Telefonica has bought the final 22% of Distribuidora de Television Digital, better known as Canal+, from Mediaset. It also acquired an 11% stake in the Silvio Berlusconi-controlled group’s Italian pay-TV business, Mediaset Premium.
Telefonica will…
Telefonica has bought the final 22% of Distribuidora de Television Digital, better known as Canal+, from Mediaset. It also acquired an 11% stake in the Silvio Berlusconi-controlled group’s Italian pay-TV business, Mediaset Premium.
Telefonica will invest €100m (US$136m) in exchange for the shares in Premium, which is being carved out of Mediaset into a new company with an enterprise value of €800m (US$1.1bn); prior to Telefonica’s investment.
The Spanish incumbent is already active in Italy where it is the largest shareholder in leading operator Telecom Italia.
Telefonica has also paid an initial €295m (US$401m) for Mediaset’s share capital in DTH operator Canal+ and €30m for the waiver of Mediaset’s pre-emptive right to acquire Prisa’s 56% stake in Canal+, which Telefonica has also snapped up.
Providing Telefonica’s deal with Prisa closes Mediaset will receive an extra €10m and the Milan-based broadcaster could earn up to €30m in performance-related bonuses, depending on how Telefonica’ pay-TV operations do over the next four years.
In total the deal could top €365m (US$496m), €10m higher than Telefonica’s initial offer to Mediaset in mid-June. All told Telefonica has now paid more than €1.1bn (US$1.5bn) to consolidate Canal+ after paying €750m (US$1bn) for Prisa’s 56% holding last month. Canal+ has 1.6 million subscribers and generated €1.16bn in total revenues for 2013, and €28m EBITDA.
Telefonica’s deal with Prisa is subject to approval from Prisa’s creditor banks. It will also need the approval of competition authorities to take 100% of the pay-TV operator.
Spain’s number three mobile operator, Orange, has already protested about the tie-up. The French telco said the deal would give Telefonica an 80% market share of pay-TV content in Spain and has urged antitrust and telecoms regulator CNMC to veto the takeover, or impose significant remedies.
For Telefonica the deal allows it to strengthen its quad-play offering as it looks to reduce churn in the highly-competitive Spanish market, where the leading operators have been haemorrhaging subscribers to budget MVNOs. Rival Vodafone has already moved into offering more services, including pay-TV content. It purchased cableco Ono for €7.2bn (US$10bn) earlier this year.
