Sogecable, Telefonica still have many unanswered questions

Spain’s biggest deal in years has finally gone through.

Pay TV operator Sogecable and telco giant Telefonica at last said yes Jan. 29 to merging their digisat TV platforms — Sogecable’s Canal Satelite Digital and Telefonica’s Via Digital.

Now the two partners just have to sit down and think the deal through.

There are scores of unanswered questions.

One is who will re-negotiate the new platform’s output deals with the major U.S. studios.

The smart money could be on Ele Juarez, who negotiated the deals in the first place as a Sogecable exec and is now managing director at Telefonica subsid Admira. Whoever it is, Hollywood will probably see prices for its movies slip.

Another question is how Sogecable and Telefonica will cover the merger’s huge cost.

In return for ceding Via to Sogecable, Telefonica will take 23% in Sogecable, not 16% as originally envisaged. Spain’s Prisa retains 16%, as does France’s Canal Plus. Longtime CEO Javier Diaz de Polanco will continue running Sogecable.

Telefonica’s share hike suggests it stumped up more merger coin than it initially intended, underwriting a 175 million euros ($188 million) subordinated loan issue, for instance.

But Telefonica may have to dip again into its cavernous pocket before too long.

Analysts opine the new Sogecable is years from break-even.

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