Telecinco buys 22% of Digital+
Iñaki Ferreras

Spanish broadcaster Telecinco, owned by Italy’s Mediaset, on Friday agreed to buy 22% of Sogecable's satellite pay-TV operator Digital+. Prisa, Sogecable’s owner, will receive €517 million in cash.

In a separate deal, Sogecable's free-to-air national channel Cuatro will also merge with Telecinco. Telecinco is valued at some €2,300 million while Cuatro is valued at €550 million. Cuatro and Telecinco will keep their brands separate.

As a result of this agreement Prisa will create a new company merging the two channels and the editorial group will control in the short term 22% of the resulting company while Telecinco will control 78% after the capital extension.

After this Telecinco's participation in the new company will grow by means of a capital extension of €500 million with the percentage controlled by Prisa dropping to 18.37% and that of Mediaset falling to 41%.

The deal gives Telecinco the right to appoint the operator's Content Director. As with Telefónica, which is now in charge of the economic management of Digital+ and also owns 21%, Telecinco will have control of two executives.

Telecinco's president Alejandro Echevarría will lead the new holding company. Prisa will have two executives and could put a vice-president in the new company.

In order to complete the deal, Sogecable will merge those subsidiaries now managing Digital+: Canal Satélite Digital and DTS Distribuidora de Televisión Digital.

The entrance of Telecinco in Digital+ comes just three weeks after Telefónica bought into Sogecable's capital. Telefónica has its own pay-TV operator, IPTV platform Imagenio.

Back in the summer Cuatro was supposed to merge with Grupo Imagina's laSexta, but that deal fell through after a series of disagreements over the power sharing in the future merged company. Imagina owns one of Spain's main TV and cinema producers Mediapro.

The Sogecable-Mediaset agreement is positive for Sogecable because the Prisa group desperately needs money. But one of Prisa's hallmarks has always been the quality of its information and the control of its own produced contents either written, radio broadcast or televised. This deal marks the loss of that control in the company’s TV businesses.

© Rapid TV News 2009