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Spanish Broadcasters Face Multi-Million Dollar Fines

But the broadcasters' real challenge is one of market perception

MADRID — Stock prices at Mediaset España and Atresmedia, Spain’s two big broadcast networks, fell yesterday afternoon after local press reports that both face fines of up to about €100 million ($115 million) from Spain’s anti-trust authorities regarding abuse of dominant position.

Mediaset España recuperated all of its 1.5% stock value loss by late trading on Friday. Atresmedia registerered a total but hardly dramatic 2.2% drop in share price by Friday mid-afternoon as markets appeared to conclude that the possibility of a huge fine, decimating the free-to-air operators’ profits, was unlikely.

According to Spanish financial newspaper El Economista, Spain’s National Markets and Competition Commission (CNMC) has presented Mediaset España, majority owned by Italy’s Mediaset, and Atresmedia, in which Germany’s RTL Group has a minority stake, with a statement of objections contending an abuse of dominant position. That appears to be related to TV ad volume discounting, a common practice in Spain, as indeed Europe, for decades.

Atresmedia and Mediaset España now have 15 days to present a defense. After that, the CNMC will serve judgement. According to El Economista, the final fine could come in at around €15 million-€30 million ($17.25 million-$34.5 million), which the TV operators can then appeal.

Whether the networks will end up paying very much at all is uncertain. But the threatened fine will do little to better the market perception of the two broadcast groups. Both are still punching healthy results. Mediaset España’s Ebitda operating profits for the first nine months of last year were €193.7 million ($222.75 million), representing a profit margin of 27.8%  Total net TV advertising in Spain only decreased 1.3% January to September 2018. Mediaset España even managed to broadcast all World Cup soccer matches without incurring much extra annual costs. Atresmedia, which co-originated “Money Heist,” struck a large output deal with Netflix.

Nevertheless, Mediaset España and Atresmedia’s stock prices took a huge hammering in 2018, plunging 40% and 48% respectively.

Analysts seem convinced that the destiny of Europe’s big broadcasters is to take an ever smaller part of an uncertain total adspend. Sexier, higher-growth investments lie elsewhere.

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