This presentation by António Seabra Ferreira (Legal Adviser, Cabinet of the President, AdC, Portugal) was made during the discussion “Media Mergers” held for competition authorities officials on 27 September 2022. More materials on the topic can be found at https://www.oecd.org/competition/latinamerica. This presentation was uploaded with the author’s consent.

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Altice / Media Capital merger
Latin American and Caribbean Competition Forum
Session III - Media Mergers
António Seabra Ferreira
28 September 2022

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01 Background
Altice / Media Capital: a vertical media merger
Altice (acquirer)
• Telecom services (voice, video, data and internet) via fixed or mobile electronic networks
• Retail distributor of pay-TV channels
• Around 40% market share in most retail telecommunications, pay-TV and multiple play
Media Capital (target)
• Media group providing audiovisual contents and TV channels
• Television studio and content producer (Plural)
• TV channels (TVI brand), including one of Portugal’s three generic channels
• Several radio stations

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01 Background
TVI brand (Media Capital): leading TV channels
25%
Average daily share view
among all TV channels
6/10
Programs in
TOP 10 most-viewed
+40%
Share of
TV advertising revenues

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02 Assessment
Theories of harm & markets
 Total input foreclosure (exclusion)
 Partial input foreclosure (raising costs)
• Customer foreclosure
• Access to sensitive information
 Wholesale distribution of TV channels
• Advertising space (TV, radio)

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02 Assessment
A) Exclusion of rivals: total input foreclosure
• TVI main channel and TVI24 news channel
competitors downstream
• No good substitutes
Ability
• Additional profits would compensate losses
• + New pay-TV subscribers switching from rivals
• - Carriage fees, advertising, customer
Incentives

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02 Assessment
Assessment tools – estimating subscriber switching rates
- How many customers would leave rivals? (departure rate)
• Consumer survey (~1,500 interviews)
• Significant number showing very high willingness to switch (10 on 1-10 scale)
• 10-20% of respondents would switch after withdrawal of TVI main channel
• 5-10% for TVI24 news channel
• 10-20% for both TVI main channel and TVI24 news channel
- How many of those customers would switch to Altice? (diversion ratio)
• Historical number portability data

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02 Assessment
B) Raising rivals’ costs: partial input foreclosure
• Strategy: supplying TVI channels to rivals at significantly higher prices
• Post merger: improved bargaining position vis-à-vis Altice’s rivals
• Increase of carriage fees while holding audience levels constant
• Partial foreclosure = most likely result of transaction

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03 Conclusion
Remedies & termination of proceedings
• Altice submitted purely behavioral remedies
• Must carry obligation
• Must deliver obligation
• Risks of specification, circumvention and monitoring
• Market test: remedies did not address competition concerns
• Notification withdrawn

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Thank
you!

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