Pressure mounts for Spanish TV merger

Analysts and bankers expect two of Spainís three commercial television networks to resume merger talks after their main rival moved towards a powerful position in Spanish football pay-TV.

Talks between Antena 3 (A3) and La Sexta broke down in 2010 but commercial pressures have grown after the completion of the takeover of Cuatro by Telecinco (T5) in December.

The ownership of Spainís four main commercial channels Ė TVE1 and TVE2, the state-owned stations occupy two more free-to-air slots Ė has been in play for two years. The sale of Cuatro by troubled Spanish media group Prisa to its rival T5, which is controlled by Silvio Berlusconiís Mediaset, produced Spainís leading TV group.

A3, which is controlled by the pan-European broadcaster RTL, and La Sexta, which is controlled by Televisa of Mexico and a consortium of smaller shareholders, could not agree terms.

Recent figures showed TVE1 had the biggest audience share at 15.5 per cent, T5 had 14.5 per cent and A3 11.7 per cent. La Sextaís was 6.6 per cent and Cuatro 6.2 per cent, with TVE 2 at 2.5 per cent.

Audience share figures must be set in the context of a dismal advertising outlook. According to Credit Suisse, Mediaset told its team last week that the Spanish TV market was down 20 per cent in April, 20 per cent in May and 20 per cent this month.

Analysts say the position was made more threatening for the smaller companies last week by a series of football rights deals struck by Digital Plus, the satellite broadcaster that is part-owned by T5. Digital Plus agreed with three mid-ranking teams to show their home La Liga matches live. In Spain, teams bargain individually with broadcasters for the rights to show matches.

Digital Plusís agreements with Real Zaragoza, Real Sociedad and Atletico Bilbao show it is being taken seriously in football negotiations. It is predicted that in the longer term there will be a deal with Mediapro, which owns the rights to the home games of Spanish footballís dominant teams, Barcelona and Real Madrid, that would consolidate all games into one package, benefiting consumers and the pay-TV industry.