An alliance made up of Rupert Murdoch’s News Corp, Telecom Italia and German media magnate Leo Kirch may yet be the white knight that will save fledgling Italian TV network TMC.
The Florence-based TV network, which operates two TV channel (TMC and TMC2), forms part of Finmavi, a controlling company owned entirely by leading film producer and Italian senator Vittorio Cecchi Gori. For more than a year, Finmavi has been in search of new shareholders and although two US investment funds have so far stepped forward, Cecchi Gori has proved reluctant to sign a deal. The two candidates are ready to take between 30 and 40 per cent of Finmavi, through a confidential capital increase and the value of the transaction is said to be worth around L1,500 billion (Euro775 million). The strategic goal seems to be the floating of an additional 30 per cent of Finmavi on the stock exchange. However, the condition that needs to be met for this to happen is that TMC and TMC2 leave the holding, something which Cecchi Gori is reluctant to do, fearing that he may eventually lose the controlling interest.
In recent weeks, the prospect of an alliance between Murdoch’s News Corp, Telecom Italia and Kirch Group has emerged, with Silvio Berlusconi’s Mediaset possibly bidding for Cecchi Gori’s interests in the movie sector. Cecchi Gori, together with his top managers, seems to be aiming at some sort of arrangement similar to that which already exists in pay-TV operator Stream, where all of the possible partners, except Kirch, are already present. The three partners would probably be offered 45 per cent of TMC and TMC2, for a price tag of around L600 billion.
The major stumbling block seems to be financial. Market analysts estimate that Finmavi will close the year in the red. Although the company expects to report profits of L90 billion, the losses from the TV operation will certainly pass the L100 billion mark. The situation would not be so bleak, if Finmavi did not have a ballast of debts: on December 31, 1998 they stood at more than L1,800 billion, which represents a major increase compared to L766 billion back in 1997.
