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Prisa stock rises on Mediaset rumor

Italian company may buy stake in Digital Plus

MADRID — Shares in Prisa, Spain’s biggest media group, have risen 11% from Dec. 8, fuelled by speculation that Italy’s Mediaset will buy a 20% or larger stake in Prisa satcaster Digital Plus and take control of broadcast network Cuatro.

Prisa stock rose 3.8% on Monday alone to Euros 3.6 ($5.3) through early afternoon trading. Mediaset shares were up 1.1% to $7.9 Monday.

Speculation about a double Prisa-Mediaset deal has built in both Italy and Spain.

According to Monday’s edition of Italian newspaper La Stampa, Mediaset, already a majority shareholder in Spanish broadcaster Telecinco, is negotiating to take control of both Cuatro and a minority stake in Digital Plus.

Spanish newspaper ABC claimed Saturday Mediaset would take control of Cuatro and pay $584.8 million for a 20% stake in Digital Plus.

Something is definitely going to happen in Spain but the deal is not yet decided,” said Alessandro Bai-Badino, a Mediaset analyst at Deutsche Bank.

Spanish telco giant Telefonica bought a 20% stake in Digital Plus on Nov. 25.

According to another analyst, there are “lots of synergies” for Mediaset’s owning both Telecinco and Cuatro. “Mediaset would own 40%-plus of Spain’s TV ad market, so could demand better pricing from Spanish media houses.”

Better content deals, centralized costs, and use of Cuatro losses for tax purposes are other advantages.

But the real deal decider — and the prices sought by Prisa for Digital Plus and Cuatro — will turn on whether Prisa has to pay back all of a $2.8 billion loan, which matures March.

Prisa has already scythed around $1.5 billion off its year-end 2008 $7.3 billion debt mountain.

The more Prisa has to give back, the more likely it is that it will have to raise cash via additional sales,” the analyst said.

Emiliano de Pablos contributed to this report.

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