Rupert Murdoch's News Corp has agreed to buy the financially crippled Italian pay-TV operation Telepiu from Vivendi Universal through a cash-and-debt agreement worth Euros893 million.
News Corp said it would pay Euros470 million in cash for Telepiu and will assume Euros423 million worth of the outfit's debt.
The deal, which is expected to be sealed in December, would put an end to an arduous two-year battle by both News Corp's own Italian pay-TV operation Stream and Telepiu to cut short their spiraling financial losses. Nevertheless, News Corp warned that the final terms of the agreement could still change, while the deal must now also be approved by Italian antitrust authorities.
At an investor conference in New York, Murdoch described his plans to merge Telepiu with Stream to create a new single pay-platform for Italy that will be named Sky Italia. Murdoch said his company would invest around Euros550 million on the new outfit, which is expected to launch in 2003.
"We are pleased to announce one of the most exciting and promising acquisitions," Murdoch said.
Vivendi's former chief executive, Jean-Marie Messier had initially planned to buy Stream from News Corp but scrapped those plans earlier this year to focus on reducing Vivendi's huge debt - which analysts have partly blamed on the poor performance of Telepiu.
Murdoch continues to hope that Italian banks will invest in the new venture. But this now appears more likely since the overall price for Telepiu has dropped by roughly one third from its Euros1.5 billion price tag at the beginning of the summer.