Mediapro, Prisa downplay merger rumors

Spanish media giants may merge TV holdings

MADRID -- Two of Spain's biggest media groups, Mediapro and Prisa, downplayed reports Thursday they are negotiating a merger of their TV holdings, following a bitter soccer rights war that has left the former with a plethora of sports rights and the latter with empty pay-per-view windows.

"There are always rumors circling us," a spokesperson for Prisa told The Hollywood Reporter. "Everyone [all the broadcasters] are talking with everyone else and Prisa is always evaluating our possibilities. But talking is not negotiating, and certainly not structuring a joint holding."

The report in Spain's leading business daily Expansion said the two groups plan to merge their free-to-air television interests in the future. Prisa's film and television branch Sogecable owns free-to-air TV channel Cuatro and Mediapro owns La Sexta.

According to the report, the two groups would set up the holding to pool their various rights deals. In addition to the soccer rights, Mediapro owns Formula 1 and the Spanish soccer Cup, among others, while Sogecable owns rights to the NBA for the next three years, as well as a massive library of film and television series.

A second stage would see the two merge their TV channels.

While the groups were tight-lipped about possible plans, industry insiders widely agree that the two will have to find some immediate solution to the soccer rights and a long-term plan of viability. Cuatro and La Sexta are both newcomers to the crowded Spanish television landscape, snagging 8.8% and 7% of the viewing audience thus far this year, respectively -- far behind pubcaster TVE's 17% or Mediaset-controlled Telecinco's 15%.

"It makes sense from a financial standpoint," said Jorge Gonzalez of IESE Business School. "Not only is it a way to reduce competition and share premium content, but free-TV is still a very good business in Spain. Beyond the synergies with the pay-per-view windows and digital platform, they boost their market share and can attract advertisers more easily."

After two years of litigation and accusations between the two companies over the lucrative rights to Spain's professional soccer league, the two sides are said to be seeking their own agreement. Mediapro owns the lion's share of rights to the soccer league's matches, but Prisa owns the country's primary pay-per-view outlet, the satellite platform Digital Plus. Prisa has been unsuccessful in its attempts to sell off the platform and is weighed down with Sogecable's estimated €890 million ($1.26 billion) debt, while La Sexta has pledged a reported €2 billion ($2.83 billion) to maintain its sports rights.

While Mediapro aired nearly all the games of this year's season -- which finished this past weekend -- on La Sexta, Prisa has alleged its rival's ownership of the rights is illegal because it broke a previous contract. The court is not to rule until late next year.