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All eyes on Telecinco float

Spanish broadcaster's IPO set for June 23

MADRID — In one of Spain’s most anticipated Initial Public Offerings of the year, private broadcaster Telecinco looks set to list 24% to 35% of its capital in June at a price which values the company between €5 billion ($3.0 billion) and €3.5 billion ($4.2 billion).

The shareholdings to be listed are currently held by Germany’s Dresdner Bank and Ice Finance.

Dates for the IPO are not set in gold, but banks involved in the operation are reportedly considering a filing with Spanish stock market authority June 4, a price fix June 21 and the IPO June 23.

The only question facing Telecinco is how high it places its valuation. 52% owned by Silvio Berlusconi’s Mediaset, Telecinco is the most profitable broadcaster in Europe, notching up $772.4 million in advertising income in 2003 and boasting a 30% ratio of EBITDA (earnings before interest, taxes, depreciation and amortization) to revenues.

That figure bests Europe’s other most profitable broadcasters: Mediaset (25%), Spain’s Antena 3 (24%) and France’s TF1 (17%).

Telecinco netted a top-ranking 28% audience share of 13-54 year-olds, Spain’s richest TV demo. It has carved out its gilt bottom-line by a policy of fiscal caution, avoiding soccer rights trading, nixing studio output deals, maintaining in-house production at some 70%, and driving hard into light entertainment, which reps some 60% of skeds.

Telecinco’s egregious success has left one hostage to fortune, however. The Dresdner Bank is tubthumping for a high valuation, which would allow it to cash in on its total 25% shareholding. But a high-end valuation would disuade the market from buying shares, fearing that Telecinco’s performance is probably as good as it gets.

Mediaset looks likely to plump for a lower starting price based on a tab of some $2.6 billion which will allow Telecinco shares to show some market heft, rising over their first few weeks. But such a price may dissuade Dresdner from divesting all of its 25% stake.

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