The move will bring Telefonica into direct competition with Retevision, the state-owned company responsible for TV signal transmission. Retevision, due to be privatized in October, had held its own talks with Kirch and was in the process of establishing a working group with TV channels to study digital TV. Retevision, which is to form the nucleus of Spain's second telecommunications company and compete with Telefonica once basic services are liberalized, says it will continue its digital developments.
Telefonica says the new venture will offer 50 TV channels and other services such as home-shopping. So far the country's TV companies, including Tele 5, in which Kirch has a 50% stake, have refused to comment on the link up. No comment was also the reply from Canal Plus, the Prisa-controlled pay-channel which was Telefonica's partner in the stalled Cablevision venture. Following the introduction of tough restrictions on its cable plans by the Spanish government and an on-going EU inquiry, Telefonica recently announced it was 'putting on hold' planned investments in the cable area of $500mn. Canal+ of France is among the company's seeking to prevent Kirch from dominating the digital market.
Sources at Spain's leading media buyers said they were following the developments with interest but were unanimous in the view that the key will be the cost of the de-coder. If the set-top box is similar to the $625 cost of Kirch's D-Box in Germany they, media buyers don't many takers, particularly with cabling projects underway or planned in the short-term in most Spanish cities.
Copyright July 1996 Crain Communications Inc.