BUSINESSWEEK ONLINE : JULY 10, 2000 ISSUE
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INTERNATIONAL -- EUROPEAN BUSINESSS

Grupo Prisa Wants to Conquer the New World (int'l edition)
The cash-flush publisher seeks alliances and acquisitions

Move over, Vivendi Universal. Spanish media giant Grupo Prisa has global designs, too. On June 28, Prisa's $867 million initial public offering--Spain's largest ever--valued the Madrid-based company at $5.2 billion and gave it the wherewithal to take a bigger piece of the worldwide market of 400 million Spanish speakers. And it's none too soon for Chief Executive Juan Luis Cebrian. Together with founder, owner, and Chairman Jesus de Polanco, Cebrian is already making acquisitions beyond Spain's borders. ''We want to be the No. 1 media provider in the Spanish language,'' says Cebrian, the former editor of Prisa's flagship newspaper, El Pais.

TRANSATLANTIC ROUTE. There's no question where that kind of vaulting ambition leads: across the Atlantic, where Cebrian is seeking alliances as well as acquisitions. In Latin America, the group paid $60 million last November for a 19% piece of Grupo Caracol, Colombia's leading chain of radio stations. Prisa and Caracol now plan to bid for licenses throughout the region. In the U.S., a deal with Universal Music Group to build a Latin record label is expected to close any day. Prisa is also talking to Telefonica, Spain's telecom king, about a Latin Internet partnership with Telefonica subsidiary Terra Networks. Cebrian wants to boost international sales from 15% to 40% of group total in four years.

Yes, Spanish banks, utilities, and other companies, not least Telefonica, have taken the transatlantic route to turn themselves into multinational powers. And yes, Prisa already has a Latin American foothold: Its Grupo Santillana subsidiary is No. 1 in book publishing. But getting bigger in the New World won't be easy. Mexico's Grupo Televisa, a broadcast and print powerhouse at home and abroad, rules the global Spanish-language market. Brazil's Rede Globo de Televisao and Argentina's Clarin also dominate their markets. All three boast revenues at least twice as large as Prisa's. In the U.S., Prisa will have to face off with Univision, the Los Angeles-based network whose programming is mostly Televisa fare. ''This is not a quick win,'' says James MacAonghus, media analyst in London for Jupiter Communications, a U.S. new-media research company.

Prisa has a strong base, certainly. In Spain it ranks No. 1 in newspapers, book publishing, music, and radio. Prisa and France's Canal+ each own a 21% stake in Sogecable, Spain's leading pay-TV company. Profits have nearly quadrupled in the past five years, to $84 million last year on sales of $905 million. El Pais, a daily with a worldwide reputation for quality, accounted for 30% of those revenues.

But expanding abroad will also mean growing nonprint activities such as radio, TV programming, film, and Internet ventures. Although music accounts for less than 2% of revenues, Cebrian and Polanco want to use their Gran Via Musical subsidiary, which is now talking to Universal Music, to capture 5% of the Latin American music market over the next few years. ''We have the capability to create talent and distribution,'' says Cebrian. ''Music is one of the main drivers of growth.''

Cebrian and Polanco want Internet content to be another. In Spain, El Pais' Web site, www.elpais.es, is No. 2 behind Terra Networks in page views and visits. But Spain's 3 million Internauts don't compare with the 10 million Spanish speakers online in the U.S. or the 13 million in Latin America. And in these markets, Prisa isn't even on the graph. Jupiter's MacAonghus says the Telefonica alliance Cebrian is considering is his last chance to get into the market without spending big. As it is, Prisa will invest $200 million in Internet proj-ects over the next two to three years.

While 54-year-old Cebrian is a cool-headed, skillful CEO, Prisa's future success also depends on Polanco's vision. A self-made man who launched Santillana in Spain under Franco, Polanco set up a Mexican subsidiary in the early 1960s and expanded throughout Latin America, publishing Spanish authors banned by Franco. The generalissimo banned El Pais when Polanco tried to launch it in 1970--making it, after Franco's death six years later, a symbol of democracy and a popular success.

At 70, Polanco remains a tireless, hands-on manager. ''It's a management team with flair,'' says one London media analyst of the Polanco-Cebrian partnership. ''They will be imaginative.'' That will help as they set out to make reality match their ambitions for Prisa.

By Gail Edmondson in Madrid, with Elisabeth Malkin in Mexico City

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