Italo film in limbo

Telepiu merger picture hampers prod'n scene

MILAN — While the European Union’s antitrust authority has yet to announce its verdict on Rupert Murdoch’s News Corp.’s planned takeover of Italian pay TV operator Telepiu, Italy’s film industry has called for a quick end to the long enquiry that is creating serious uncertainty in the sector.

In the last few days, conflicting reports have surfaced regarding the possibility that the Euro antitrust body will raise new objections to the proposed creation of a single pay TV operator, the plan for which was announced last year.

Conflicting reports

On Friday, the Financial Times said the $960 million deal was “expected to be completed without further substantial concessions,” apart from those already offered by News Corp., mainly covering movie and sports rights.

The same day, Reuters and Italian wire services quoted a Brussels source as saying, “The commission will issue a new statement of objections” regarding the expected acquisition of a 19% stake by Telecom Italia and other issues.

The Brussels body is expected to disclose its decision before April 14, but Italy’s film and TV circles are getting nervous.

“Pay TV has not been investing in movies at all for more than a year in Italy, while in the past it used to cover 10%-15% of production budgets,” said Riccardo Tozzi, president of film production company Cattleya.

“If two pay TV platforms cannot survive in Italy, we should have only one operator but a strong one. It’s a paradox that in such a good season for Italian films, no pay TV operator is buying them.”

Gianpaolo Sodano, head of Italian distrib association Unidim, said, “Delaying a decision on the deal is also creating problems for viewers who have been forced to accept very modest programming by Telepiu and News Corp.’s Italo pay TV platform Stream.”

Even Prime Minister Silvio Berlusconi’s Fininvest, which owns leading broadcaster Mediaset and top film producer-distributor Medusa, is worried.

Medusa CEO Gianpaolo Letta said: “Italy’s film producers are working just day-to-day now: (The) pay TV crisis is even more worrying because over-the-air stations are cutting budgets and the piracy problem remains unsolved.”

Pact boundaries

Paolo Ferrari, prexy-CEO of Warner Bros. Italia, said if the EC would set one-year limits on exclusive deals the new merged entity makes with U.S. and European film producers, “it would not be such a problem.”

“Competition would be strengthened and prices would be easily adjusted. Pay TV operators would be more able to reach break-even,” he said.

In October, News Corp. agreed to pay Vivendi Universal $895 million (now $960 million after the euro-dollar rate changed), including $417 million in debt, for struggling pay TV company Telepiu, which has about 1.6 million subscribers.

After the planned Stream-Telepiu merger, News Corp. will control 81% of the combined company, to be called Sky Italia, and Telecom Italia will control the remaining 19%.