Viacom said to buy Telefonica's Telefe in US$400m deal

[WASHINGTON] Viacom Inc, owner of cable networks including MTV and Comedy Central, won a bidding process to acquire Argentine broadcaster Television Federal SA from phone carrier Telefonica SA, according to people familiar with the matter.

The media giant outbid Time Warner Inc and the Cisneros Group, which controls Venezuelan network Venevision, the people said. The deal, valued at about US$400 million, could be announced as soon as this week, said one of the people, who asked not to be identified discussing private information. The transaction will still require regulatory approval, the person said.

The deal would bolster Viacom's international business, a source of growth amid declining subscriptions and ratings in the US Telefe, as the network it's acquiring is known, is Argentina's most-watched broadcaster and is a producer of the melodramatic serials known as telenovelas that are popular throughout Latin America.

Viacom's international business is rising to prominence with the promotion of the division's chief, Bob Bakish, to acting chief executive officer on Nov 15, and the Telefe deal would be an early win in his tenure. But the agreement comes at a delicate time for Viacom, whose board is busy contemplating a merger with CBS Corp. The controlling shareholders of Viacom and CBS, Sumner and Shari Redstone, have directed the companies to consider a combination to assemble a stronger collection of media assets.

Telefonica, Europe's most indebted phone company, has sought to sell assets to raise funds and reduce borrowings. The carrier canceled the initial public offering of its tower and undersea unit and failed to sell 02 in the UK after the European Union blocked a deal on competition concerns. The company said last month it will cut its dividend and has also put off a potential stock offering for 02 until next year.

Telefe is the only free-to-air broadcaster owned by Telefonica, a leftover from its push into media in the late 1990s.

The deal, if it's successfully completed, would be a win for Argentine President Mauricio Macri, who has been working to encourage foreign investment in the country and has pledged to open up competition in telecommunications and media.

BLOOMBERG