MADRID – In a milestone deal that looks set to shape the future of TV in Spain, Spanish telco giant Telefonica has bought Canal Plus, the biggest pay TV operator in Spain, for €725 million ($1.0 billion).
Presided by Cesar Alierta, who has reiterated the telco’s interest in moving muscularly into the content and pay TV business, Telefonica informed Madrid’s CNMV stock market regulator of the offer Tuesday; Prisa, the controlling shareholder of Canal Plus, notified the CNMV on Wednesday evening that it had accepted Telefonica’s $1 billion bid.
Telefonica already owned a 22% equity stake in Canal Plus. Though the deal still has to clear Spanish and E.U. competition authorities, Telefonica now looks set to run Spain’s most-subscribed pay TV player.
A Telefonica Canal Plus buy was always on the cards, though Prisa had insisted it was looking for far more money for its stake.
Significantly, having completed a two-year plan which including divesting assets – an initial public offering on a stake in O2 Deutschland, 40% of its Central American assets, O2 Ireland, Telefonica Czech Republic for €2.47 billion in November – Telefonica’s debt mountain has been reduced to €45.38 billion ($62.7 billion) by the time it announced full year resuls in March, giving it leeway to splash out on new acquisitions.
Canal Plus also represents a highly strategic asset as Telefonica drives into contents. One prime advantage of Telefonica’s buying Canal Plus is for the telco to muscle in Canal Plus’ Spanish soccer rights, another to migrate the roughly 60% of its satellite subscribers which are not Telefonica clients to the telco’s bundled fiber optic and 4G Telefonica offers.
Ramping up pay TV subscriptions in Spain will require a deep pocket – such as Telefonica’s – and most probably need to be integrated in an attractively priced three or four-play offer.
(Emiliano de Pablos contributed to this report.)