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New tariff in town for Italian pay TV

Berlusconi's VAT tax irks Murdoch's Sky Italia

Has Silvio Berlusconi crossed swords with Rupert Murdoch by suddenly slapping a tax on News Corp’s Sky Italia paybox? 

The two moguls are slugging it out in Italy, where the Berlusconi-led government announced recently that was doubling the VAT from 10% to 20% on pay TV subs just as Sky Italia launched its Christmas subscription campaign.

“It’s a tax that hits more than one fifth of Italian households right in the middle of an economic crisis,” complained Sky Italia CEO Tom Mockridge before striking back. Prompted by James Murdoch and his dad, Sky has been airing a barrage of spots urging its 4.6 million subs to send protest emails to the Berlusconi government.

Berlusconi and finance minister Giulio Tremonti counter that the 20% pay TV tax — which would be the highest in Europe — is being dictated by the European Union. The EU was probing Italo pay TV taxes after Mediaset in 2007 complained about its PPV customers having to pay a 20% VAT instead of 10%.

Relations between the media barons have oscillated over the years. But Silvio may have overstepped this time.

“The rivalry between Murdoch and Berlusconi in Italy is now set to become increasingly belligerent,” predicts Fabrizio Perretti of Milan’s Bocconi business school.

Their next battleground will be rights to Italian Serie A soccer, which come up for auction in early 2009.

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