operator Matav is also in on Jerez’s system.)

US West has put in a bid with Spanish partners to run a cable franchise in Barcelona as a result of an invitation from the Catalan government.

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