Sogecable talk sends shares higher

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MADRID -- Rumors that Spanish media conglomerate Prisa could be looking to make a public offer for the remaining shares of television giant Sogecable that it does not already own moved shares at the Spanish stock exchange Tuesday.

Reports on Monday suggested that France's Canal Plus or Rupert Murdoch's News Corp. could have set sights on the Madrid-based Sogecable, which owns free-to-air channel Cuatro and satellite platform Digital Plus.

"Today the market is focusing closely on Sogecable and the possibility of a public offer by Prisa," media analyst Julian Coca said at investment bank Inversit Banco.

Prisa holds 48% of Sogecable and has slowly upped its stake in the past two years. Vivendi sold its minority 21.3% stake in Sogecable four years ago, after rumors that it had been negotiating to take the controlling stake.

As word leaked late Monday, Sogecable shares climbed 7.4% to 24.10 euros. Shares closed Tuesday at 24.18 euros.

A juicy plum in the Spanish media sector, where it leads the market in pay TV, Sogecable has been looking more vulnerable following an intense soccer rights war with rival group Mediapro.

Investors are excited by Cuatro's better-than-expected returns on advertising and audience and possibilities abound, with one option seeing Sogecable's parent group Prisa buy back 100% of the subsidiary and another option seeing Prisa take Cuatro and Spanish telecom giant Telefonica take over pay platform Digital Plus. Telefonica markets its own Internet TV service, Imagenio.

Either formula would allow Prisa to sell off the pay TV business that is dragging down its bottom line.

"Not just in Spain, but in Europe in general, we are seeing a growing concentration in the media sector," Coca said. "The probability is high that the sector will become even more concentrated."

But a spokeswoman for Prisa denied that the company was in talks with other groups or planning on acquiring Sogecable in a public offer.

"We're an important group, and we're always in the eye of the hurricane," the spokesperson said. "Sogecable's share price is very good and we can buy it as we would any other company. There is nothing new."

The rumors Tuesday distracted investors from last week's market-moving rumors that publishing group Vocento has decided to offload its 13% stake in the country's leading free-to-air television channel.

Telecinco's rival Antena 3 found its shares trading up at the end of last week as investors heard possibilities that Vocento may be looking to jump ship to the competition. Antena 3, which has seen its stock price drop from 18.28 euros a share this year to a low of 10.19 euros in late November, saw its price climb to just over 12 euros on Friday. Tuesday's session saw the share scale back to 11.57 euros as focus shifted to rumors of a public offer by Prisa.

A Vocento spokesperson denied that the group had made a decision about whether it will sell off its Telecinco stake. The group, which also owns DTT channel Net TV must choose between the free-to-air channel or the DTT option before a scheduled 2010 analogue blackout in Spain.

"We have until 2010 to decide, and a decision has not been made," the spokesperson said.

Vocento announced in November broad guidelines for a massive restructuring and will present a new strategic business plan in January. The company has recently signed Miguel Abellan from France Telecom's Spanish subsidiary Orange to head up New Markets, a newly created division focusing on Internet and free press.

Speculation that Vocento could be eyeing the competition seemed credible to many despite the fact that Antena 3's share price has plummeted over the past year thanks to dropping audience share in favor of Telecinco.

Antena 3's average audience share in the first nine-month period of 2007 dove to 17.7% versus 19.8% a year ago and below its own target of 19%. The figure underscores the channel's ongoing struggle to snag audience attention against Telecinco, which regularly corners some 21.3% of the audience.

"Vocento could be interested in reformatting Antena 3," Coca said. "While it might not seem to have a long-term logic, laws change all the time and the government is already doubting about how and when to carry out the blackout. There is an opportunity there now."

Vocento closed 1.11% up Tuesday to hit 14.55 euros a share.
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