(Bloomberg) -- 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 $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 U.S. 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.
Viacom climbed 2 percent to $36.60 at 11:04 a.m. in New York.
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 its 02 unit in the U.K. 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.
For Telefonica, “this would be a possibility to unlock some value of its operation in Argentina and at the same time reduce further its leverage,” Pedro Oliveira, a Banco BPI analyst, said in a note to clients. BPI has a “reduce” rating and price target of 7.90 euros for Telefonica. The Madrid-based phone company gained less than 1 percent to 9.03 euros in Madrid.
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.
--With assistance from Lucas Shaw To contact the reporters on this story: Patricia Laya in Washington at playa2@bloomberg.net, Pablo Gonzalez in Buenos Aires at pgonzalez49@bloomberg.net. To contact the editors responsible for this story: Crayton Harrison at tharrison5@bloomberg.net, Andres R. Martinez at amartinez28@bloomberg.net, Ville Heiskanen, Phil Serafino
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