Finance issues forcing operators to consider coming closer together

With falling revenues from advertising, Spain´s media barons have reluctantly had to look at reorganising their empires in order to survive. All six of the major players: Prisa, Vocento, Planeta, Unedisa, Mediaset and Mediapro, have been calling on their lawyers to help restructure their Iberian operations.

Most at risk has been the Prisa Group whose interests include the newspapers El País and Cinco Días, sports paper AS, television group Sogecable and its satellite channel Digital+, television channel Cuatro and publishing unit Santillana.

After very painful negotiations with the banks, which together hold €5bn of Prisa’s debt, it has been given a one-year extension on the most difficult of its loans, a €1.95bn bridging facility raised in 2008 to buy out Sogecable. Lawyers say negotiations with the banks were made more difficult with the unexpected release in February of Prisa´s longstanding adviser, Uría Menéndez, to be replaced by two-partner firm Cortés Abogados.

Having previously failed to sell the Digital+ part of the Sogecable business, Prisa has had to put up Santillana as an additional guarantee while it reportedly tries to dispose of other assets and produce a viable business plan for its future.

It has already closed its unprofitable Crisol book and music store chain and is likely to put up for sale its Portuguese arm, Media Capital. If deals cannot be struck Prisa could attempt a rights issue as its Board has authority to raise up to €2bn in equity.

If the group were to go under it would be the largest bankruptcy seen in Iberia. The political desire to avoid this could therefore, suggest lawyers, guide the way towards an enforced end to rival Mediapro´s battle with Sogecable over football broadcasting rights. It is this long-running dispute that has been a principle cause of Prisa’s inability to find a buyer for Digital+ as bidders were unable to determine the net worth of the company.

The prospect for peace between Mediapro and Prisa has also led the audiovisual market to speculate on a merger between Cuatro and Mediapro´s La Sexta – which has regularly used Ecija Abogados for legal advice since the channel’s launch in 2006. Another possible merger would be between Planeta's Antena 3 and Telecinco, owned by Italy´s Mediaset. The Spanish Parliament has recently approved legislation enabling such mergers to go through.

M&A, communications and media, and banking and finance lawyers can therefore expect a busy summer as the media fallout continues. Negotiations will inevitably be tough, as the major players, backed by their political affiliations, will fight hard to retain as much power as possible. But lawyers say that they certainly expect fewer Iberian newspaper titles and TV channels once the battles are over.