Spanish telecoms company and former Endemol owner Telefonica is embroiled in a fight to acquire the Brazilian telco arm of France’s Vivendi, and a mysterious TV content deal could see it land a knockout blow to rival Telecom Italia, writes Jesse Whittock.
Telecoms companies are increasing understanding the value strong programming and content can have on their offers, as they move to triple- and quad-play offers of TV, mobile, broadband internet and wireless services.
Perhaps that’s why Global Village Telecom, a Brazilian telephony and pay TV subsidiary of media giant Vivendi, looks likely to fetch up to €7 billion (US$9.3 billion) as European companies Telefonica and Telecom Italia duke it out for control.
According to a Reuters report, Telefonica, which made a €6.7 billion cash-and-shares offer for GVT earlier this month, is adding a caveat to its offer: a golden goose TV content sharing agreement.
“This hasn’t been made public yet but Telefonica’s offer is worth more than the €6.7 billion currently on the table because it includes a television content deal with Vivendi,” an unnamed source told Reuters.
Despite Telecom Italia looking to offer as much as €7 billion to outmuscle Telefonica, a programming deal that hands Vivendi’s pay TV subscribers premium content at little or no extra cost would be an enticing option.
It highlights that old mantra that you hear at every TV conference the world over: in modern media, content really is king. Telefonica has previously followed this mantra – buying production and distribution giant Endemol for €5.5 billion in 2000 before later selling it for a fraction of that price after an uneasy partnership.
Telecom Italia’s rival offer would hand Vivendi, which is France’s biggest media company, a 20% stake in its business and a stake in a holding company combining the pair’s Brazilian assets.
Talk of a Telecom Italia-Vivendi tie-up, meanwhile, has lead to speculation of the former partnering with another European pay TV giant, Mediaset. Vivendi is said to be interested in acquiring a stake in Silvio Berlusconi’s company, which is Italy’s largest commercial broadcaster and has a large TV operation in Spain.
However, this is further muddied by the fact that Telefonica, which has been building its pay TV operations in Europe in recent months, is buying an 11.11% stake in Mediaset’s pay TV business, Mediaset Premium.
In July, Telefonica announced it was buying Mediaset’s 22% stake in Distribuidora de Television (DTS), which is the company behind leading Spanish TV operator Canal Plus Spain, taking its ownership of the platform to 100%. This came after it acquired Prisa’s 56% stake in May to take its stake to 78%.
Plenty of numbers, companies and conditions for you to pick through there, but if Telefonica programming promise wins it control of GVT we will have yet another example of why content ownership is set to decide the future shape of the media industry.