INTERNATIONAL: Spanish government’s row over digital TV takes a nasty turn - Launching digital satellite TV has caused a furore in Spain. John Perry reports

Spain’s biggest publishing and media group, Prisa, is fighting for its commercial life in a bizarre struggle with the government that has all the ingredients for a rip-roaring tale: politics, jail threats and, of course, football.

Spain’s biggest publishing and media group, Prisa, is fighting for

its commercial life in a bizarre struggle with the government that has

all the ingredients for a rip-roaring tale: politics, jail threats and,

of course, football.



A country with low readership levels but very high television

consumption, Spain is fertile soil for the development of digital

television. In January of this year, Prisa, in partnership with the

French pay-television giant, Canal Plus, and Spain’s biggest private

television network, Antena 3, launched the country’s first digital

satellite television service, Canal Satelite.



But Prisa had not taken into account old animosities. Spain’s

one-year-old centre-right Partido Popular (PP) government is not fond of

Prisa.



This is because it is the publisher of the daily newspaper, El Pais - a

thorn in the PP’s side during its 13-year spell in opposition. Since

Canal Satelite’s inception, the PP has tried to cast obstacles in its

path. These have so far included attempting to ban its technology,

backing a rival digital consortium and seeking to drastically cut Canal

Satelite’s coverage of football, one of the television mainstays of

screen-hungry Spain.



One of the main methods has been to argue that Canal Satelite’s decoders

fail to meet European Union technical requirements. However, the

European commissioner for industry and telecoms, Martin Bangemann, is

investigating this issue to decide whether the Spanish government’s

objections are breaking EU rules governing free competition.



A second has been the favouring of a rival consortium, Via Digital. Via

Digital is led by Spain’s dominant phone utility, Telefonica, (chaired

by a friend of the Prime Minister, Jose Maria Aznar) and the state

broadcaster, Radio Television Espanola (RTVE) and it hopes to get its

service off the ground this autumn.



However, the controversy took on an even more menacing undertone in May

when Antonio Asensio, one of the partners in Canal Satelite, alleged the

government had issued him with jail threats back in December. The

intimidation, he alleged, was intended to stop him joining forces with

the chairman of Prisa, Jesus de Polanco, to form the digital television

grouping.



The government was, allegedly, attempting to stop Asensio and Polanco

combining their rights to screen live football matches - crucial to the

viability of digital TV in Spain - in a deal that enables Canal Satelite

to offer Spain’s football-mad viewers comprehensive coverage of the

Spanish League for the first time.



It is a messy battle that has scandalised the media and business

community alike, and has set alarm bells ringing that other parts of the

telecoms and media sector could be affected by close government

intervention.



Lawrence Sudlow, the managing director of the Madrid advertising agency,

Sudlow Media, believes the alleged jail threats are a matter for

concern.



’The government should set the guidelines under which business can

operate, but then allow a free market within those guidelines. This

affair shows it is failing to do that,’ he argues. Nevertheless, he

adds: ’In the communications sector, any government would be heavily

involved because it is the key issue for the development of any

society.’



Arturo Rojas, an analyst at the Madrid-based independent thinktank,

Analistas Financieros Internacionales, says: ’We could see the

government becoming even more interventionist once the development of

cable television really gets under way in Spain, because that business

will have even bigger expansion prospects than digital television.’



Huge amounts of money are at stake. Between them Canal Satelite and Via

Digital plan to invest a combined total of more than Pts150 billion

(dollars 1 billion) in digital television over the next three years.



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