Telefonica, CEI reach radio, TV agreement

$560 mil deal gives media co. control over 50% of Argentine TV

BUENOS AIRES — Telefonica and Citicorp Holdings (CEI) have reached an agreement by which the Spanish media group Telefonica Media will control leading Argentine channel Telefe (Channel 11) and 50% of Azul TV (Channel 9). Also covered under the mammoth agreement is a network of 11 provincial stations and Radio Continental. Telefonica is expected to announce the purchase of the remaining 50% of Azul from Australian-based Prime TV.

Although final figures were still being discussed, a source at CEI estimated the sale at $560 million, to be paid with shares in Telefonica Media and an undisclosed amount of cash. With this operation Telefonica Media will control more than 50% of Argentina’s TV market.

According to industry sources, negotiations for cable operator Cablevision and leading sports programming producer TyC, in which CEI and Telefonica hold equal shares, are still under way, but industry observers believe the cable system will remain in the hands of CEI and U.S. investment firm Hicks, Muse, Furst & Tate.

Jose Antonio Rios, president of Telefonica Media, said in a press release that the Spanish group wishes its media business to be the leader in Portuguese- and Spanish-language TV markets, and that Telefe and Spanish Antena 3 will be jewels of the crown to enter the Latino TV markets. Telefe has a 37.8% market share in Argentina, the largest penetration in South America. Telefe figures big in the company’s acquisitions plans. Rios said that other TV acquisitions will be announced shortly in Argentina and possibly in the U.S.

Meanwhile, the general manager of Telefe, Gustavo Yankelevich, will leave his post after 11 strong years to manage Ampelion, a newly created programming producer that will produce exclusively for Telefe.

Citicorp Holdings has investments in TV, cable, radio, telecommunications, the Internet and publishing companies. The holding is controlled by Hicks, Muse (40.2%), Republica group (28.8%) and Citibank (23%). Telefonica was until now CEI’s equal partner in most of their business in Argentina, though the two now differ in their goals.