Spanish broadcaster Telecinco, owned by Italy’s Mediaset (Berlusconi), on Friday agreed to buy 22% of Sogecable's satellite pay-TV operator Digital+. Prisa, Sogecable’s owner, will receive $775 million in cash.
In a separate deal, Sogecable's free-to-air national channel Cuatro will also merge with Telecinco. Telecinco is valued at some $3,312 million while Cuatro is valued at $792 million. Cuatro and Telecinco will keep their brands separate.
As a result of this agreement Prisa, a shareholder of Hispanic Television network V-Me, will create a new company merging the two channels and the editorial group will control in the short term 22% of the resulting company while Telecinco will control 78% after the capital extension.
After this Telecinco's participation in the new company will grow by means of a capital extension of $750 million with the percentage controlled by Prisa dropping to 18.37% and that of Mediaset falling to 41%.
The deal gives Telecinco the right to appoint the operator's Content Director. As with Telefónica, which is now in charge of the economic management of Digital+ and also owns 21%, Telecinco will have control of two executives.
Telecinco's president Alejandro Echevarría will lead the new holding company. Prisa will have two executives and could put a vice-president in the new company.
In order to complete the deal, Sogecable will merge those subsidiaries now managing Digital+: Canal Satélite Digital and DTS Distribuidora de Televisión Digital.
The entrance of Telecinco in Digital+ comes just three weeks after Telefónica bought into Sogecable's capital. Telefónica has its own pay-TV operator, IPTV platform Imagenio.
The Sogecable-Mediaset agreement is positive for Sogecable because the Prisa group desperately needs money. But one of Prisa's hallmarks has always been the quality of its information and the control of its own produced contents either written, radio broadcast or televised. This deal marks the loss of that control in the company’s TV businesses.