Spanish Cable Consolidation� A Happy End?
After years of flirtation, the romance between the two Spanish cable operators Ono and Auna is likely to end in marriage. Something has made things easier: Auna has divorced its mobile division (Amena), 80% of which is about to be bought by France T�l�com�s mobile division (Orange) for 6,400 million �. The division and sale of Auna-Amena will provoke a profound restructuring of the sector, and is seen favourably by the CMT (the Spanish regulator) whose president yesterday said that it is �good for the market and for consumers�. The operation also opens the door for the integration of the two cable operators which do not compete geographically. Ono has offered 2,600 million� for Auna and negotiations are quasi-finalised. The happy ending seems close.
Can a rather forced marriage be a happy one? Perhaps; but happiness is certainly not guaranteed. They might do well in fixed telephony and broadband, but television remains a tricky business. The greatest challenge is access to content rights. In Spain, for example, competition against the -merged to monopoly- satellite operator Sogecable is practically non-existent, despite long lists of undertakings imposed at the time of the merger that aimed to ensure access to football rights and premium movies.
Access to content is crucial for pay-TV operators, as well as for new IPTV and mobile TV providers. It is not surprising that it has become a major focus of attention for regulators and competition authorities. However, these do not seem to be doing a fantastic job. Just today the Spanish regulator admitted that its �arbitration in the conflicts over access pay-TV rights has not been effective�. In other words, cable operators are not getting any content. The same might be the case for future providers of new media services.
Perhaps the merger will give the new cable entity greater bargaining power vis-�-vis the content rights owners. However, as things stand now, with valuable content broadcasting rights being sold collectively, in packages, in exclusivity and over long periods of time to satellite pay-TV operators such as Sky (who has won all the football broadcasting rights auctions so far) or Sogecable (who just two weeks ago renewed its contract with UEFA to broadcast the Champions League) cable companies need much more than a merger to be able to compete effectively. [Some of them are claiming that certain contents are �essential facilities� and that access to them should be regulated ex-ante�.. a very dangerous claim!]
It is interesting that meanwhile, in the UK, where cable consolidation between NTL and Telewest is also likely, cable is selling Flextech. Any thoughts why? Here are some by Julian Clover.
