Rios: EI Conquistador for Telefonica Media.

With the announcement last month that Telefonica of Spain had delayed plans to sell shares in its media unit, one could pinpoint when the technology stocks of most markets began to free fall.

That Telefonica has intuition one could have surmised; that it can predict the future is something its competitors should look into.

To some analysts, however, Telefonica Media required more critical mass before it could be floated. Indeed, according to Telefonica Media's president, Jose Antonio Rios, the group will go public when it becomes one of the top 10 players of its kind and much larger than its current estimated value of $8 billion.

Telefonica, Spain's largest telephone company, had originally planned for a June sale of $1.15 billion in shares of Telefonica Media, and has since rescheduled for the fall on the Madrid stock exchange, the NASDAQ in the U.S. and possibly the MerVal stock market in Argentina (for 25 percent of its shares).

Telefonica is a $13.5 billion conglomerate, with 1999 earnings of $1.8 billion and a market capitalization of $84.7 billion. It is also the largest telephone operator in Latin America, cash-rich and with an overflowing treasure chest for acquisitions.

Last March, Telefonica shelled our $5.4 billion in stock for Endemol Entertainment which, for now, remains a stand-alone production and distribution company. According to Miami-based Rios, Telefonica Media is now on the hunt for additional property in Northern Europe, and will not divest its 5 percent in Pearson in the wake of Pearson TV's merger with CLT-UFA. However, Telefonica Media's main focus is on the Spanish and Portuguese-speaking Latin American markets. Even though the bulk of its operations are in, Argentina, Telefonica Media is also looking to Brazil (with a possible deal with SBT) and Mexico (with a reported agreement with TV Azteca's Comarex). Per other reports, Telefonica Media is also looking to acquire a stake in Multicanal, Argentina's cable MSO; in Media Park, a Spanish-channel packager; CCRTV, a Catalan TV station; and Telemundo, the Sony-owned Spanish-language TV network in the U.S.

According to an official statement, Telefonica Media is "aiming to become the most important Spanish and Portuguese-speaking company of open TV in addition to participating as co-management of [several] cable companies in Latin America, In the area of DTH, Telefonica Media will participate as a global leader in the launching of digital communications in Latin America and the Spanish-speaking markers of the U.S." Through a spokesman, Rios stated that "in the next three years, Telefonica Media will be present in 10 Latin American countries."

But Telefonica's strategy is not just to become a very large conglomerate. Juan Villalonga, chairman of Telefonica, is quoted, as saying, "The key to Telefonica's scheme is content. Without it, phone companies risk becoming simple commodity pipelines."

Acquisitions for Telefonica Media also include a major drive to hire "the best talent available" and, as soon the Telefe deal is completed, to create a division to better develop synergies among the various companies in the group. Currently, some internal cooperation deals on an experimental basis are taking place between Spain's Antena 3 and Argentina's Telefe. Reportedly, the merits of merging Endemol and Terra Networks (the Internet unit of Telefonica) with Rios' Media division will be analyzed in the future.

Its recently-aborted merger with Holland's KPN (which was to become a conglomerate with a marker value of $138 billion) also provides a key to understanding Telefonica's business philosophy. Even though the Telefonica-KPN group would have been under the control of Telefonica's shareholders (with a 62 percent ownership), the largest, single shareholder of the combined units would have been the Ditch government with a 16 percent stake, clearly indicating an iron will to keep control of any venture.

If Telefonica and its subsidiary Telefonica Media now have separate souls, it is due to Jose Antonio Rios, who was appointed president of Telefonica Media International y de Contenidos in August 1999. The former, based in Madrid, is said to be as bureaucratic as any telephone company can be; the latter, based in Miami, is run as an American entertainment company.

Before joining Telefonica Media, Rios was the president of Galaxy Latin America and responsible for the planning, development and launch of DirecTV in Latin America. Galaxy is the multinational company formed by Hughes Electronics, Venezuela's Cisneros Group of Companies, Brazil's Televisao Abril and Mexico's MVS Multivision. Rios was also vp of Hughes Electronics. Before joining Galaxy, in 1995, Rios worked 13 years as third-in-command (with the title of corporate vp) at the Cisneros Group of Companies in Caracas, Venezuela, and was responsible for their six operating divisions.

Rios, a native of Caracas, starred as an engineer. Besides his native Spanish, he's fluent in English and Italian (as his wife is Italian). The 55-year-old Rios has been described as "an easy-going, practical person with a positive attitude and very fast with numbers."

Rios' first international marker appearance was at last year's MIPCOM and he returned to Cannes in April for MIP-TV, Currently, Rios jets between Miami and Madrid with, frequent stop overs in various, parts of Latin America, especially Argentina, where the bulk of Telefonica Media properties are located. "