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CNMC takes action over Telefónica breach of commitments in DTS acquisition

Spanish markets regulator the CNMC has initiated proceedings against Telefónica for a possible breach of commitments made when it acquired pay TV operator DTS.

According to the watchdog, Telefónica made errors in calculating the fixed costs of its Movistar Partizado football channel in making an offer of its pay TV channels to rival providers.

The CNMC has the task of monitoring whether Telefónica has met its obligations in relation to the acquisition of DTS, formerly known as Sogecable, which provided the Canal+ España service, from publishing group Prisa.

Under the terms by which the regulator authorised the 2015 acquisition of Prisa’s 56% stake in DTS, Telefónica was obliged to commercialise its premium channels offering rivals and to make the services of OTT TV providers available to its own internet subscribers under non-discriminatory terms.

Telefónica was obliged to make its pay TV offering available to competitors, including providing its football and motorsports channels for a guaranteed minimum cost. Fixed costs were allocated on a proportional basis, with the distribution to be based on criteria that included the fees paid by subscribers as well as the potential subscriber base of different operators.

The CNMC says that Telefónica wrongly calclulated the fixed costs of the Movistar Partizado channel for the 2016-17 season, understating the number of subscribers on its own network that took the channel, which led to higher costs being allocated to other operators.