Prisa Surges as Telefonica Said to Near Pay-TV Purchase

Promotora de Informaciones SA jumped as much as 30 percent as Telefonica SA (TEF) is nearing an agreement to buy a controlling stake in the media company’s pay-TV business for about 800 million euros ($1.1 billion), according to people familiar with the matter. Telefonica, Spain’s biggest phone company, may pay for Prisa’s 56 percent stake in DTS Distribuidora de Television Digital SA with cash, said two of the people, who asked not to be identified because the deliberations are private. While a final agreement may be imminent, the media company still needs to give final approval for the deal, one of the people said. Madrid-based Telefonica was competing with bidders including Al Jazeera, the people said. “Even as this transaction won’t hurt Telefonica’s balance sheet, it’s quite an expensive deal only to secure some content such as soccer rights, as there are very few synergies to be achieved,” Andres Bolumburu, an analyst at Banco de Sabadell SA in Madrid, said by telephone. “On the other hand, it’s a positive transaction for Prisa as the media company needs to trim its debt pile, although I was expecting a slightly higher valuation.” Telefonica, which already owns 22 percent of the asset, is interested in acquiring Madrid-based Prisa’s stake in its pay-TV business to expand offerings in Spain, Chief Operating Officer Jose Maria Alvarez-Pallete said in a news conference in Madrid last week. Telefonica yesterday announced a new package for its TV offerings with fixed-line, mobile-phone and Internet services under the brand Movistar Fusion TV, starting at 75 euros.

Photographer: David Ramos/Bloomberg

A logo sits on display outside the Telefonica-Diagonal Zero tower offices of Telefonica...Read More

Prisa rose as much as 11.9 euro cents to 51.4 euro cents in Madrid, the biggest intraday advance since June 2012. The stock was up 19 percent at 47 euro cents as of 9:24 a.m. Telefonica climbed 0.8 percent to 11.30 euros.

Prisa Restructuring

Telefonica was considering options for Prisa’s pay-TV unit including teaming up with either Mediaset Espana Comunicacion SA, which also holds 22 percent in DTS, or with Al Jazeera to buy the asset, one of the people said. Representatives for Telefonica and Prisa declined to comment. Prisa shareholders approved an agreement to restructure about 3 billion euros of debt in December, giving the owner of El Pais newspaper time to turn around the business and cut debt. The media company obtained new liquidity and extended debt maturities with creditors while gaining time to sell businesses such as broadcasting assets as it struggles to reverse a decline in advertising spending. Prisa said last week its 2013 net loss widened to 648.7 million euros from 255 million euros a year earlier. Prisa said on Feb. 25 that its main shareholders had reduced their stake below 30 percent. This allowed Telefonica and Mediaset Espana to buy Prisa’s stake in the pay-TV business within 15 days. Source :  http://www.bloomberg.com/news/2014-03-05/telefonica-said-nearing-purchase-of-prisa-s-pay-tv-unit.html