Italian DTH Stallions Gain Equity Muscle

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Milan, Italy -- Two of Europe's most powerful mediacompanies signed deals for competing direct-to-home platforms in Italy.

Together, the agreements solidified the rival DTH powerbases in one of the last European markets of significant size that remained largelyuntapped by pay television.

News Corp.'s recently formed News Corp. Europe unitinked a preliminary agreement Dec. 24 to acquire 80 percent of Stream for roughly $120.6million. Stream, a digital-cable and satellite platform, is run by telco Telecom Italia.

NCE is expected to eventually reduce its stake to less than50 percent in order to let in more partners, including French broadcast network TF1.However, NCE is expected to remain the largest shareholder.

Separately, Italy's heavyweight public broadcaster,RAI, has officially joined Canal Plus S.A. as a partner in Stream's two nemeses --Telepiú and its digital-satellite-service offspring, D+.

Shortly before the NCE announcement, RAI signed a complexagreement with Canal Plus, under which it will acquire a 5 percent stake in Telepiú/D+ by2002, with options to acquire a further 5 percent. If RAI doesn't add to its stake,Canal Plus can buy back RAI's interest at that point.

In a dream deal for RAI, estimated to be worth 90 billionlire ($US55 million), RAI will part with little cash, but it will supply six new thematicpay channels by 2000, in addition to its existing three free-to-air digital channels.

RAI will get a voice in selecting new partners to take afurther 35 percent stake in Telepiú/D+ so that Canal Plus winds up with a 45 percentstake and Silvio Berlusconi's Fininvest group retains its 10 percent stake.

The agreement between Telecom Italia and NCE for Stream wasconsummated right on deadline; the two parties had hoped to finalize their pact byChristmas. It was widely believed that the deal hinged on Murdoch's ability to secureglobal rights to Italian soccer -- and, in fact, press reports indicated that if hecan't do so, he can back out of the Stream deal.

The Italian government and Lega Calcio, Italy's soccerleague, are expected shortly to confirm an antitrust arrangement ensuring that bothplatforms get a fair share of league matches.

Telepiú/D+ has already signed a string of separateagreements directly with seven major soccer teams.

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