MADRID — Giant Spanish telco Telefonica may merge its Internet conglom Terra Lycos with film and TV subsid Telefonica Media.
The move would create an AOL-Time Warner-style combo for online distribution and content delivery, tapping product from TM production houses such as Dutch TV producer Endemol and Spanish movie powerhouse Lolafilms.
A decision on a possible merger is not likely to be taken before June.
The link-up could see Telefonica dispose of its 5% in U.K. media group Pearson, according to Spanish newspaper “El Pais.”
It could also give Bertelsmann greater access to Telefonica Media. The German media giant has a 31% stake in Lycos Europe, which has an as yet unfulfilled $1 billion commitment to market services on Terra Lycos.
A merger would help to prop up both Terra Lycos and TM, Telefonica’s two biggest loss-making operations.
“Telefonica Media is very important (for Telefonica) because it gives content to mobile and the Internet,” Glen Spencer Chapman, an analyst at Ibersecurities said. “It’s important as a strategic interest, but it also needs to turn a profit.”
According to results filed to Spain’s CNMV stock market regulator last month, Terra Lycos ran up a $497 million deficit for 2000 and TM a $564 loss, driven by losses of $228 million at satcaster Via Digital and $412 million at Argentine holding Atlantida Comunicaciones, which includes broadcaster Telefe.
Telefonica has a 36% stake in Terra Lycos.
Any combination of Terra Lycos and TM could imply a top level executive reshuffle at both entities. Terra Lycos prexy Joaquim Agut has come under increasing fire for allegedly precipitating the exit of Lycos founder Bob Davis from Terra Lycos and for not turning around Terra Lycos’ fortunes.
And tensions are said to have grown between Telefonica prexy Cesar Alierta and Telefonica no. 2 Fernando Abril over who really calls the shots. TM prexy Juan Jose Nieto is reportedly identified as an Abril man, and could suffer for that in a restructuring.