Telefonica Buys Majority Stake in Digital Plus, Becomes Spain's Leading Pay TV Firm

The $1 billion deal that raises its stake to 78 percent also eases media group Prisa's debt burden.

MADRID -- Spanish telecom Telefonica became Spain's most powerful pay-TV operator overnight after media group Prisa accepted its binding offer to buy its 56 percent stake in pay platform Digital Plus for approximately $1 billion, adding to the telecom's minority stake and giving it 78 percent of Spain's leading platform.

Telefonica has long had its eye on Digital Plus, which owns the lion’s share of coveted rights to sporting matches including ever-popular soccer teams Real Madrid and FC Barcelona. The $1 billion (725 million euro) acquisition will alleviate Prisa’s 3 billion euro debt and values Digital Plus at $1.8 billion (1.3 billion euros). Mediaset Spain owns the remaining 22 percent of Digital Plus.

Telefonica thus adds 1.6 million Digital Plus subscribers to its 670,000 clients, according to figures provided to the stock exchange regulators.

Telefonica, which already owned a 22 percent stake in the platform, is not only looking to increase its ability to bundle packages of broadband, cable and television, but comes at a time when the company is looking to persuade European anti-trust regulators to greenlight a separate deal to buy German mobile operator E-plus from its Dutch rival KPN.

In July, Telefonica agreed to a cash and stock deal to buy E-plus for some $11.3 billion (8.1 billion euro), but the deal is on hold as regulators assess if it will create unfair competition in Germany’s mobile and landline services. The deal would give Telefonica a slice of the German market equal to T-Mobile and Vodafone.

The Spanish telecom announced an expansion strategy two months ago via its Movistar Fusion TV with an eye on bundling services that saw it bulking up its presence in the pay-TV market, buttressed by key sports rights like Formula 1, European Cup 2016, the World Cup 2018 and UEFA rights for the next four years.

Telefonica's Movistar TV will launch its own thematic channel in September, focused exclusively on international soccer matches. Vodafone, the Spanish stalwart's main rival, is undertaking a similar strategy of bundling services, having just acquired Spain's leading cable operator Ono for $10 billion (7.2 billion euros), in a deal that is not fully closed yet.