Dowry puts Murdoch off Mediaset wedding

2nd time in 3 years principals have called off deal

MILAN — The latest megadeal between media moguls is off — at least for now.

Late last week Rupert Murdoch backed away from a deal to acquire control of Silvio Berlusconi’s TV company Mediaset.

Such a deal, some Euro sources say, could have been the starting point for the creation of an Italian-Spanish-French digital satellite alliance — one strong enough to compete against powerhouse player Canal Plus.

Other sources, more skeptical, suggest that Berlusconi drummed up a possible deal with Murdoch as a way of attracting other investors to Mediaset — and as a way to silence his critics in the Italian Parliament.

It was the second time in three years Murdoch and Berlusconi have tried and failed to strike an alliance. Murdoch scuppered a similarly ambitious deal with Germany’s Leo Kirch to develop digital broadcasting in that territory back in 1996.

The apparent reason this go-round: Berlusconi was holding out for too much money.

Murdoch reportedly was offering 10,000 lire ($5.55) per share for 50.6% of the company, or 5.8 trillion lire ($3.2 billion); Berlusconi wanted 12,000 lire ($6.67) a share, or about 7 trillion lire ($3.9 billion).

“I did not even want to open real negotiations over the price,” Berlusconi said Friday during the evening newscast on his flagship station Canale 5. “It was not a matter of money, but of heart. We discussed not only the sale of all our shares in Mediaset but also the sale of a smaller part. But (Murdoch’s) offer was just for all our shares, and so the heart prevailed.”

A News Corp. spokesman in London said Friday: “We do confirm that there were talks and they broke down.”

The two execs, however, met again over the weekend in London, most likely to discuss possible cooperation at a lower level on TV programming and digital platforms, according to Fininvest.

News of the trip was disclosed Sunday in an effort to dispel rumors circulating in Italy that Murdoch was very irritated by Berlusconi’s refusal to sell after that talks went on for several weeks.

Marina, the eldest of Silvio’s five children and vice president of Fininvest, said: “My father and Murdoch met again Saturday in London, to leave an open door to possible cooperation.” News Corp. did not comment.

According to Fininvest sources, the sale of Mediaset was not discussed again and the two tycoons talked about an alliance in the trade of TV programming.

Many in the TV industry believe that they discussed also about European digital TV platforms. Since the Italian government project to create a single national platform seems bound to fail, sources said Mediaset is exploring other possibilities.

Sources in Italy are speculating that Mediaset and Italian telco Telecom Italia could be eyeing Spanish and French digital play-ers Via Digital and TPS, respectively, to collaborate in the newfangled digital broadcast arena and compete against Canal Plus. Having Murdoch’s BSkyB as a partner would solidify the group as a force to be reckoned with.

Murdoch’s offer to buy 50.6% of Mediaset was made with the understanding that Italian takeover laws would have obliged him to acquire the entire company.

New corporate governance rules say that companies acquiring more than 30% in another company must subsequently bid for all its shares.

Mediaset shares closed Friday at 12,150 lire ($6.75), down 1.1%. They traded as high as 12,770 lire ($7.09) earlier. Shares have risen as much as 36% since mid-February, when Mediaset first said it was in talks with News Corp.

Berlusconi has been under pressure to sell his stake in Mediaset, which has prompted accusations of a conflict of interest with his political career.

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