Mediapro applies for bankruptcy protection

Cites difficulties in meeting its financial commitments

MADRID -- Spanish media giant Mediapro, which holds rights to Spain's professional soccer league, has requested a formal suspension of payment of its debt in the latest round of a nasty rights war.

Citing difficulties in meeting its financial commitments -- especially the €105 million ($130 million) a Madrid court ordered it pay rival media titan Sogecable for breach of contract in 2006 over soccer rights --Mediapro said it had decided to request judicial protection from creditors "due to a basic sense of prudence."

Mediapro blamed its inability to meet its commitments on Sogecable's not paying €90 million ($111.4 million)by June 15 for rights to air the first half of the 2010-2011 soccer season on its pay TV channels Canal Plus or Canal Plus Liga.

"The decision to request suspension of payment does not cast doubt on the profitability or viability of Mediaproduccion SL, given that it has been motivated solely by the decision of Sogecable to not face its payment obligations," the company said in a statement.

Mediapro also threatened to take legal action against its rival for damages.

Sogecable immediately responded with a statement accusing Mediapro of trying to stop payment of the €105 million and declaring its own intention to pay for the season's rights at the same time as it requested a bank guarantee.

In March, a Madrid court ordered Mediapro pay Audiovisual Sport, the sports rights holding in which Sogecable has an 80% stake, for not honoring a 2006 contract signed that promised Sogecable access to the Spanish professional soccer league matches.

Some €97 million account for accumulative damages for the seasons from 2006/2007 through February 2008, the period referred to in the suit.

Mediapro owns most of the professional league's broadcast rights including the coveted rights to titans Real Madrid and FC Barcelona, which it pulled out from under pay TV stalwart Sogecable in 2006, unleashing a heated soccer war. Authorities stepped in to safeguard the public's right to watch the Spanish league's games and the two camps have been reluctantly divvying up the most lucrative matches throughout the season.

Mediapro airs games on its free-to-air channel La Sexta. Sogecable broadcasts one match on its pay channel Canal Plus Sunday nights. Both Sogecable and Mediapro have pay channels dedicated to games. Sogecable offers its soccer channel on its satellite platform's soccer channel Canal Plus Liga and Mediapro via its terrestrial digital channel GolTV.

Insiders agree that Mediapro is not simply playing hardball and looking to threaten Sogecable's cash cow, pay TV and video-on-demand soccer rights, which most analysts agree is the natural market for the soccer league.

"They may be using Sogecable's not paying as a reason, but the numbers just don't add up. The past year wasn't as successful as they would have liked and the coming year is unclear," said one analyst, who asked not to be identified.

For many, the juicy soccer rights are indigestible given the prices paid. Mediapro signed exclusive agreements with the country's soccer giants Real Madrid and FC Barcelona in 2007 for €1.1 billion ($1.4 billion) and €1 billion ($1.2 billion), respectively, for seven seasons worth of rights.

Even so, few are willing to bet against Mediapro, which posted €460 million ($570 million) in turnover for 2008 and employs 256 people. As one of the strongest media companies in Spain and a big player in Spain's northeastern Catalan region, Mediapro and its chief Jaume Roures have a range of political contacts.

Mediapro not only controls free-to-air TV channel La Sexta and owns Gol TV, but is one of the most prolific blue-chip film producers in Spain, financing Woody Allen's "Vicky Cristina Barcelona," "You Will Meet a Tall Dark Stranger" and "Midnight in Paris."
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