Spanish TV sector on brink of major shakeup

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Antena is the third private broadcaster to announce Thursday it is open to a merger following a sharp drop in advertising revenue.

MADRID – Spain's television sector was on the brink of a major shakeup Thursday after another private broadcaster, Antena 3, said it was open to a merger to deal with a sharp drop in advertising revenue in the country's worst recession in over 50 years.

"We are not closed to relationships, but we need to study all the options open to us, without haste," Antena 3 chief executive officer Silvio Gonzalez told a conference, adding the final decision would be "based on whether any deal creates value."

Antena 3 is the third broadcaster after La Sexta and Telecinco to announce that it is studying or open to a merger since the government passed a law in February that eliminated a 5.0 percent limit on cross shareholdings at TV broadcasters.

The law is intended to ease sector mergers and the chief executive of La Sexta, Jose Miguel Contreras, predicted in March that mergers of Spanish television and media groups were bound to take place within four to six months due to the "horrific" market conditions they are experiencing.

"The (economic) crisis is the best guarantee that this will happen," he said.

Spain's four private free-to-air television channels – Antena 3, Cuatro, Telecinco and La Sexta – have all been hit hard by the downturn, which has struck just as they are facing a steady rise of cable and a recovery in ratings by state broadcaster RTVE.

Telecinco, the market leader in terms of audience share in 2008 for the fifth year, posted a net profit last year of EUR 211 million, a 40.2 percent drop over 2007 as advertising sales fell 11.1 percent to EUR 1.2 billion.

Earlier this week Prime Minister Jose Luis Rodriguez Zapatero's socialist government threw private broadcasters another lifeline with the announcement that it will "drastically reduce" the amount of advertising allowed on the country's two public television stations.

Zapatero did not announce by how much he planned to cut advertising revenue on TVE1 and TVE2, which uses a mixed-financing model that relies far more on advertising than direct state subsidies.

State broadcaster RTVE earned more than EUR 550 million in advertising revenues last year.

In 2008, the government instituted a policy that saw RTVE's advertising allotment cut to 10 minutes per hour from 11 minutes. It is due to drop to nine minutes next year.

But private broadcasters have insisted the drop was not enough. They argue they face unequal competition from RTVE because its state subsidies mean it can afford more expensive shows that are difficult to compete against.

The head of Antena 3 said Thursday that advertising should disappear from the public broadcaster entirely as well as from local television stations run by Spain's regional governments.

"There are too many stations to share the advertising revenue pie," he said.

Antena 3 is controlled by Spanish publisher Planeta and its Italian peer De Agostini. Cuatro is owned by Spanish media giant Prisa.

Telecinco is controlled by Italian Prime Minister Silvio Berlusconi's Mediaset while Spanish media group Mediapro owns La Sexta.

On Thursday, shares in Antena 3 closed down 9.66 percent at EUR 4.30, Telecinco shed 7.11 percent to end at EUR 7.32 while Prise gained 6.99 percent to end at EUR 1.99. The Ibex-35 main share index ended up 0.92 percent.

AFP / Expatica

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