New honcho at Telefonica

Change expected to have local, int'l impact

MADRID — A little-known executive of a local tobacco company will replace the high-profile but controversial Juan Villalonga as president of Spain’s giant Telefonica.

Under Villalonga, the telco has been on an 18-month global media buying spree: A deal to acquire leading Dutch producer Endemol just closed Monday, while another huge acquisition, for Internet portal Lycos in the U.S., is still pending.

The appointment of Cesar Alierta, president of the tobacco maker Altadis, looks set to be made official at a Telefonica board meeting this afternoon in Madrid.

At that meeting, Villalonga is to present his voluntary resignation as Telefonica topper, having yielded to fierce pressure since being investigated for alleged insider trading by Spain’s stock market regulator.

Political appeasement?

The changing of the guard at Telefonica, Spain’s biggest company, is expected to have considerable impact on both its local and international media assets and aspirations.

Alierta, 55, is said to be close to both Spanish Finance Minister Rodrigo Rato and Francisco Gonzalez, co-prexy of Telefonica core shareholder Banco Bilbao.

Alierta does have some international background, having studied business administration at Columbia U. in New York, plus financial credentials as a former economist and stockbroker.

But his appointment looks more like a political compromise than a ringing endorsement of Telefonica’s recent moves into the film and TV biz.

What he might do

Alierta’s brief could be to put the brakes on future international alliances, which, through share swaps, could dilute the Spanish presence on Telefonica’s board.

Alierta may take another look at the proposed purchase of Lycos by Telefonica subsidiary Terra, although he will preside over the same board that approved the deal this March.

Alierta may also be less enthusiastic than his predecessor about Bertelsmann’s increasing its presence in Antena 3, a local Spanish station in which Telefonica is a major shareholder.

Pinkslips

One effect of Alierta’s presidency is almost certainly the pinkslipping of short-lived Telefonica Media prexy Manuel Garcia Duran. Other TM execs, such as CEO Juan Jose Nieto, may stay on, however.

Didier Bellens, the broadcasting chief exec of RTL, which is co-owned by Bertelsmann, told Reuters on Monday that if attempts to raise its stake in Antena 3 failed, it would have to reconsider its strategy in Spain.

Although Telefonica Media’s international aggressiveness will depend on the caliber and experience of its top execs, who are still to be determined, it will probably continue full-steam ahead in Latin America.

The Spanish government regards the region as its natural market for Spanish businesses. TM has opened talks with many broadcasters in Latin America looking to take stakes or forge alliances.

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