Spain: Commercial TV now a duopoly

The consolidation of Spanish commercial TV business has given rise to a duopoly with two main players, Telecinco-Cuatro and Antena 3-La Sexta controlling 85.6 per cent of the TV ad pie and 52.1 per cent of audience ratings.

Two years after the merger between Mediaset-owned Telecinco and Cuatro, now both under the umbrella of Mediaset Spain, Antena 3 and La Sexta have just announced their merger agreement to become the second largest private TV group in the country.

Antena 3 Group will absorb La Sexta which in return receives 7 per cent (around €70 million) of the newly formed group, with an additional 7 per cent maximum (another €70 million) depending on the performance of the merged company in the 2012-2016 period.

The deal is subject to approval from the competition authorities as well as from Antena 3’s shareholders in the first quarter of 2012. Antena 3 will increase its share capital to carry it out with the new shareholding structure as follows: Publishing House Planeta Agostini, 41.7 per cent; RTL, 19.2 per cent; La Sexta, 7 per cent; Free Float, 27.4 per cent; and own shares, 4.7 per cent. Under the merger terms, Antena 3 will assume E70 million of La Sexta’s debt (estimated at a total of E100 million), and the newly formed group will be presided by Jose Manuel Lara, current president of Antena 3 Group, with Silvio Gonzalez as the CEO and Jose Miguel Contreras, current president of La Sexta, as vice president.

The new group will operate 8 TV channels (Antena 3, Antena Neox, Antena Nova, Nitro, La Sexta, La Sexta 2, La Sexta 3 and Gol TV), one of them a pay DTT service, Gol TV with over 1 million subscribers including all distribution platforms, with an overall audience share of 25.7 per cent as of November 2011. It will compete face-to-face with the first largest private TV group, Mediaset-Spain, that also operates 8 channels leading the ratings with a share of 26.4 per cent in November.

In the advertising market, the new group will control 41.9 per cent of the pie against Mediaset’s 43.5 per cent, giving rise to a duopoly, with 85.6 per cent of the pie, which, according to advertisers, it will trigger off “awful consequences” in the market.

The merger agreement has been in the works for two years above all following the merger between Telecinco and Cuatro at the end of 2009. The creation of that TV giant, Mediaset Spain, led Antena 3 TV and La Sexta to follow suit in a very fragmented TV market with ad revenues in free fall and with La Sexta’s shareholders, such as the Mexoco’s Televisa, with a 40.5 per cent stake, not willing to put more money into the company (since 2006 La Sexta’s shareholders have invested around €700 million).

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