Digital+, which is also said to have interested companies such as Al Jazeera, News Corporation, Liberty Global and Vivendi, comes with a large customer base in the form of the 1.6 million subscribers to Spanish pay-TV channel Canal+. Highly-indebted Prisa is said to have initially sought well over EUR 1 billion for its stake, but Telefonica’s final offer values the company at 45 percent less than four years ago, when it acquired 22 percent of Digital+ for EUR 500 million. Prisa’s net loss more than doubled last year to EUR 648.7 million euros, prompting shareholders to approve an agreement in December to restructure around EUR 3 billion of debt to give it time to sell broadcasting assets and its Spanish-language book publishing divisions.
However, the deal will need to receive approval from Spanish or European regulators, since the acquisition of Digital+ would give Telefonica well over 60 percent of the Spanish pay-TV market. Earlier in the year Spain’s telecoms regulator CNMC suggested that the European Commission may have to investigate the likely deal due to its Community-wide dimension and its implications for competition in Spain. In March CNMC director Jose Maria Marin Quemada said that a possible acquisition would have “important implications” because it would allow Telefonica to offer TV services that other operators may not be able to easily replicate, and the prices of the resulting TV offerings would need to be analysed.
Rival operator Orange Spain has already responded by submitting a complaint to the CNMC denouncing the deal and other recent moves by Telefonica to bundle TV content into its Movistar Fusion convergent packages and its decision to migrate Movistar ADSL customers to fibre free of charge. Allowing the Telefonica-Digital+ deal to go ahead would have an “undeniably negative impact on competition" in Spain, according to Orange, because it would enable Telefonica to offer convergent packages that cannot be matched by other companies.
