Spanish audiovisual group Sogecable has vehemently denied speculation that it is nearing a sale to Telefonica of a 92.5% stake in digital satellite platform Canal Satelite Digital (CSD).
Such a sale would undoubtedly result in a long-awaited merger between CSD and Telefonica-owned rival platform Via Digital.
Sources at Sogecable this morning described the speculation as "absolutely not true." CEO Javier Diez de Polanco denied similar rumours on February 24 during the presentation of Sogecable's financial results. Sources at Telefonica today preferred not to comment.
The rumours originated in an article that appeared this morning (March 21) in Spanish newspaper El Mundo. The story says that Sogecable, which is part-owned by Telefonica multimedia rival Prisa Group, has agreed to the sale due to heavy losses at CSD. The story goes on to suggest that the final negotiating point is the price of the operation, which will depend in large part on Sogecable's rights to Warner product. The sale should be closed before Telefonica subsidiary Telefonica Media floats initial shares this June, again according to the El Mundo article.
Sogecable incurred losses in 1999 of $15m (pts2,321m). Canal Satelite Digital, in turn, finished the year with losses of $44.3m (pts6,872m), which represented a 60% reduction over the previous year's losses. CSD's losses are chalked up to the expensive output deals it has maintained, mostly with US multinational majors, since its January 1997 launch. It is those same output deals which have made CSD a more attractive platform for cinema fans, and the platform has led Via Digital in subscribers by nearly double.
Via Digital, nevertheless, had made great strides in recent months to attract new subscribers, growing by 30% in the final six months of 1999. Telefonica launched Via in September of 1997 and the ensuing "digital war" led to very lucrative output deals for US majors. A merger between the two platforms would be felt internationally.
In a move which would seem to deny the rumours, Prisa announced yesterday that both Prisa and Canal Plus would raise their shares in Sogecable by buying out a small chunk of the shares owned by Banco Bilbao Vizcaya Argentaria (BBVA), which is required by the government to decrease its audiovisual interests. Prisa and Canal Plus will acquire 1.53% each of BBVA's shares, increasing their respective participations in Sogecable to 21.26%, or 42.52% together. "With this acquisition, Prisa and the Canal Plus Group increase their confidence and renew their support for Sogecable," the press release stated.