Reports are that News Corp., Murdoch's media company that owns 50% of Italian pay-TV network Stream, is in talks to merge the unit with Telepiu, owned by France's Canalplus, a subsidiary of media giant Universal Vivendi. Such a deal would create an Italian pay-TV monopoly.
Meanwhile, speculation has intensified that Murdoch may buy a big stake in Mediaset, the TV holding company owned by Silvio Burlusoni, Italy's own media mogul who is expected to become the country's prime minister after elections in May. Conflict-of-interest rules limit the business activities of Berlusconi while he occupies that nation's highest office.
"If the reports are all true and they are carried out, then Italy may soon be a much larger part of Murdoch's plans than it had been," said Italo Bompieri, a Rome-based commentator on media issues.
Because of Italian law that regulates foreign ownership of communications ventures, the rules would have to be changed before Murdoch can accumulate control of any media company. But Bompieri and others say that doesn't mean the 70-year-old tycoon won't have a huge influence in Italy.
In the pay TV field, Murdoch's News Corp. would ostensibly own around a quarter of the combined Stream-Telepiu venture, since the company's current stake in Stream is balanced by the 50% share owned by former state telephone monopoly Telecom Italia.
Such a merger would leave Italy with just one pay-TV network, but experts say that may be the only way the sector can survive. The two companies fought a bitter antitrust battle that gave both the lucrative soccer broadcast rights starting last year, and soon after unveiled a common decoder, something expected to make pay television more attractive to customers.
Both companies, however, continue to hemorrhage money in a market that appears too fragmented to support two rivals. The companies involved have so far been mum about the prospects for a deal, but newspapers report that talks could be concluded around mid-year.
Concerning Mediaset, the timetable could be much more advanced. Reports are that Berlusconi will have to reduce his controlling stake before the May 13 elections, possibly by as much as a third. Newspapers reported that the 64-year-old Berlusconi would gain a stake in News Corp. that could make him the company's second leading shareholder after Murdoch. -- Eric J. Lyman
Copyright April 2001, Crain Communications Inc.