Telefónica-Antena 3 Alliance Halted

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Madrid, Spain -- The proposed Spanish TV alliance between
telco Telefónica de España and commercial channel Antena 3 TV has been halted by the
Spanish high court.

Last year, Telefónica agreed to acquire a 25 percent stake
in Antena 3. Telefónica president Juan Villalonga said part of the motivation was to
guarantee Telefónica access to programming for Via Digital, its digital, direct-to-home
platform.

However, the government ruled last month that the deal may
not close, and that Telefónica can't act as shareholder of Antena 3, nor use its
political and economic rights as such, until the high court makes a final ruling.

After Telefónica bought the Antena 3 stake in July, its
competitor in the DTH arena, Prisa Group (a 25 percent shareholder in Spanish TV group
Sogecable), denounced the deal. Prisa argued that the Ministry of Fomento (Spain's
regulatory body) didn't verify if Telefónica was acting according to the
private-television law, which forbids parties from holding shares in more than one
commercial TV operation. There are two Spanish banks holding shares in both Telefónica
and Sogecable.

Telefónica has asked the government to withdraw its order
halting the deal.

"It was just a business project, and it was done
according to the law," said José Más, president of Antena 3. "We are not
worried about the resolution when we take it to the high court."

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