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Will News Corp Pull Out Of Telepiu Deal?

By | July 3, 2002

      News Corp could be on the verge of pulling out of the deal to acquire Telepiu for $1.5 billion. According to press reports, the deal is in jeopardy as News Corp is having trouble finding investors for the combined Stream/Telepiu platform in Italy.

      Interspace reported in the last issue that persuading its partner in Stream, Telecom Italia, to invest more into the platform was critical to pulling off the deal. Interspace believes if Telecom Italia is showing any reluctance towards investing further in pay-TV, the whole deal is likely to be in jeopardy. News Corp wants to take a 50 per cent stake in the new platform with the other 50 per cent to be made up of a combination of Telecom Italia and other investors.

      For Vivendi, the deal with News Corp was seen as a key to reducing its debt. If the deal was to fall through, both parties would be faced with a decision of whether to close their loss making platforms down. Interspace believes this is a tough call. Telepiu is the market leader in Italy with the highest number of subscribers, but News Corp is in a better position to cope with the continuing losses.

      By stating its intentions to buy Telepiu, it is clear the News Corp is a big believer in pay-TV in Italy, but it remains to be seen if it can persuade Telecom Italia and other investors of the merits of the business model. Italy is seen as one of the potentially better pay-TV opportunities for News Corp in Europe. It would make an ideal second market for the company, behind the United Kingdom. Italy, unlike Germany, does not have a high number of free-to-air channels and has little cable infrastructure. It has a population of over 20 million people and potentially could offer rich pickings for one of the pay-TV satellite operators.

      –Mark Holmes

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