Telecommunications group Altice is to acquire a 94.7% stake in the Portuguese media company Media Capital from Spanish media group Prisa. The deal will give Altice control of both an assortment of popular Portuguese TV and radio stations, including free-to-air TV channel TVI, and content producer Plural Entertainment. The acquisition is currently valued at €440 million ($503 million), however is subject to adjustments for debt and working capital.
The deal is subject to regulatory approval. Altice previously had to make concessions to acquire an important strategic asset when it purchased Portuguese fixed and mobile telecoms operator PT in April 2015. In this case, the European Commission approved the deal under the condition that Altice would sell its two other Portuguese telecom assets Cabovisao and Oni. This was to alleviate concerns that the deal would reduce competition and potentially lead to higher end-user prices.
Media Capital ended the first quarter of 2017 with total operating revenues of €35 million, a 10% decline on the previous year with €39 million. Operating revenues in the TV segment also decreased by 12% YoY. Notwithstanding, its quarterly net profit was € 1.9 million, 3% above Q1 2016.
Following its purchase of Portugal Telecom in April 2015, Altice’s acquisition of Media Capital is another key asset for the company. The combination of both Media Capital's content assets and its broadcasting interests will strengthen Altice's position in the media market, fuelling development in its own original content (particularly local language content) and digital platforms, alongside its more traditional pay TV offerings.
Altice’s interest in original content in Portugal fits into its wider global strategy of developing content across its key pay tv providers, with the acquisition of content producer Plural being used partly as a hub for producing global content for the Spanish, Portuguese and Latin American markets. This isn't Altice's first diversification of this kind - the upcoming arrival of its new series and cinema channel Altice Studio in France (which launches on August 22 2017) is also indicative of its aim to become a key player in the field of original production and content. Furthermore, in June 2017 Altice recently agreed a distribution partnership with Neflix, covering France, Portugal, Israel and Dominican Republic.
The Media Capital acquisition will be important in reinforcing Altice's leading position in the Portuguese pay TV market through Portugal Telecom's consumer facing pay TV brand MEO. Under Altice ownership, Portugal Telecom has seen steady growth, with pay TV subscribers increasing by 7.6% to 1.6 million customers between 2014 and 2016. These years have seen fresh investment by the company, including the rollout of 4K set-top boxes to its fibre customers in May 2016, helping Portugal Telecom strengthen its position in a competitive market. At the end of Q1 2017, MEO had the most pay TV subscribers in Portugal with 1.56 million, just ahead of its main rival NOS. In terms of revenue MEO also has the largest share in Portugal, with 45.3% of pay TV subscription revenue at the end of 2016.