The football war between Spanish pay TV rivals Mediapro and Sogecable has flared up again after Mediapro's rights division this week filed for bankruptcy protection after a new spat over rights payments.
Mediapro said the dispute could mean that Sogecable is unable to broadcast matches from the first and second divisions of La Liga next season - a suggestion flatly contradicted by the Prisa-owned Sogecable.
The new outbreak stems from a ruling by the Madrid court of first instance in March this year. The court found in favour of a suit by AVS, the rights company 80 per cent owned by Sogecable and 20 per cent owned by TV Catalunya (TVC) against Mediapro. At issue was the contract signed by Mediapro, Sogecable, AVS and TVC in July 2006, through which all parties agreed to pool TV rights. The ruling declared the contract was valid and ordered Mediapro to pay Sogecable €105m in damages and interest.
Mediapro has still not made the payment and said this week that Sogecable had delayed a payment of €90m due this month for the pay TV rights to La Liga for the 2010/11 season. Mediapro said it was therefore forced to apply for protection from its creditors because of the consequent 'imbalance in cash flow'.
Mediapro said its rights division remains both viable and profitable despite its cash flow difficulties and that its holding company Imagina and other companies in the group are unaffected.
The new football season starts in August, which would appear to leave enough time for the two groups to come to terms over a new deal, since it effectively boils down to a €15m payment from Mediapro to Sogecable. Neither group would have anything to gain from provoking continued uncertainty on the part of consumers subscribing to Sogecable's Canal Plus La Liga or Mediapro's Gol TV.
Screen Digest believes that with Sogecable focusing on DTH satellite for its premium pay channel while Mediapro has opted for DTT, cable and IPTV, there is room for both services to survive in a market where pay TV penetration is relatively low and there is room for growth. Sogecable has the advantage of long experience in the pay market and the advantage of being HD, and is currently showing all 64 matches of the World Cup finals - with Spain among the favourites.
However, that assumes that both companies have what it takes to finance their channels to the break-even point. The privately-held Mediapro has signed long term deals to represent TV rights for all but two of Spain?s senior clubs. As well as domestic TV rights it sells international rights to La Liga, which rivals the English Premier League and Italy's Serie A as the most popular in the world. Agreements with FC Barcelona and Real Madrid run until 2013 and are worth an annual €143m and €220m respectively.
Cashflow problems on the part of Mediapro would have worrying implications for these clubs.