Back to top

Analyst Blog

Telecom behemoth Telefonica (TEF - Analyst Report) is trying to gain full control of Spanish pay-TV group Distribuidora de Television Digital, or DTS, by acquiring Mediasets. Reportedly, Telefonica has made a €295 million ($400 million) bid to take over 22% stake in DTS which is currently owned by Mediasets.

Earlier, on Jun 2, 2014, Telefonica reached an agreement with Promotora de Informaciones, S.A. (PRISA) to acquire the latter’s 56% stake in DTS for €750 million ($1.017 billion). The Mediasets deal will increase Telefonica’s stake in DTS to 78%. However, the deal is yet to receive the anti-trust approval and the green signal from PRISA’s sponsoring banks.    

Although Telefonica will become the owner of DTS, Italian media conglomerate Mediaset also stands to benefit from the transaction. Madrid-based Telefonica will pay €10 million ($13.56 million) to Mediaset if its deal with PRISA gets through. Mediaset could get an additional €20 million ($27.12 million) based on DTS’ rise in subscriber base over the next four years following the closure of the PRISA transaction.

Further, the Italian mass media company will receive an additional €30 million ($40.68 million) subject to acceptance of Telefonica’s offer and the surrender of its preferential right to acquire PRISA’s stake in DTS. This implies that Mediaset can receive up to $355 million depending upon the successful closure of the deal and the future performance of DTS.

Telefonica has been concentrating on Pay-TV to offset traditional access line loss. The carrier exited the first quarter of 2014 with total Pay-TV subscriber base of 3.6 million marking year-over-year growth of around 8%. Strong performance on the home ground and from its Brazilian subsidiary Telefonica Brasil (VIV - Analyst Report) facilitated the impressive results.

Telefonica has been successful in increasing its Pay-TV access market share in the main markets, where the company operates. We believe the DTS acquisition is part of its strategy to continue with the growth momentum.

Telefonica currently carries a Zacks Rank #3 (Hold). Better-ranked stocks worth considering within this sector are Kyocera Corp. (KYO - Snapshot Report) and Level 3 Communications Inc. (LVLT - Snapshot Report). Both the stocks currently carry a Zacks Rank #2 (Buy).

Please login to or register to post a comment.

New to Zacks?

Start Here

Zacks Investment Research


Are you a new Zacks Member or a visitor to

Top Zacks Features

My Portfolio Tracker

Is it Time to Sell?

One of the most important steps you can take today is to set up your portfolio tracker on Once you do, you'll be notified of major events affecting your stocks and/or funds with daily email alerts.

More Zacks Resources

Zacks Rank Home - Evaluate your stocks and use the Zacks Rank to eliminate the losers and keep the winners.

Mutual Fund Rank Home - Evaluate your funds with the Mutual Fund Rank for both your personal and retirement funds.

Stock/Mutual Fund Screening - Find better stocks and mutual funds. The ones most likely to beat the market and provide a positive return.

My Portfolio - Track your Portfolio and find out where your stocks/mutual funds stack up with the Zacks Rank.

Zacks #1 Rank Top Movers for Zacks #1 Rank Top Movers

Company Symbol Price %Chg
SUPER MICRO… SMCI 27.00 +10.25%
CANADIAN SO… CSIQ 38.34 +8.18%
BANCO DO BR… BDORY 16.78 +8.05%
CENTURY ALU… CENX 26.97 +7.97%
WILLDAN GRO… WLDN 11.38 +5.86%