MADRID -- Cable TV, plus the lure of triple-play services covering TV, telephony and Internet access, are eroding Sogecable's once formidable pay TV leadership in Spain.
That's not all bad for Sogecable: budding pay TV players, led by Telefonica's ADSL Imagenio and telco ONO, often buy Sogecable programming.
But these triple players are forcing Sogecable's hand.
Soft-launched in 2004, Imagenio has just north of 200,000 subscribers. ONO has 850,000 cable customers. Both offer video-on-demand, unlike Sogecable, which owns Spain's sole satcaster Digital Plus.
Both are way behind Digital Plus in subscribers, which had 1.96 million subs at the end of 2005. However, that's 133,789 less than Sogecable notched up the previous year, before it shuttered analog paybox Canal Plus.
All Spain's major Internet providers, including Deutsche Telecom's Ya.com and France Telecom's Wanadoo, are readying triple play.
Local Internet provider Jazztel has test-launched Jazztelia TV offering 30 channels including AXN, Fox, Calle 13, TCM and Jetix.
If Sogecable is hurting, it's a similar story across Europe. Opportunities afforded by digital terrestrial television have slowed subscriber takeup at Italy's Sky Italia; cable rivals are impacting Germany's Premiere; and DTT and cable have hit U.K.'s BSkyB.
BSkyB is fighting back by launching its own triple-play bid with broadband and mobile TV services. But its rival, cabler NTL, hopes for a quadruple play covering TV, Internet, fixed line phones and mobile phones if a proposed merger with Richard Branson's Virgin Mobile goes ahead.
The Digital Plus subs base pales before BSkyB's 8.1 million subs, Sky Italia's 3.5 million, Premiere's 3.4 million and the 8 million of France's Canal Plus.
In a less mature TV market, Sogecable is using more traditional tactics to push pay TV -- already a hard sell in Spain.
"Spanish pay TV has one of Europe's lowest penetration rates due to high pricing," says Jazztelia TV contents head Concepcion Ferreras.
ONO's triple play costs $69 a month, Imagenio's $72. Digital Plus now offers a 16-channel basic package including Canal Plus and decoder rental for a cut rate $29, well below the $44 it charged for a multiplexed Canal Plus alone in 2004.
Sogecable has also diversified, launching promising analog terrestrial broadcaster Cuatro in November.
It also has locked down the No. 1 pay TV driver -- soccer. It has rights to Spanish league soccer matches, including Real Madrid and Barcelona, until 2008-09 via Audiovisual Sport, its 80% owned subsid.
Still, Sogecable remains a near pure-play TV operator in an increasingly triple-play environment. That could change.
Juan Luis Cebrian, CEO of Prisa, Sogecable's 24% controlling shareholder, wants to team with a triple-play operator, such as France Telecom or Spain's Telefonica, which, incidentally, already owns 24% of Sogecable.
"Sogecable's most obvious option is to enter the telco business. The logical ally is Telefonica," says Eduardo Garcia Matilla, prexy of audience researcher Corporacion Multimedia.
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