A Reuters report indicates that under the terms of the 900 million
euro ($970 million) deal, Italian telecoms operator Telecom Italia
will hold a minority stake of up to 19.9 per cent. Competition Commissioner
Mario Monti said, "I am satisfied that the Commission, after an
in-depth investigation and intensive negotiations with the parites,
has established the right conditions for the pay-TV market in Italy
to remain open and to evolve in a competitive way on a lasting basis
to the advantage of the consumers".
While Sky Italia is expected to do better than previous offerings,
the challenge before Murdoch will include Italy's rampant pay television
piracy. In addition, to match the pay-TV success he has managed
in Britain with BSkyB, he will have to install the technology.
It is worth noting that neither Stream nor Telepiu have made a
profit since their launch in 1996 and 1991 respectively. Given this
track record it could take many years before Sky Italia makes inroads
into the Italian market. A critical mass of around 25 per cent penetration
is not expected till 2012, according to UBS Warburg, the report
Though the country watches nearly five hours of television a day,
Sky Italia will face stiff comeptition from 14 free-to-air national
channels and 700 local ones -- a choice that has helped glue Italians
to their screens but may have left them satiated.