Telefonica’s Canal Plus Purchase Approved

Spain’s competition authorities thumbs up telco purchase of premium Spanish paybox

Telefonica Logo

MADRID – Spain’s antitrust National Commission on Markets and Competition (CNMC) has given the thumbs up on Telefonica’s €719 million ($781.5 million) purchase of Prisa’s 56% stake in top Spanish pay TV operator Canal Plus.

Thrashed out over months between Telefonica and Spain’s competition authority, the conditions are less onerous than feared: Telefonica may still, for example, bundle content and broadband access in triple and quad-play offers.

Telefonica will now also take on Canal Plus’ obligation to invest in Spanish movies and TV. Added to this, CNMC limitations in exclusivity on rights to acquired content will do nothing to decelerate Telefonica’s drive into the production and co-production of original series and movies on which the CNMC does allow Telefonica to exercise –exclusivity.

That drive has already begun: From its September 2013 official launch, Telefonica Studios has co-produced nearly 30 titles in Spain and Argentina.

One question — and it will most probably take Telefonica, one of the biggest telcos in Europe, some time to digest the strategic import of the CNMC rulings — is whether Telefonica will also now look to take minority equity on U.S. or big European TV series, as it drives into self-produced content.

Announced Thursday after market close, CNMC conditions include a commitment to make available a wholesale offer of 50% of its premium content to rival pay TV operators in Spain. This takes in firstrun Hollywood studio movies and TV series and big sports: Formula One racing, the World Racing World Championship, the Olympic Games, Basketball World Cup and soccer matches from La Liga, Champions League, FIFA World Cup, Europa League and King’s Cup. Rivals will pay for these contents via wholesale deals at regulated rates.

Press reports had suggested Telefonica would have to make 75% of premium content available to rivals. Also forbidden are lock-ups clauses on bundled or standalone offers; Telefonica must offer its Internet infrastructure to all payboxes, providing at least three routes into its broadband network.

CNMC’s conditions will be considered legally binding in 15 days, with no recourse to appeal. Less than three weeks out from the Cannes Festival and the L.A. Screenings, CNMC’s milestone approval has at least removed Telefonica’s biggest content uncertainty: Whether it would be set acceptable conditions with regards to its ownership of Canal Plus. Traditionally Spain’s biggest paybox, Canal Plus is now a Telefonica company.