The World: Insider's View - Spain

Sogecable is set to shake up the Spanish TV market by transforming Canal+ into a free-to-air digital channel, Jesus Olivar writes.

The Spanish television market is bracing itself for a series of changes this autumn that will introduce a new analogue channel, a number of digital terrestrial stations and, most importantly, launch Cuatro TV, a 24-hour, open-access channel from the pay-TV group Sogecable.

Sogecable is no stranger to Spanish television. However, its Canal+ channel, which it is rebranding Cuatro, has never been available free to air. It was only able to broadcast for six hours a day, the remainder of the signal being encrypted and only available to subscribers.

Sogecable applied to the government in February to change its Canal+ licence. Canal+ will be moved to Socecable's digital platform, Digital+, as a premium channel broadcasting sport and films.

The application was not made without prompting objections, mainly from the national commercial broadcasters, Antena 3 and Tele 5. For them,Cuatro is a threat. They fear it will fragment audiences and eat into their advertising revenue.

Sogecable is investing heavily to ensure Cuatro's success, pulling in a number of professionals from other companies in the group to run the project. One of the biggest gambles has been to hire Inaki Gabilondo as the anchorman for Cuatro's primetime news programme. Gabilondo is the presenter of the leading Spanish radio show, Hoy por Hoy (At the Present Time). His move to TV shows that Sogecable wants Cuatro to stand out and challenge Antena 3's lead in the news stakes.

Although its investment in programming has been large, Cuatro will need time to establish itself and win a competitive share of viewers. Increasing the current 2 per cent share of Canal+ will be relatively easy. However, Cuatro is not expected to attract more than an 8 per cent share by the end of 2006, and will not move into double figures until the year after, when it will start to be a serious competitor to the two other channels.

Given the large amount of clutter on the other national stations, and the innovative advertising breaks that Cuatro is promising, it will immediately receive a share of Spanish advertising budgets. Cuatro needs to be competitive in its pricing - although it is unlikely that this will stop the enormous increase in prices that Spanish TV has suffered over the past few years.

That said, Sogecable is in an enviable position. With Cuatro, the company is entering the commercial TV and DTT markets, reinforcing Sogecable's current position as the leading pay-TV group in Spain. And in moving Canal+ to DTT, it is increasing the number of subscribers to Digital+ at a key time for the Spanish pay-TV market, given that the two main cable operators, Ono and Auna, have merged and Telefonica has launched its ADSL TV Imagenio service.

- Jesus Olivar is the director of MediaLab, Mediaedge:cia, Spain.