Spain War Over; CNN Launches Network


Madrid, Spain -- The Spanish pay television business took
two turns last week, on both the direct-to-home and network fronts.

Two rival DTH platforms decided to get hitched, and Cable
News Network announced a joint-venture news channel in the market that will represent its
first service produced and headquartered outside of Atlanta.

Telefónica S.A., the majority shareholder of the Via
Digital DTH platform, and Sogecable, owner of the Canal Satelite Digital platform, agreed
last week to merge their systems.

Both are eager to complete the platform merger as soon as
possible. Jointly, they have 810,000 subscribers -- 510,000 at CSD and 300,000 at Via

A source close to the negotiations said Sogecable will own
50 percent of the merged platform, and it will manage its programming. Telefónica will
own 30 percent of the platform, and it will act mainly as a technology partner to develop
value-added services, the source said.

The remaining 20 percent could go to Time Warner Inc. and
The Walt Disney Co., which both hold options to buy into Sogecable through prior
programming agreements.

"Telefónica will have to decide whether to divide --
and how -- its 30 percent among other Via Digital shareholders," the source said.

DTH Europa (a unit of Mexico's Grupo Televisa),
Japan's Itochu Corp. and public broadcaster TVE Tematica are Telefónica's
partners in Via Digital.

The merger agreement is expected to be finalized by Sept.
30, after legal, financial and marketing elements are hashed out.

The value of the two platforms will also be calculated. So
far, CSD looks to be worth much more than Via Digital. CSD has programming contracts with
six Hollywood studios, while Via Digital has only one. What's more, CSD has exclusive
rights to the country's top soccer matches.

Transmission issues must also be addressed. CSD currently
uses an Astra satellite, and Via Digital uses Hispasat.

While the two platforms consummate the marriage, CNN is
getting ready for its newest baby. It agreed with Sogecable to produce a 24-hour
Spanish-language news service to be known as CNN+. The channel, to be produced here, is
expected to bow in December, and it will be available on the Sogecable platform and on
cable systems.

Compañía Independiente de Noticias de Television -- a
joint venture between Sogecable and Turner Broadcasting International -- will produce the
national and international newscasts, which will air every half-hour.