The Spanish media group Prisa has announced a E1bn cash and equity deal with its Italian counterpart Mediaset to sell a stake in satellite TV platform Digital + and merge their free-to-air (FTA) TV stations.
Under the deal, Mediaset will merge its…
The Spanish media group Prisa has announced a E1bn cash and equity deal with its Italian counterpart Mediaset to sell a stake in satellite TV platform Digital + and merge their free-to-air (FTA) TV stations.
Under the deal, Mediaset will merge its Spanish FTA subsidiary Telecinco with Prisa’s loss-making Cuatro, respectively the second and fourth largest TV stations in terms of audience share, and first and third in terms of advertising, for an equity consideration of E550m. Meanwhile, the enlarged Telecinco will acquire 22% of Digital + for E500m in cash, joining Telefonica as a minority partner in the satellite pay-TV platform.
Telecinco will finance the transaction by carrying out a E500m capital increase in Q2. Mediaset will fully subscribe to its share of 50.5% while a syndicate of banks led by Mediobanca and JPMorgan will underwrite the remaining shares, which are floated on the stock exchange. The two banks will act as joint global coordinators and bookrunners, while BBVA and Banca IMI will participate as lead managers and bookrunners.
Mediaset aims to own 41.3% of the new Telecinco-Cuatro group, while Prisa will hold 18.3%.
Both parties will be given proportional representation on Digital + and Telecinco’s boards. The deal is expected to close in Q3, subject to the approval from regulators, Telecinco’s shareholders and Prisa’s creditors.
JPMorgan and Mediobanca advised Mediaset on the deal while Allen & Co were exclusive advisers for Prisa.
Digital + was valued at E2.35bn, the same price tag applied when Telefonica bought a 21% stake in the platform in November.
Analysis
The deal follows Prisa’s year-long attempts to sell Digital + after talks with Vivendi and Telefonica fell through last February. It also culminates merger talks that have dominated Spain’s TV market since last May, when a new law paved the way for possible consolidation.
As part of these talks, two other TV stations, Antena 3 and La Sexta, are rumoured to be close to sealing a merger.
Meanwhile, at a stroke and for only E253m in cash, Mediaset is greatly consolidating its position in Spain. The new Telecinco, which will operate under the brand name Cuatro, will emerge as the dominant player in the free-to-air market. Its eight free-to-air channels will command a 22% share of the audience and 40% of the advertising- above rivals including current market leader TVE and Antena 3.
In exchange, Prisa gets some respite as it seeks to repay its E1.95bn bridge loan by the end of March. Since last September, the El Pais publisher has raised at least E681m in cash through stake sales in the group and its subsidiaries MediaCapital and Santanilla.
The agreement also strengthens Digital +, Spain’s largest satellite pay-TV platform, moving it closer to becoming a triple-play player. In addition to offering broadband through its partnership with Telefonica, it will now also be able to draw free content from Telecinco.
