A Spanish financial online newspaper ‘El Confidential’ claims to have got wind of negotiations between News Corp’s Rupert Murdoch and Telefonica, over the fate of beleaguered Spanish DTH player Canal+, owned right now by Prisa Group with a 22% holding by Telefonica. The Spanish telco is known to be in long term discussions to buy full control of the operation, but no progress has been reported in these talks for a while.
Murdoch has apparently approached Telefonica first to ensure that it is onside and doesn’t consider an approach as ‘hostile’ to Telefonica interests. Telefonica itself is understood to have been interested in buying Canal+ which takes that name from the Vivendi operation of the same name, because it has exclusive rights to Canal+ TV channels, as well as making over 20 of its own channels, and dominates Spanish pay TV. The DTH supplier has around 1.9 million pay TV customers out of a landscape of just under 4 million pay TV homes in Spain.
This is seen as a pincer movement on European football, with Prisa holding key rights to the highly considered Spanish League, while News Corp, through its various Sky operations, has either full or secondary rights to soccer in the UK, Germany, and Italy ‘ the major European leagues if you include Spain, with the most fanatical TV followers.
The natural partner for Canal+ Spain is, in fact, Vivendi, and it engaged in talks in 2009, alongside Telefonica to buy out control from Prisa. At that time it ended up more of a rescue, with some debt put in place and the purchase of a 22% holding. Telefonica began talks this January to take a controlling stake. It is understood that News Corp now has permission to approach Prisa, says the newspaper, with a view to coming up with a formula that closes the talks started in January, but with News Corp added to the list of buyers.
Telefonia has its hands full with the financial performance of Spain, a blot on an otherwise unblemished financial landscape, with Telefonica growing aggressively in Latin America. Its own Imagenio IPTV service is in need of a boost and it may well have entered soccer rights discussions with Sky on behalf of Imagenio, as a part of its agreement to let News Corp into the bidding process.
One of the issues that the Telefonica discussions have faltered on is price. El Confidential claims that it has bid just $900 million for 56% of Canal+, which would means that Prisa would make a loss on its purchase of Canal+ and may also breach covenants on debt it borrowed to buy the asset.
Back in 2008 Murdoch showed his first interest in Canal+ , then operating under the name Digital +, according to a rumor published at the time in the London Financial Times. Telefonica then went on to effect a financial rescue instead in 2009.