Warner Bros. International Television (WBIT) has paid around $32m for a ten per cent stake in Spain's leading pay-TV operator, Canal Satellite Digital (CSD), exercising an option first offered in 1997.
Sogecable remains the majority shareholder of CSD with 83% of the digital platform that had more than 800,000 subscribers at the start of this year and now looks positioned to capitalise on demand for high-speed internet access. Sogecable, which is controlled by Spanish media empire Prisa, is 20% owned by French pay-TV giant Canal Plus.
At the same time, WBIT - a division of Time Warner Entertainment Company that is now being swallowed up by America Online - has also taken a 10% stake in CSD's thematic movie network Cinemania, leaving Sogecable with a 90% holding. That deal was valued at just under $1m.
Following the deals, WBIT is expected to name a delegate to both the CSD and Cinemania boards of directors. The agreement was signed by Sogecable (and CSD) chief executive officer Javier Diez de Polanco and WBIT president Jeffrey R. Schlesinger.
This accord comes on the heels of denials of merger talks between CSD and rival digital platform Via Digital (48%-owned by telecoms giant Telefonica). Such speculation had been sparked because of Via Digital's rapid growth in its own subscriber base.
Both Telefonica and Sogecable have prospered on the stock market over the last year. Telefonica reported annual revenues of more than $18bn and a market capitalization of $80bn; while Sogecable's July 1999 initial public offering in July last year raised as much in $200m in shareholder equity and allowed the company to cut debt by $165m. Since that IPO, Sogecable's shares have more than doubled in the wave of enthusiasm for public companies with internet promise.
Over the last few years, Sogecable and Warner Bros have deepened their business ties. They are involved in several movie joint ventures, including those covering local theatrical distribution (Warner Sogefilms, a three-way joint venture with Universal Pictures International); theatrical exhibition (Warner Lusomundo Cines de Espana, a three-way chain with Portugal's Lusomundo); and film production (via Cine Bel Air Entertainment).
In addition, Sogecable maintains exclusive first and second pay TV window rights in Spain to film and programming from WBIT Distribution, and the CSD platform carries several Time Warner networks including Turner Classics Movies, Cartoon Network and CNN International. Sogecable and Turner Broadcasting System International are joint owners of CINTV, the producer of the Spanish-language round-the-clock news network, CNN+.
Along with CSD, Warner Sogefilms and Warner Lusomundo, Sogecable is home to pay TV outlet Canal Plus Espana, film production arm Sogetel and rights-trading and international sales operation Sogepaq.