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LISBON — The Portuguese government has revealed that it will veto a mooted E150 million ($210 million) deal for Portugal Telecom to take a 30% stake in Media Capital, owned by Spain’s Prisa.

Media Capital controls Portugal’s dominant broadcaster TVI, which boasts a massive 44.5% primetime share.

Opponents believe its hook-up with Portugal Telecom — which owns IPTV service Meo and is launching the country’s digital terrestrial TV platform — would give the government, which still owns a share in Portugal Telecom, too much control over TVI news coverage in the run-up to the Sept. 27 general election.

Confirming the talks to Portugal’s securities markets commission, Prisa said that Portugal Telecom’s input would help drive Media Capital’s international growth — with the Portuguese-speaking world’s 280 million inhabitants its principal target.

Prisa, Spain’s biggest media conglom, urgently needs to cut its $7 billion debt as it struggles to sell its Spanish satcaster Digital Plus.

Portugal Telecom has made major inroads into local TV after being forced to sell its film and cable TV subsidiary, PT Multimedia (now renamed Zon Multimedia) in late 2007.

The possibility of forging a Portugal Telecom-Prisa alliance is now likely to be postponed until after the election.

In the meantime, Portuguese media group Cofina has announced that it’s interested in acquiring a majority stake in Media Capital.