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Spain TV Channels win merger clearance

Source: Reuters - Fri 29th Oct 2010

Spain's competition authority CNC has cleared Telecinco's acquisition of Prisa's free-to-air Cuatro TV channel with only moderate competition limits, sending Telecinco's shares soaring.

"The CNC has approved the merger between Telecinco and Cuatro subject to the commitments made by Telecinco ... on the understanding that they resolve the competition problems detected" the watchdog said in a statement on Friday.

One of the conditions set is that Telecinco, Spain's largest private TV channel, cannot sell advertising from the two companies' main channels (Telecinco and Cuatro) in a single package that makes up more than 22 percent of audience share.

Currently the two have a 14.7 percent and 7.2 percent share of Spain's TV audience, respectively.

"These conditions can be easily taken on by Telecinco, and will prompt further consolidation in the sector, and (the sector) will be better for it" said Virginia Perez, analyst at Ahorro Corporacion Financiera brokerage in Madrid.

Telecinco shares were up 9.2 pct at 9.37 euros by 1320 GMT, having been up about 4 pct before the statement. Prisa shares were flat at 1.855 euros.

A second strand of the deal, in which Telecinco, majority-owned by Italy's Mediaset, will buy a 22 percent stake in Prisa's Digital+ pay-TV unit, is still pending approval.

That will link the two partners with Telefonica, which also has a 21 percent stake in Digital+, and has raised concerns of market dominance, especially in terms of content purchases.


Shares in rival TV firm Antena 3, which is expected to seek its own merger to keep up, also took heart from the deal, jumping 4.1 percent to 7.37 euros.

"We continue to think that the consolidation of Antena 3 with (smaller unlisted rival) La Sexta is inevitable," broker BPI said in a note to clients.

Telecinco reached the 1.05 billion euro ($1.5 billion) deal with Prisa last December to buy Cuatro and the stake in Digital+, creating an entity with Spain's largest audience share.

The CNC said it had imposed restrictions on Telecinco, Prisa and Telefonica in Digital+ as regards the sale of advertising, and Telecinco had promised not to sell advertising jointly with the other two.

It also placed limits on how long Telecinco can hold content exclusively and unspecified limits that cap its simultaneous presence in free-to-air TV and pay-TV via Digital+.

Similarly, Telecinco will break agreements to manage advertising for third parties operating free digital channels.

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