EU Greenlights Murdoch’s Italian PayTV 'Quasi-monopoly'

03 April 2003

The European Union’s Competition Commission on Wednesday approved the €1 billion ($1.08bn; £0.688bn) acquisition by News Corporation of Telepui - the sole payTV rival of its Italian satellite operation Stream.

The new merged entity will be branded Sky, bringing it into line with Murdoch’s other global satellite enterprises.

Mario Monti, the EU competition commissioner, was in defensive mode, pleading ‘Hobson’s choice’ for agreeing to “create a quasi-monopoly on the Italian market.” The fragile business environment, he argued, permitted room for only one operator to survive in the Italian pay-TV market; although conceding that “the best choice would have been two separate pay-TV platforms”.

Both Stream and Telepiu have haemorrhaged billions of lira over the years of their rivalry – but Murdoch is adept at the waiting game. In the absence of any competition, industry observers expect a replay of the UK model in the early-90s, when the media mogul’s lossmaking Sky swallowed its less deep-pocketed rival British Satellite Broadcasting to start printing pound notes within eighteen months.

As part of the deal struck with NewsCorp, the EU demanded that Sky limit the terms of its contracts with sports and movie content providers. Hereafter, soccer club contracts will run for a maximum of two years, and those with film distributors for up to three years.

Data sourced from: The Wall Street Journal Online; additional content by WARC staff