Pact Widens Funding Flow for Italys Stream

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Milan, Italy -- The future expansion of Italy's second
digital-TV platform, Stream, was secured following the signing of a deal here last month
that finalizes its new ownership structure.

Stream parent Telecom Italia SpA sold 65 percent of the
cable and direct-to-home pay TV service. Rupert Murdoch's News Corp. Europe unit picked up
35 percent of Stream; 18 percent went to Italian film and TV enterprise Cecchi Gori Group;
and Societa Diritti Sportivi Srl, a new soccer-rights company, bought 12 percent.

TI indicated that it could sell additional shares to other
Italian investors.

The deal -- reportedly worth 130 billion lire ($64.6
million) -- comes after months of protracted negotiations. It was subject to a final delay
when TI's board resigned May 25, after rival Italian telecommunications operator Olivetti
SpA succeeded in its hostile takeover bid for TI.

The new partners are expected to fuel Stream with an
additional L2 trillion ($993.2 million), according to Italian press reports citing Stream.

While the three companies couldn't be reached for comment,
a statement issued by News Corp. Europe said: "With the acquisition of 35 percent of
Stream's shares, we maintain that we will be able to contribute in a significant way to
the development of Italy's audiovisual production and television sector. Also, the global
distribution network to which News Corp. Europe belongs represents a valuable platform for
exporting Italian cultural production around the world."

Italian press reports quoted Cecchi Gori Group head
Vittorio Cecchi Gori as being particularly satisfied that the majority of Stream will
remain with Italian companies.

Italian minister of communications Salvatore Cardinale also
expressed his satisfaction. "It is the realization of an agreement that sees Italian
and international operators working together, while the platform remains solidly in
Italian hands," he said in the Italian press.

Stream, which currently has 170,000 digital-cable and
satellite subscribers, can now concentrate on catching up with Canal Plus S.A.-owned
Telepiú. That company's D+ platform has 600,000 subscribers.

And the involvement of sports-rights company SDS will help
to level the playing field.

SDS will bring exclusive, live pay-per-view coverage of
four major soccer teams (Roma, Lazio, Parma and Cecchi Gori's own team, Fiorentina) to
Stream, enabling the platform to compete with Telepiú's soccer PPV service, Calcio.

Italy's new soccer season kicks off Aug. 1, and it will
likely be preceded by major marketing campaigns from both Stream and Telepiú.

The deal is also expected to add a raft of new thematic
channels for Stream. Cecchi Gori has already announced that he intends to launch up to 10
channels, and analysts predicted that News Corp. Europe will add some of its own networks
to the mix.

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