Italy Considers Pay TV Ownership Limits

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Milan, Italy -- Salvatore Cardinale, Italy's minister
of communications, confirmed last week that the government will publish proposals for new
antitrust ownership limits on pay TV, following an agreement signed in late December for
News Corp. to acquire up to 80 percent of Telecom Italia's pay TV platform, Stream.

Cardinale did not comment on speculation that ownership
levels will be restricted to a maximum of 50 percent for one partner, but he confirmed
that limits on ownership of soccer pay TV rights would likely be limited to 50 percent.

"These limits are in the interests of guaranteeing an
open and pluralistic market in Italy's pay TV sector," Cardinale said.

He added that the government would push ahead with plans to
legislate in favor of the use of a common decoder system open to both Stream's and
competitor Telepiú's digital-TV platforms.

Word of the government's plans to reassess pay TV
ownership limits came just as another major alliance is being forged that will have an
impact on the dramatically shifting Italian TV scene.

The much-heralded alliance between European media magnates
Leo Kirch and Silvio Berlusconi, which may also include Rupert Murdoch's News Corp.,
may, in reality, only see the latter two take small stakes in The Kirch Group, which is
undergoing restructuring.

The talks between the three executives fueled speculation
that a large European consortium would be formed to sweep away all significant pay TV
rights for sports and cinema and to create a new European soccer superleague.

It now appears more likely that under The Kirch
Group's restructuring, Berlusconi's Fininvest holding company and Murdoch's
News Corp. may simply invest $250 million each in the German company in return for 3
percent each in Taurus Film, Kirch's TV- and film-production company.

Officials for Fininvest and Kirch were unavailable for
comment.

Under Kirch's restructuring, three holding companies
are to be created: a new company, provisionally titled Pay-Co, for the group's pay TV
projects; Taurus Beteiligungs, for publishing and other activities; and Taurus Film. A
partial floatation on the stock markets is also planned within the next 18 months.

Various figures have been reported in the financial pages
over the past two weeks that have been pegged to Kirch's own international valuation
of its group. Kirch has reportedly valued its group at $13.5 billion. Kirch has declined
to comment on those published reports, but the company insisted that it will make the
numbers public shortly.

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