Lost in digital merger maze

Rumored Sogecable-Telefonica link a complex deal

MADRID — The rumor mill has been mulling a golden oldie — a possible merger of Sogecable digital platform Canal Satelite Digital (CSD) and Telefonica’s rival Via Digital.

Merger musing may dominate tittle-tattle for much of 2002 because it’s far easier said than done.

It has taken the smallest of moves to get journos jawing. On Dec. 22, Spanish newspaper El Mundo suggested that Telefonica film and TV subsid Admira will buy 100% of sports/movie feed Gran Via, premium channel of Via Digital, in which Admira holds 49%.

The buy-up hasn’t happened, and even if it were to take place, it looks like a classic internal accounting move. It would allow Admira to cut losses at Via, which hit 34.9 billion Pta ($188.4 million), January-September 2001, and consolidate any sales of Gran Via to other operators straight onto its profit-and-loss accounts.

It’s subtler, solons insist. If Admira owns all of Gran Via, it can bundle it with Sogecable’s ultra-popular premium channel Canal Plus Espana, into an uber premium feed to dominate the pay TV market.

Five can’t survive

Solons jaw on about a digital merger for another good reason. Spain has five main pay TV operators: CSD with near 1.3 million subs; Via Digital with 770,000; digital-terrestrial-television Quiero with some 150,000; and cable outfits ONO and Auna Cable, boasting 300,000 and 400,000 respectively. The last four will lose an estimated $540.5 million combined this year.

At 29% of Spain’s 12.9 million households, Spanish pay TV take-up still shows growth potential as penetration is lower than the U.K. or France.

But there’s not a market for three digital players. “A merger between CSD and Via Digital makes sense — I think all the players would agree to do that,” says Glen Spencer Chapman, an analyst at Ibersecurities.

However, Spain’s conservative prime minister, Jose Maria Aznar, is said to oppose a tie-up between Sogecable and Telefonica because it would give Sogecable’s 21% managing shareholder, the socialist-friendly Prisa, a key role in the combo.

So subtler solutions are called for. A variant comes with the apparent blessing of Vivendi Universal, which also has 21% in Sogecable. This would see Vivendi U buy Prisa’s 21% in Sogecable but allow Prisa to retain its 21% in the Sogecable-owned sports-movie channel Canal Plus Espana, which becomes the premium feed in fused platforms.

Prisa problem

It might just pass Spanish antitrust authorities but might not pass muster with Prisa. It and Vivendi U have agreed that neither partner can raise its stake in Sogecable before December of this year.

“Prisa would have to be paid a lot of money,” observes Manuel Torres, also at Ibersecurities. “In 2002, Sogecable should post net profits without recourse to extraordinary income. An exit would also destroy Prisa’s across-the-board media presence. It’s complicated, though not impossible.”

But given its difficulty, some observers, led by the Prisa-bating newspaper El Mundo, are betting on a premium package.

This could just be making trouble. Why Sogecable would allow the weaker Gran Via to piggyback off its hugely popular CSD, which has 2 million subs, is an intriguing question.

The huge shadow cast across business by politics in Spain is a legacy of its dictatorial past. As far as a digital TV merger is concerned, it could fire rumor-mongering for years to come.

(Emiliano de Pablos contributed to this report.)

Popular on Variety

More Biz


    Jay-Z Gets Shade From Kaepernick, Support From Cardi B as NFL Fallout Continues

    If anyone expected the drama surrounding Jay-Z’s deal with the NFL to calm down over the weekend, they were mistaken, as controversy and conversation continued to swirl. The situation grew even more intense late Friday when TMZ reported that Jay is looking to acquire a majority interest in an unspecified NFL team, which would add [...]

  • Curiosity Stream Altice

    Altice USA Pacts With John Hendricks' CuriosityStream Service

    Altice USA has set a deal with John Hendricks’ CuriosityStream to expand distribution of the science- and history-focused subscription streaming service. The deal will make CuriosityStream available to all Altice USA’s 4.9 million customers across 21 states, including a big cluster serving New York and Connecticut. Altice also plans to add the CuriosityStream app to [...]

  • Led Zeppelin Stairway to Heaven

    Department of Justice Backs Led Zeppelin in ‘Stairway to Heaven’ Copyright Case

    The U.S. Department of Justice has weighed in on the next big music copyright case on the horizon following the Katy Perry “Dark Horse” decision, and taken Led Zeppelin’s side in the long-running copyright dispute that pits the writers of the group’s anthem “Stairway to Heaven” against the publishers of the earlier song “Taurus” by [...]

  • Harvey Weinstein

    Harvey Weinstein Prosecutors Make Last-Minute Move to Bolster Case

    The Manhattan D.A.’s office is making a last-minute bid to strengthen its case against Harvey Weinstein, who is set to be tried next month on charges of rape and sexual assault. Prosecutors notified the court on Tuesday that they will seek a new indictment. The D.A.’s office wants jurors to hear from Annabella Sciorra, the [...]

  • Jeffrey Epstein

    Jeffrey Epstein's Autopsy Rules That He Died by Suicide

    Jeffrey Epstein’s death earlier this month has been ruled a suicide by hanging. The New York Times reported on Friday that the city’s medical examiner has officially made the ruling six days after Epstein was found dead in his jail cell at the Metropolitan Correctional Center in Manhattan. According to the Times, which cites a [...]

  • America Ferrera Eva Longoria

    America Ferrera, Eva Longoria and More Sign Letter to Latinx Community: 'We Will Not Be Broken'

    America Ferrera, Eva Longoria and more have signed a letter published in several media outlets on Friday standing in solidarity with the Latinx community. In response to the heightened tension surrounding President Trump’s immigration agenda, the El Paso shooting that targeted Latinx people and the ICE raids in Mississippi, the letter addresses the language used [...]

More From Our Brands

Access exclusive content