Telecinco says Prisa deal won't hurt earnings

Mediaset unit inked deal for Prisa free-to-air channel

MADRID -- Mediaset unit Telecinco's earnings per share will not fall with its €1.05 billion ($1.51 billion) deal to acquire Prisa's free-to-air channel and a stake in its Digital+ pay TV channel, the broadcaster said Monday.

The deal, announced Friday, will boost Telecinco's revenue and achieve significant cost savings in programing and investments from the start, Telecinco said, but did not provide an estimate for the synergies.

"All we can say is that the deal will not be dilutive in earnings per share for 12 months after the operation," Massimo Musolino, general operations manager of Telecinco said on a conference call.

Prisa said it expects to close the deal with Prisa around May.

"The agreement is subject to various kinds of authorization, and we expect it to be closed in the first half of next year, round about May," a Prisa executive said on a separate conference call.

Telecinco will pay about half of its purchase of Cuatro and a 22% stake in Prisa's Digital+ pay TV channel with shares in the enlarged company and the other half in cash.

It will partly finance the operation with a €500 million share issue, to which core shareholder Mediaset will subscribe its 50.5% stake, while JPMorgan and Italy's Mediobanca underwrite the rest of the issue.

Prisa gets 18.3% of the enlarged Telecinco and has a lock-up period on the stake, but Musolino failed to provide further details on the lock-up, saying only that it "was usual for this kind of operation."

Shares in Telecinco closed down 2.74% at €9.60, while Prisa lost 5.79% to €3.58.

Meanwhile, Mediaset gained 4.07% as analysts cheered its consolidating presence in Spain.

Telecinco said it will not change its policy to pay out a minimum of 50% and a maximum of 100% of its earnings as dividends, despite €500 million of new shares coming on the market after the share issue.