Digimed considers a 25% stake in LTV
CyTA subsidiary Digimed Communications Ltd. and Lumiere TV Public Co. have signed a letter of intent according to which the programmes of subscriber channels LTV and Alfa will also be transmitted through miVision, CyTA’s digital platform.
This is in addition to LTV and Alfa’s present mode of reception by subscribers via satellite receivers and top-box decoders which will continue until 2010.
The new deal, which appears to enjoy the parliamentary backing of the ruling coalition parties, was approved by the CyTA board of directors and is expected to be ratified by the end of the month.
CyTA will pay an annual fee of CYP 2.5 mln for LTV to manage its programme content and and a monthly bonus of CYP 15 for every new subscriber that LTV brings in.
The preliminary deal also envisages CyTA taking a 25% stake in the share capital of LTV, with the latter having recently received the preliminary approval of the Securities and Exchange Commission to proceed with a dual listing on the Cyprus Stock Exchange (CSE) and the Athens stock exchange (ASE) as reported by the Financial Mirror (Feb. 1-7, 2006).
According to Financial Mirror estimates, the participation of Digimed in the share capital of LTV could cost the telecom giant at least CYP 1.75 mln in cash to secure the 25% stake.
The LTV listing, which was initially planned for end-March or early April, may be delayed if the contents of the deal are seen as having a significant impact, changing the business plan, future prospects and other crucial data contained in the current prospectus.
SEC Chairman Marios Clerides told the Financial Mirror that if the changes are significant, then LTV may have to submit a new prospectus, otherwise, it will simply add the extra information and proceed with its listing plans.
“It depends on what they submit to us,” said Clerides.
MULTICHOICE SUSPENDED
Concerns that the deal may be delayed or blocked by parliament, which needs to ratify every major deal of the government-owned telecom operator, were brushed aside by CyTA officials who said the deal was concluded by its subsidiary Digimed that enjoys its own capital and is semi-autonomous and also from the way LTV’s major shareholders orushed to abandon the Multichoice board.
The resignations by three LTV executives from the Multichoice board and the notification that LTV intends to sell its 7,466,390 shares which represent a 27% stake in the capital of the CSE listed Multichoice, forced the CSE to suspend trading in the stock.
The fact that LTV has notified MCC that it will suspend the transmission of its content – including films and sports events like Cyprus, UK and UEFA football from 2010 through MCC – is seen as putting an expiry data on the future of MCC, which based on its 68 mln outstanding shares had a market capitalisation of CYP 12.8 mln on the CSE before the developments.
OUTCRY
Major TV stations like ANT1 and Sigma as well as the owners of PrimeTel, the telecommunications partner of EAC, which plans to offer its own Triple Play services from April, are expected to rush their own objections to the Competition Commission and may try to block the deal through Brussels, citing the fact that the two dominant players in the pay-TV market are joining forces with a near 99% control of the market.
“We are waiting to see the contents of the agreement, but for sure we shall challenge the deal,” is how one senior manager of a private firm eyeing an entry into the pay-TV market told the Financial Mirror.
This is in addition to the public outcry staged by ANT1 and Sigma TV stations against the deal.
DIGITAL
The reason why private stations are reacting to the deal is because that it’s a marriage between two powerful institutions, the respective leaders in the markets they operate.
CyTA is the most respected name in the telecom market with vast reserves and expertise, while LTV is the best managed firm holding the broadcast rights of popular films because of its association with the major studios and the rights to transmit Cyprus football, UK Premier League, UEFA, major European and Greek matches as well as many other sports features.
In an effort to calm jittery nerves, senior CyTA officials told the Financial Mirror that the agreement reserves the right for other privately owned TV stations also to transmit their programmes through the miVision digital platform.
But no mention was made of the fact that LTV has already renewed its exclusive rights to transmit the Cyprus football games beyond 2007, while details are also sketchy regarding the price at which the content will be broadcast.
