Spain's Antena 3 Says "Unfair Merger Conditions" Favor Mediaset

Competition authorities order the broadcaster to market advertising separately for each channel, Antena 3 and La Sexta. The same conditions were not imposed on Mediaset in its similar merger 18 months ago with Cuatro.

MADRID - Spanish broadcaster Antena 3 said it won't go ahead with its merger with La Sexta given the "unfair and discriminatory conditions" imposed last week by competition authorities, which the company said favor rival Mediaset's dominance in the market.

"Under the umbrella of defense of the market, the National Competition Commission's (CNC) resolution strengthens and protects the absolute domination of Mediaset Spain Group's dominant position for the next few years in the open and pay TV business, to the detriment of the rest of the broadcasters, including Antena 3 Group," the company said in a statement.

The CNC, which approved Mediaset's merger with Cuatro 18 months ago with minimal conditions for three years, ordered Antena 3 to create two independent companies to sell advertising--as opposed to Mediaset, which can market packages using both channels offer to potential clients. Additionally, the two companies should not communicate and eliminate obvious synergies to market advertising.

"If they are not allowed to generate synergies, it's very difficult to see any reason for the merger," a source who asked not to be identified told Spanish online daily elConfidencial.

Antena 3 must also create commercial packages that offer a maximum of 18 percent share, compared to Mediaset's 22 percent share--and must respect the condition for five years.

"The company has decided, as a result, to not accept the conditions dictated by Competition and to employ every legal and administrative mechanism possible with the aim of defending the operation as well as the interests of the Antena 3 Group and its shareholders."

One analyst pointed out that if Antena 3 were to accept the conditions, it would establish a very complicated precedent, in which the market had two main competitors--but operating under entirely different guidelines.

Spanish second quarter advertising market forecasts show a 12 percent drop for the TV market.