SAT-ITALY 07.03.1997


The new managment of Telepiu is contemplating several strategies in order to
increase the number of subscribers to its digital subscription package. One
of them is the leasing of digital receivers and this operation has already
started in Milan and in other cities of the province of Lombardy. The
digital boxes are being offered for 15,000 LIT (around 15 DEM) a month which
equals 180,000 LIT (180 DEM a year). Subscribers can pay either every two
months or annualy. According to a Telepiu spokesman, "this is only a limited
market experiment" and does not signify a definite market strategy.
The excessive cost of the digital receivers, which are sold at prices
ranging from 1,500 to 1,800 DEM is the principal obstacle to the development
of the digital market in Italy. Currently, there are a little over 50,000
subscribers to the Telepiu Satellite service despite a rich offer of Italian
language programming and live Italian league football.
The whole leasing operation is currently only in its test phase because it
is rather costly for Telepiu who has to subsidize the potential subscribers.
According to some market experts, Telepiu has bought several thousand
digital receivers from Nokia and Grundig at the price of around 500 DEM
which in turn were turned ove to the satellite equipment dealers.
In parallel to this digital receiver offer, the package of channels that
form part of the Telepiu Satellite bouquet is to be relaunched. The monthly
subscription is around 57 DEM a month or 684 DEM for a whole year. For this
price subscribers get all the channels minus the live Italian football
league games. The announced Formula 1 service on five simoultaneous channels
is set to start on March 9th and the subscription fee for all the season
will be around 150 DEM.

By the end of this season, the Italian football teams in Serie A and Serie B
are set to divide revenues from TV rights which amount to 400 million DEM a
year (broadcast and pay-TV rights included). The decisive element for the
increase in this source of revenues will be the success of pay-per-view,
whose enormous potential will be seen only when the necessary receiving
equipment becomes accesible to a majority of Italians (it currently costs
around 2,000 DEM). The individual football teams are planning to start
selling directly the necessary receiving equipment and the subscriptions
since it is in their own interest to have as many subscribers as possible.
In this first "experimental" season of pay-per-view football, only 43,852
viewers subscribed to the service with the most popular teams being Juventus
(13,369 subscribers), Milan (7,835) and Inter (6,049) which in fact means
that these 3 teams attract 60% of overall subscribers.
The model for the Italian teams is the English Premier League where clubs
are set to receive 1,800 million DEM from PPV services (from 1998-2001). A
similar boom is expected also in Italy, where TV revenues have doubled in
comparison to 1994 (in England, the increase is an enormous 457%).
The Italian TV revenue cake is divided in the following way: out of the 191
million DEM (broadcast TV rights which belong to RAI) 5,3 million DEM go to
each Serie A team and 4,5 to every team in Serie B. The revenues from pay-TV
(Telepiu) which amount to 108 million DEM are divided so that Serie A gets
82,6 million DEM and Serie B 25,6 million DEM. Finally, PPV revenues (90,2
million DEM) will be divided taking in account the final league standings.

The arrival of the new shareholders of Italian pay-TV network Telepiu,
French media giant Canal Plus (which owns 45% of the venture, inherited from
NetHold) will profoundly shake up the existing management situation.
Recently, five managers in the marketing division were dismissed and in all
probability drastic personnel cuts are expected over the next few weeks.
Currently Telepiu has more than 1,000 employees and this figure is set to be
With the takeover of Telepiu, Canal Plus has also inherited a debt of around
400 million DEM (estimates up till the end of 1996) and a low subscriber
base of around 58,000 subscribers (compared to the 150,000 predicted in
previous market estimates). Canal Plus will probably try to use the same
strategy in Italy which proved a winner in France: by investing resources
into own movie productions, seeking to become one of the leading film
production companies in Italy. Because of this market strategy it is
possible the headquarters of the pay-TV network could move from Milan to
Rome (in order to be nearer to the film studio Cinecitta). The man who will
be responsible for the reorganization of Telepiu will be Marc Olivier,
previously responsible for the launch of the Polish Canal Plus service.
He has already announced the launch of an Italian version of the Disney
Channel (to start by the end of 1997) as well as a dedicated weather
channel, Il Canale Meteo. In a recent interview to Italian weekly
"L'Espresso", Mario Rasini, one of the key managers at Telepiu said that
they are contemplating the launch of a religious channel (in cooperation
with the Italian Catholic church), a music channel (in cooperation with the
Italian record companies) and other thematic channels (in cooperation with
RAI and Mediaset).  Italian TV market experts are convinced however that
there will also be changes in programming. The launch of the second sports
channel has been delayed and potential advertisers were offered a package
comprising Formula 1, Formula Indy, the Superbike championships which  has
now been reduced only to include the Formula 1 races. 

Italian media magnate Vittorio Cecchi Gori has sold 20% of his holding
company Cecchi Gori Group-Finmavi (which does not include his TV interests -
TMC and TMC2/Videomusic) to three mysterious Swiss investors. The three
buyers with strange names are all based in Switzerland or Luxembourg.
Kourou Holding, Huan Holding and Goron Holding have bought the shares in
January. The majority shareholder of Cecchi Gori Group-Finmavi is Vittorio
Cecchi Gori with another 30% being held by Vittorio's mother, Valeria
Pestelli, who is also the widow of the founder of the group, Mario Cecchi
Gori. Some analysts speculate that this deal may be a signal that Cecchi
Gori has finally found the foreign investors for his TV interests.

A new TV channel dedicated to travel and tourism made its debut March 1st on
Italian cable systems. Canale Viaggi is transmitted via the cable network
operated by the state telecommunications company Stream (the number of total
households is 350,000 homes). According to the channel's MD Riccardo
Pereira, they hope to have 50,000 subscribers by the end of this year with
400,000 by the end of 1999.
The channel currently broadcasts 8 hours a day, from 16:00-24:00 hours. The
majority of the programming is foreign (around 60%), produced by leading TV
companies such as BBC, CBS, Rede Globo and the Travel Channel.

Cable television is finally coming to Italy after a delay of several years.
The company in charge of cabling up Italy is called Stream (75% owned by
Stet and 25% by Telecom Italia). From January 1st, Italians who are
connected to Stream's fiber-optic cable network can finally enjoy the
benefits of pay-TV as well as near-video-on-demand services. The TV signals
which are broadcast via satellite are captured by Stream and then
distributed via the fiber-optic network.
The cable decoder is sold to subscribers at the price of around 1,400 DEM,
but as a promotional offer, Stream is offering the decoders free for one
year to subscribers. Viewers are offered several packages (or bouquets) of
channels with the basic package costing 120 DEM a year (it includes CNN,
Eurosport, EBN and Euronews as well as 23 DMX audio channels). The prices
for NVOD events varies from 0,5 to 6,5 DEM.
But there is a shadow looming upon the development of cable TV in Italy.
First of all, the number of households reached by the fiber-optic technology
is still small compared to those using the old coaxial-cable technology.
Also, the cabling up of the principal 19 Italian cities is carrying on at a
snails pace. In Rome for example, all the time limits for cabling up the
center of the city, which were agreed with the City Hall have been surpassed
by far.

According to a recent survey conducted by Astra and Demoskopea, Italians
want to watch more quality and culture programming and want to see less
violence and volgarity on TV. The survey was conducted among 1,954 people
aged between 14 and 79 years. The data is as follows: 50% want more culture,
science and education programs, 33% more information and current affairs,
26% more quality movies, 15% more music, theatre, art and ballet, 14% more
sport, variety and quizzes, 2% more telenovelas. But when these wishes is
compared to actual viewing figures for programs, it is easy to note that
there is a big difference what people say and what they really watch on TV.
The two principal TV networks RAI and Mediaset mostly broadcast the
following types of program: telenovelas and TV series (19,9%), movies
(16,6%) and news and current affairs programs (14,9%).
The total number of Italians who watch TV from 1-3 hours a day is around 34
million (74%), 9 million (19%) watch more than 3 hours while 3,4 million do
not watch TV at all or watch only a modest 30 minutes a day. In the past two
years, more than 18 million Italians (39,1%) have reduced the time they
spend in front of the TV screen while on the other hand, a little over 8
million people have increased TV viewing. 
Fifty nine percent of people who took part in the survey say that nearly all
channels are similar to each other while 53% are convinced that the programs
intented for a general audience do not satisfy anyone. A large part of the
interviewed, 62% to be exact, said they would be prepared to watch more TV
if there were better programs on. Interestingly, 40% say that they usually
do not even watch TV but just keep it on as ambient sound, instead of the
radio. On the subject of thematic TV channels, 67% say they are favourable
while when asked if they would be prepared for such services, 63% said no.

                                   FOR THE WEEK MARCH 9-15

10.III - RAI UNO, 20:50h - The Pelican brief (USA-93), starring: Julia
Roberts, Denzel Washington, Sam Shepard
11.III - RAI TRE, 01:20h - Follow the boys (USA-44), starring: Marlene
Dietrich, Orson Welles (in English, with Italian subtitles)
12.III - RAI UNO, 20:50h - Teo (ITA-96), starring: Francesca Messere,
Ludgero Fortes dos Santos
12.III - RAI DUE, 20:50h - Face of evil (USA-94), starring: Tracey Gold,
Perry King
13.III - RAI DUE, 20:50h - On deadly ground (USA-94), starring: Steven
Seagal, Michael Caine
13.III - RAI DUE, 00:45h - Morte di un matematico napoletano (ITA-92),
starring: Carlo Cecchi, Anna Bonaiuto
14.III - RAI TRE, 20:30h - Fearless (USA-94), starring: Jeff Bridges,
Isabella Rossellini,, Tom Hulce, Rosie Perez, John Turturro
14.III - RAI UNO, 22:50h - Rocky II (USA-79), starring: Sylvester Stallone,
Talia Shire
15.III - RAI DUE, 20:50h - Scam (USA-93), starring: Christopher Walken,
Lorraine Bracco

09.III - RAI DUE, 14:00h - Formula 1: GP Australia from Melbourne
09.III - RAI TRE, 18:25h - Athletics: World indoor championship from Paris
09.III - RAI DUE, 19:00h - Basketball (m): Italian league, KINDER
12.III - RAI TRE, 16:55h - Alpine skiing: World cup, downhill (w)
12.III - RAI DUE, 19:25h - Alpine skiing: World cup, downhill (m) from Vail
13.III - RAI TRE, 16:55h - Alpine skiing: World cup, super G (w)
13.III - RAI TRE, 22:55h - Alpine skiing: World cup, super G (m)
14.III - RAI TRE, 15:40h - Volleyball (w): Italian league, REGGIO
15.III - RAI TRE, 16:25h - Volleyball (m): Italian league, ALPITOUR
15.III - RAI DUE, 16:55h - Alpine skiing: World cup, super G (w) from Vail,
I race
15.III - RAI DUE, 18:10h - Alpine skiing: World cup, super G (w) from Vail,
II race
15.III - RAI DUE, 19:25h - Alpine skiing: World cup, super G (m) from Vail,
I race
15.III - RAI TRE, 20:30h - Alpine skiing: World cup, super G (m) from Vail,
II race 

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