Italy's antitrust authority has announced that Vivendi Universal and News Corp have withdrawn their plan to merge their Italian pay-TV arms, pre-empting the watchdog's widely expected ruling against the operation.

Despite initial industry confidence that the merger would receive swift regulatory approval, last September the antitrust authority opened an investigation into the deal, stating that a single pay-TV operation could lead Canal Plus to "gain a position of monopoly" in Italy and consequently impose higher prices on customers without having to improve services.

In a move to resolve regulators' concerns, Vivendi Universal has already announced that it is in advanced talks with News Corp over the "acquisition of Stream by Telepiu." (Screendaily, December 9).

The original deal would have seen Telepiu acquire 75% rather than 100% of Stream, with News Corp retaining 25%. Telecom Italia Chairman Marco Tronchetti Provera was quoted in the Italian press as saying he was confident both sides would reach a new deal.

Telepiu's losses amounted to some Euros 220m last year, while Stream lost Euros 400m. Telepiu has around 1.8 million subscribers while Stream has some 800,000 customers.