Vivendi to negotiate Digital+ deal

Telefónica will cede to Vivendi the negotiations for the buyout of Sogecable's pay-TV business Digital+.

Today (Friday) is the day for Sogecable's Shareholders General Meeting where Prisa's CEO Juan Luis Cebrián (Prisa being Sogecable's owner) will announce the sale of the operator.

This operation is vital for Prisa because the media group will so reduce its €4,850 million debt and above all pay out €1,950 million of a credit to be cancelled next March.

The negotiations limited last week to the conversations between Sogecable and Telefónica - the main candidate to buy Digital+ - have now been extended to Vivendi due to the difficulties with closing an agreement with Telefónica.

In fact Vivendi, which initially showed as minority partner of Telefónica in a possible buyout has unexpectedly been the protagonist over the last few days. The regulatory problems Telefónica would encounter by buying Digital+ have dragged Vivendi to first place in the game. Telefónica buying Digital+ would see the company with a dominant position in Spain's pay-TV market and this Brussels would not tolerate.

According to Vivendi sources, the French media group would be willing to asume a major position in Digital+ so leaving to Telefónica a minor stake of around 40%.

A final joint-venture between Telefónica and Vivendi nevertheless would go no further than a €2,000 million offer, €500 million fewer than what many consider a minimum investment and nearly half the €3,850 million at which Prisa values Digital+. This price difference is a great handicap to close the sale.

However what is clear is the role of each candidate once the operation is made. Telefónica will manage the client base while Vivendi will manage the content by negotiating with the content providers. It would also be in charge of the packaging of the channels.