Prisa, Mediapro thrash out merger details

Iñaki Ferreras

Representatives from Spain's main TV production companies Sogecable and Mediapro are negotiating the last details of the merger between the two. The merger will generate the country's biggest audiovisual holding and one of the biggest in Europe with some E2,800 in revenues.

The deal for the share of the management of the new group is already advanced, with the chief executive position going to Mediapro (probably Tatxo Benet) and the presidency to Prisa-Sogecable (for Manuel Polanco).

On Mediapro's side, the company will be in charge of the production business and also of the exploitation of rights. On Prisa's side, Sogecable's owner will be in charge of the free-to-air TV channel that results from the merger. Remember Mediapro's in-the-clear channel is laSexta and Sogecable's is Cuatro.

But the main handicap for the definite agreement resides in the formula chosen for Sogecable's pay-TV operator Digital+. Including Digital+ is of imperative importance as it provides Sogecable with 50% of its business.

Mediapro’s management have always worked from the idea of a 50% share in the merged holding company. So the conclusion is the broadcasting of the sporting audiovisual rights, the audiovisual production of this group and its stake in laSexta are worth as much as the broadcasting rights of Sogecable, Cuatro and Media Capital (Prisa's Portuguese subsidiary) put together.

With Digital+, Sogecable doubles its revenues and also its EBITDA in relation to Mediapro, a situation which would alter the terms of the deal.

One solution is the sale of some of Digital+, as has been on the table for some time. Prisa could very well sell 40% of Digital+ to the joint-venture Telefónica-Vivendi leaving the remaining 60% within the holding company with Mediapro. That would also leave the door still open for Telefónica in a future holding company.