Telecom Italia, News Corp. Near TV Deal

Telecom Italia, the world’s eighth-largest telecommunications company, said Sunday that it is close to selling as much as 80% of its Stream pay-TV unit to News Corp. for as much as $118.8 million. This would give News Corp. Chairman Rupert Murdoch his long-sought entry into the Italian television market.

The Italian company also said that it and News Corp. Europe, a News Corp. subsidiary, will bid for the rights to broadcast the Italian soccer championship as Stream attempts to establish itself in the pay-TV market in Italy. News Corp. recently set up its Europe unit as a vehicle for its expansion on the continent.

“The two sides confirm their interest in developing a pay-TV offering of considerable interest to the market, including the transmission of the Italian soccer championship,” Telecom Italia said. Murdoch has said he would be willing to put as much as $2.5 billion on the table to buy television rights to Italian soccer.

Telecom Italia said Stream was valued on the basis of $1,350 per subscriber. Stream claims 110,000 subscribers, giving the company a total value of $148.5 million. That values the 80% stake at $118.8 million.

Murdoch has tried on at least two occasions to enter the Italian television market, opening talks with Silvio Berlusconi, who is the owner of Fininvest, the parent company of Mediaset, Italy’s largest commercial TV broadcaster. On both occasions, talks broke down because Berlusconi refused to cede control.

Telecom Italia said that nothing so far had been signed, adding that “dialogue is continuing with other Italian and European partners,” a reference to France’s TF1, which Italian news wire Ansa has reported is taking part in the talks.

News Corp. officials were not available for comment.

The accord would set the scene for a standoff in the pay-TV market between Stream and Telepiu, a unit of France’s Canal Plus. Earlier this month, Italian state broadcaster Rai agreed to gradually buy as much as 10% of Telepiu.

Separately on Sunday, German media giant Kirch Gruppe refused to comment on a report that Murdoch hopes to take a $1-billion stake in the new holding company being formed through its restructuring.

It was reported in Germany this week that along with News Corp., two international investors would be Saudi Arabian Prince Alwaleed bin Talal and Italian media tycoon Berlusconi.