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Telefonica, Bertelsmann huddle

Spanish join Germans, continue European media concentration trend

VISIT CANNES 2000
CANNES — In yet another symptom of media concentration in Europe, Spanish film and TV giant Telefonica Media and German media behemoth Bertelsmann are in talks to form a joint content-creation alliance.

The new company would focus on content creation for TV, Internet and cell phones. The potential partners aim to close a deal in the next few weeks, said sources.

The accord would play off ever closer links between Telefonica and Bertelsmann.

On Tuesday, Terra Networks, Telefonica’s Spanish Internet group, agreed to a $12.6 billion takeover of Lycos, the Nasdaq-listed Web portal. One of the world’s largest dot-coms, the new joint venture, Terra Lycos, marks the first large incursion made by a European company into the U.S. internet market.

Parallel to this deal Telefonica and Bertelsmann, which has a stake in Lycos Europe, announced a $1 billion alliance to develop e-commerce services and downloading content for the Terra Lycos platform.

Sources near to the negotiation underscore the role played by TM prez Jose Antonio Rios in closing a deal with Lycos. Terra Lycos will have access to the books, music, film TV and other media properties of Bertelsmann. A contents creation venture feeding Terra Lycos and broadcasters owned by Bertelsmann and Telefonica Media would be a logical conclusion to this new axis.

Further linking TM and Bertelsmann, TM is the lead, 5% shareholder in the U.K.’s Pearson Group. In a $19 billion deal last month, Pearson TV and the Bertelsmann co-owned CLT-Ufa announced a merger, creating the biggest TV company in Europe.

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