Putting a new spin on old rumours of merger talks between Telefonica-backed digital satellite TV platform Via Digital and Grupo Prisa's Canal Satelite Digital (CSD), Spanish newspaper El Mundo reported that the two groups are negotiating the creation of a joint Internet and TV venture which could result in the fusion of CSD and Via Digital.

The El Mundo report is based on access the paper says it had to a Telefonica memorandum dated February 6 which describes the creation of a new company, referred to as Newco Digital, to be launched as a 50-50 joint venture between Prisa and Telefonica. El Mundo says Telefonica and Prisa heads met on May 31 to firm up plans.

Both companies would bring content to the joint Internet venture from their digital platforms, as well as their range of other media interests. According to El Mundo, Telefonica could offer Prisa a 10% stake in existing Internet subsidiary Terra as a part of the deal.

The fusion of CSD and Via Digital would likely result from such a joint venture. However, the Spanish government has already shown its opposition to a merger and the European Commission would undoubtedly get involved.

The El Mundo article suggests Prisa is interested in making the move in order to beef up its stock flotation before June 12. Telefonica president Juan Villalonga, in turn, needs the support of a Spanish giant like Prisa, the article suggests, in the wake of recent fall-outs with the government and Telefonica's leading shareholders.

Sources at Prisa refused to comment on the rumours, while sources at Telefonica were unavailable for comment.