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Murdoch Slashes Offer for Vivendi Italian Pay-TV Unit

News, 03 July 2002

Denying it is exploiting Vivendi’s current problems, News Corporation on Tuesday lopped one third off the price it had originally offered for Telepiu, the lossmaking Italian pay-TV broadcaster owned jointly by Vivendi and Telecom Italia.

NewsCorp’s opening offer – €1.5 billion ($1.47bn; £0.96bn) – was withdrawn just three weeks after Vivendi signed a memorandum of understanding with the Murdoch-controlled company in a deal that would have merged Telepiu with NewsCorp-owned local pay-TV rival Stream. It would also have reduced Vivendi’s current debt burden by €1.2bn.

But a person close to the negotiations denied that NewsCorp’s latest move is capitalizing on Vivendi’s catalog of woes. “It’s not a question of taking advantage of Vivendi's management problems but of making the numbers add up. If anything, new management might be less desperate to cut a deal but the original offer doesn't make economic sense.”

One way in which it “doesn’t make economic sense” is the reluctance of Telecom Italia to become involved as a reduced shareholder in the new combined entity – the Murdoch half of which, Stream, is also bleeding cash. NewsCorp wants TI to double its stake but the telecoms giant is strangely unenthusiastic at the prospect of investing a further €300m to cover projected future losses.

Data sourced from: Financial Times; additional content by WARC staff