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STREAM ENDS FIRST HALF OF 2000 IN THE RED

By Staff Writer | November 15, 2000

      Italian pay-TV operator Stream has reported that losses almost doubled in the first half of 2000 to L302 billion from L152 billion (E78.50m) in the same period last year, despite an increase in both revenues and subscriber numbers.

      Revenue was up to L104 billion, compared to L23 billion in the first half of 1999. Stream also reported that subscriber numbers rose 27 per cent to 489,000 during the period, thanks to an offer, which includes Italian first-division football and the Italian version of Big Brother.

      According to Telecom Italia, which jointly owns Stream with Rupert Murdoch’s News Corp, the pay-TV platform’s losses are due to “the cost of acquiring new programming, the construction of technical infrastructure and commercial activities tied to increasing Stream’s client base.” However, the perspectives do not seem brighter for the last part of the current financial year. “The results of the second semester,” warns a Telecom report, “could be affected by the charges for the adoption of the single decoder, set down by law, on part of the operators in the sector”.

      According to Stream CEO Lucia Morselli, the pay-TV operator will break even in 18 months when it reaches 1.3 million subscribers, adding that Stream “will break even at a lower number of subscribers than Tele+.” Morselli confirmed that new interactive services will roll out shortly and that she is working with Telecom Italia on other offering to complement its enhanced sports channel and pay-per-view service, which has proved popular for adult movies.

      Stream, which broadcasts 103 channels, has succeeded in signing up 160,000 new subscribers in the past two months, with an average of 3,000 a day. The overall number of subscribers has reached the 650,000 mark. But, Stream’s negative financial results have once again rekindled talk regarding a change in the shareholding structure, which currently sees Telecom Italia and News Corporation each holding a 50 per cent stake. According to business daily Il Sole 24 Ore, Rupert Murdoch was recently in Milan where he met up with Telecom Italia president Roberto Colannino and media magnate Silvio Berlusconi. On that occasion, Colannino and Murdoch discussed the realisation of an operation on which they have been working for the past four months – since Telecom Italia gained a foothold in the Italian terrestrial TV sector with the acquisition of the TMC TV network. It seems that the telco is seriously considering its exit from the pay-TV sector, which has until now only brought it losses to the tune of hundreds of billions of lire.

      For his part, Murdoch is aiming to take control of Stream in order to merge it with Tele+. He is convinced that the pay-TV sector in Italy can become profitable only if the two existing platforms unite.