London -- News Corp. last week secured its first major
distribution foothold in Continental Europe and announced a new $300 million interactive
unit led by one of its top executives.
News Corp. Europe said it would buy 35 percent of Stream,
the 160,000-subscriber Italian pay TV platform owned by Telecom Italia SpA. The company
will partner with Italian film producer Cecchi Gori and SDS, the Italian soccer-rights
agency that controls four of the country's clubs.
The deal follows three failed attempts to buy into
Continental European distribution.
Last year News pulled out of an agreement to buy Stream. In
1997, it scotched efforts to partner with Germany's The Kirch Group. And earlier this
year, News' 40 percent-owned British Sky Broadcasting Group plc and France's
Canal Plus S.A. broke off merger talks.
Meanwhile, BSkyB CEO Mark Booth will leave the
direct-to-home company to head e-partners, News' new interactive unit. Booth joined
BSkyB in November 1997, and he had been approached with a $25 million offer to head
Microsoft Corp.'s interactive services.
News chairman Rupert Murdoch countered with the offer to
head e-partners, which will have $300 million to invest in interactive television, the
Internet and wireless communications.
BSkyB strongly denied local reports of a rift between Booth
and Elisabeth Murdoch, Murdoch's daughter and BSkyB's managing director of
programming. One report quoted a BSkyB source saying that Booth and Elisabeth Murdoch
never saw eye-to-eye.
Another report, denied by the company, said Booth was upset
about not being included in BSkyB's recent negotiations with Canal Plus.
Before joining Sky, Booth was CEO at Foxtel, the Australian
pay TV service partly owned by News Corp. Prior to that, he was chief operating officer of
Japan Sky Broadcasting, and he ran MTV Europe as a start-up.
Murdoch also said Booth's successor would come from
outside of the company, ruling out his daughter.
There was some market speculation about a return to BSkyB
by former programming chief David Elstein, if he doesn't become director general of
the British Broadcasting Corp.
Other possible candidates include Fox Broadcasting chairman
David Hill and Tony Ball, who heads Fox/Liberty Networks.
"Maybe Mark Booth has left to make way for someone to
come in and stitch together a pan-European company," WestLB Panmure analyst Paul
The first stage in that plan might be the investment in
Stream. News said it will have "operational control," and it will name
Stream's CEO and other key executives. TI will retain 35 percent of Stream and
appoint its chairman.
TI said it expects to invest $1.09 billion to develop the
money-losing platform, which will compete head-to-head in Italy with the Canal Plus-backed
Telepiú bouquet. The deal is slated to close by the middle of this month.