TF1, RAI in Italo digital pact

Deal could bring French net into head-to-head with Canal Plus

CANNES — French private television network TF1 and Italian pubcaster RAI have signed a letter of intent to team on an Italian digital TV platform.

The move gives the two until the start of June to decide whether they will proceed with formation of the joint venture. If TF1 and RAI do pact, it will bring the French company into direct digital competition with the Canal Plus group for the second time: Canal Plus is attacking the digital market in Italy via its controlling stake in paybox Telepiu.

TF1 has a 25% stake in French digital platform TPS, which is currently locked in a head-to-head clash with Canal Plus’ digital operation Canal Satellite. An eventual move into Italy would rep TF1’s first major step outside French borders, although there has been talk that the Bouygues-controlled group is pondering another digital clash with Canal Plus in Spain.

A joint venture between RAI and TF1 would be something of a setback for Canal Plus, which held lengthy talks with the Italian pubcaster about bringing RAI onto its digital platform. The European Competition commissioner Karel Van Miert has already expressed opposition to a single Italian digital offering.

News of the talks between TF1 and RAI came as the French network announced a 4.3% rise in revenues for the first quarter of 1998. Ad revenues were up 4% at $332 million, compared to a 2% rise this time last year.