Spain awoke this morning to the prospect of a dramatic revolution in its media landscape, with the announcement that industry giants Grupo Prisa and Telefonica have agreed to merge their pay-TV units.

According to the terms of the deal, which must now be approved by both groups' administrative boards, as well as local and European authorities, shareholders of Telefonica-backed pay-TV operator Via Digital will cover a 23% capital amplification of Prisa media unit Sogecable, home to pay outlets Canal Plus and Canal Satelite Digital, making Telefonica an equal shareholder in Sogecable alongside Prisa and France's Canal Plus.

In addition, Sogecable will buy out Telefonica media unit Admira's shares in their powerful, jointly-owned sports rights broker Audiovisual Sport. Telefonica will name a president to the board of Sogecable.

Neither company has made reference to how the deal will affect their other media interests, but the aftermath would be huge in Spain. Sogecable is also home to producer Sogecine, rights house Sogepaq, distributor Warner Sogefilms, exhibitor Warner Lusomundo and more. Telefonica's media unit Admira houses shares in wide-ranging media interests around the world including Endemol Entertainment, Lolafilms, Antena 3 TV, Patagonik and Media Park, among others.

Despite the lengthy process of getting approval from antitrust authorities, which could take up to six months, a positive indicator of eventual success is that a similar pay-TV merger, between Italian operators Telepiu and Stream, has just received local telecom authority clearance in Italy.