Market Watch

Antena 3 and La Sexta Restart Merger Talks

October 08, 2010

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Spanish commercial broadcasters Antena 3 and La Sexta have revived merger talks after initial negotiations which started in December 2009 had ended unsuccessfully in February 2010. The talks are said to be at an early stage with finalisation not imminent. A roadmap has not been publicized. Due to the eager previous attempt to join forces, however, due diligence has already been completed.

A merger scenario had become possible after a relaxation of Spanish media ownership law in February 2009 in the wake of audience fragmentation through digitization. The new law permits terrestrial free-to-air channels to merge, provided their combined audience share does not exceed 27 per cent. This threshold has been set to prevent media concentration. The reform of media ownership law follows an unprecedented decline in the Spanish TV advertising market. In 2008, the Spanish net TV advertising market fell by 11 per cent and in 2009 the market contracted by 23 per cent.

The continuation of talks between Antena 3 and La Sexta comes at a time where merger negotiations between Mediaset-backed Telecinco and Prisa-owned Cuatro have reached an advanced state. The broadcasters announced to join forces in April and a regulatory decision is expected to be reached by end of October. Screen Digest expects regulatory clearance, although limits may be imposed on advertising bundling to help protect smaller rivals. The imminence of the Telecinco/Cuatro deal puts increased pressure on both Antena and La Sexta which risk marginalisation in the face of a new super-broadcaster. Based on the audience share for September 2010, Telecinco and Cuatro would have a joint audience share of 21.1 per cent compared to stand-alone shares of 10.9 per cent for Antena 3 and 7 per cent for La Sexta. At the same time, a finalised Telecinco/Cuatro deal and regulatory feedback provides guidelines and increased security for Antena 3 and La Sexta in their own merger plans.

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