The merger between Spain’s two biggest pay-TV companies has been given the green light by the country’s government.

Unveiled in May [WAMN: 10-May-02], the complex deal unites dTV broadcasters Via Digital (owned by telecoms giant Telefónica) and Canal Satelite Digital (owned by Sogecable, a joint venture between Vivendi Universal and Spanish media firm Prisa). It creates a pay-TV giant boasting annual sales of €1.3 billion ($1.3bn; £0.8m) and 2.8 million subscribers (an 80% market share).

Spanish regulators imposed a number of conditions on the combination. For example, subscription fees must be held at current rates for four years, and Telefónica may not promote movies and soccer matches shown on the merged service via its other platforms (such as mobile phones and online networks).

The two companies claim the concessions are harsher than they anticipated, but for Spain’s infant cable industry – now dwarfed by its merged pay-TV rivals – they do not go far enough.

The government justified its decision by pointing to the recent sufferings of European pay-TV operators – not least in Spain, where digital terrestrial platform Quiero TV went bust earlier this year.

However, there may also be a political aspect to the approval of the deal. Some observers suggest that acquiescing to the desires of the nation’s two largest media groups is not a bad idea for a government facing municipal and general elections in the next two years.

Data sourced from: Financial Times; additional content by WARC staff