Rupert Murdoch has pulled out of Italy by closing a deal with Vivendi Universal that sees News Corp selling its ailing pay-TV arm, Stream to the rival media giant. The deal, which must now be approved by Italy's Antitrust Authority, paves the way for Vivendi's Telepiu' to become the only pay-TV outfit operating in Italy.
The two media giants reached an agreement after News Corp bought Telecom Italia's 50% share of Stream for Euros 48m, just over half the value of Telecom's initial investment in the loss-making operation. The move enabled News Corp, which already owned the other 50%, to sell Stream to Vivendi.
Vivendi's acquisition of Stream, reportedly for Euros 545m, will now need to obtain the final seal of approval from Italy's Antitrust Authority.
Last year, the two outfits attempted to push through a deal which would have seen Telepiu acquire 75% rather than 100% of Stream, with News Corp retaining 25%. However, they pulled out of the deal when it became clear that the watchdog would rule against the operation amid concerns that it would allow Canal Plus to "gain a position of monopoly" in Italy and consequently impose higher prices on customers.
While the new deal is expected to get regulatory approval, Telepiu president Emmanuel Gout moved quickly to address antitrust concerns. "We will follow the market's rules, and the market is inviting us not to raise prices," he was reported in the Italian press as saying. " We aim to increase revenue by raising the number of clients, rather than prices."
Both pay-TV platforms are currently suffering massive losses, largely due to the rocketing prices of soccer rights, and combining forces is seen as a means of moving the fragile Italian pay-TV market back into the black.
Telepiu's losses amounted to some Euros 220m in 2001, while Stream lost Euros 400m. Telepiu has around 1.8 million subscribers while Stream has some 800,000 customers.