Spanish media group Prisa (owner of pay TV operator Digital Plus) and rival Imagina (the holding company of Mediapro and Grupo Arbol) have broken off negotiations to unite their audiovisual businesses. The breakdown was confirmed in a release to the stock market regulator. Both companies were originally planning a like-for-like merger, but Prisa demanded more than 50 per cent of the new company claiming that Prisa was worth more than Imagina. The deadline for the agreement set for 24 July had already been extended for 15 more days until the 8 August but was broken one day before the final cut-off for an agreement. The break up of the negotiations means the possible merger of the two group's national free to air channels La Cuatro (Prisa) and La Sexta (Mediapro) is unlikely to happen. Breakdown also means that the on-going battle over football rights in Spain which has raged for more than a year will continue.
A merger between Cuatro and La Sexta would have created a strong third commercial free TV player that would have further increased pressure on current market leaders Telecino and Antena 3, which are already struggling to keep their market shares in the light of audience fragmentation. Although both Cuatro and La Sexta would have remained distinct channels post-merger, their advertising airtime would likely have been marketed in a bundle, similar to Antena3's strategy to synchronise ad breaks and sell advertising airtime simultaneously across its flagship channel and digital channels Neox and Nova. Combined audience share (24hrs, commercial target) for Cuatro and La Sexta in H1 2009 was 19.4 per cent, compared to 15.4 per cent for Telecinco and 17.6 per cent for the Antena 3 channel bundle (16.0 per cent for Antena 3 flagship alone). This corresponded to a net advertising market share of 19.0 per cent for Cuatro and La Sexta combined, vs. 25.6 per cent for Telecinco and 24.9 per cent for the Antena 3 bundle. In a merger, Cuatro and La Sexta would likely have been able to increase their power-ratio (share of advertising per audience point). Due to their limited reach as stand-alone players, their advertising prices currently are around 30 per cent below those of Telecinco. A bundling model following a merger would have permitted price increases of approximately 15 per cent, according to Screen Digest estimates.