SAT-ITALY 23.05.1997


The next few weeks will certainly be decisive for the future of digital TV
in Italy. Talks are currently underway among RAI and Stet on one side and
Canal Plus on the other side. The objective of the talks is to reach an
agreement by this autumn at the latest, on which will depend if Italy will
have one or more digital platforms.
Several weeks ago, Italian state television RAI and the telecommunications
giant Stet (through its subsidiary Stream) signed a very important
agreement. RAI will take a 5% stake in Stream and a new joint company will
be formed. Provisionally called NewCo, it will be controlled 70% by RAI and
30% by Stream. It will be in charge of the development of new thematic
channels and for buying TV rights on the foreign market. In simple terms,
RAI will provide the know-how and Stream the financial capital.
Canal Plus who controls Telepiu is currently the only digital program
provider in Italy. However, it is in Canal Plus's interest to reach an
agreement with other partners. Currently, Canal Plus has a 45% stake in
Telepiu, while the other 45% is held by Kirch and 10% by Silvio Berlusconi's
Fininvest. Talks between Canal Plus and Kirch on the French company taking
over Kirch's stake have being going on for several months but with no
visible result in sight. If no cooperation agreement is reached between
Canal Plus and RAI/Stet, Italy will have two competing digital platforms and
it will be interesting to see whose side will take the other major Italian
TV players Mediaset and TMC who are currently standing by the side.
If a favorable agreement is reached, there will be only one Italian digital
platform, controlled by Italian companies but with a large stake held by
Canal Plus. It would be in charge of satellite and cable distribution
(thanks to Stet) and would enable the transmission of all the major Italian
TV channels as part of the "bouquet". One important advantage of a single
digital platform is that there would be no costly war for obtaining the TV
rights to major Hollywood titles.
However there are some problems which may appear if an agreement is reached.
The first is that the agreement would not be looked upon favorably by the
Italian and EU antitrust authorities. The second is that for Canal Plus an
agreement would probably be rewarding in a financial sense but on the other
hand would decrease its ability to control the platform.  
A compromise agreement of sort is also possible which would see the major
players using the same digital platform, but there would be at least two
bouquets of channels, owned by RAI/Stet and Canal Plus/Telepiu. This would
however provoke a bidding war for the movie TV rights. 
According to the Italian daily "La Repubblica",  the managers of Canal Plus
are examining a proposal for substituting all of the 80,000 digital decoders
that have been bought by the subscribers to Telepiu's digital satellite
service. New decoders similar to those used in France would be sold which is
expected to considerately bring down the price of the receiving equipment.
The scrambling system would not be Simulcrypt but a closed system, not
compatible with the current Italian norms.

The Italian state television RAI is considering launching a satellite
channel which would broadcast the best programs from RAI's huge program
archive. The new channel provisionally called RAI Gold or RAI Memoria would
rely on over 300,000 hours of programming which represents a sort of
audio/video archive of the recent history of Italy. Experts are currently
working on a project whose aim is to digitalize all the TV as well as the
radio archives (also amounting to around 300,000 hours of programs). Old
programs would be restored and converted to the new format, and by the year
2000 a multimedia catalogue of all RAI's programs will be available. A small
sample of RAI's digital library project is already available on the Internet
at http://www.rai.it/teche 

For the past few months there has been a lot of speculation that the foreign
shareholders of Italian TV holding company Mediaset are planning to sell
their stakes. If Leo Kirch, Nethold/Canal Plus and Kingdom/Al Waleed were to
sell their interests, it would certainly be a huge blow to the image of this
successful Italian media company. Together, the three foreign investors have
around 14% of Mediaset divided this way - Leo Kirch (4,5%), Nethold/Canal
Plus (6,4%) and Saudi prince Al Waleed (2,3%) and the market value of their
stakes is estimated at around 1,250 million DEM.
It they decided to sell it would not be easy to find other suitable partners
who would be able to buy the stakes for a good price. The current
shareholders would be ready to sell their stakes for economic reasons - they
are short of cash or want to concentrate on other activities.
Canal Plus/Nethold has already said that its primary activity in Italy will
be pay-TV since it holds a 45% stake in Telepiu. The German media magnate
Leo Kirch is in financial trouble after heavy investments for the launch of
the digital service DF-1. He has two choices before him - abandoning the
digital project completely or finding a new partner. In short he needs money
and the 400 million DEM stake in Mediaset would certainly come in handy.
Finally, the Saudi prince Al Waleed is expanding his activities and there is
a question mark about the priority of the Mediaset stake.

                             FOR THE WEEK MAY 25-31

26.V - RAI UNO, 20:50h - Pretty woman (USA-90), starring: Richard Gere,
Julia Roberts
27.V - RAI DUE, 20:50h - Racket - Part VI (ITA-96), starring: Michele Placido
28.V - RAI UNO, 20:50h - If someone had known (USA-96), starring: Kellie
Martin, Linda Kelsey
28.V - RAI DUE, 20:50h - Il tenente dei carabinieri (ITA-86), starring: Nino
Manfredi, Enrico Montesano, Massimo Boldi
29.V - RAI TRE, 20:40h - Four weddings and a funeral (UK-95), starring: Hugh
Grant, Andie McDowell
30.V - RAI TRE, 20:40h - Hard to kill (USA-90), starring: Steven Seagal,
Kelly LeBrock
30.V - RAI UNO, 22:50h - Il ladro di bambini (ITA-92), starring: Enrico lo
Verso, Valentina Scalici
31.V - RAI DUE, 20:50h - In the line of duty: Kidnapped (USA-95), starring:
Walter Tracey, Dabney Coleman

25.V - RAI DUE, 13:30h - Formula 1: GP Spain - live
26.V - RAI TRE, 17:00h - Tennis: French Open, live from Paris
27.V - RAI TRE, 16:30h - Tennis: French Open, live from Paris
28.V - RAI TRE, 16:30h - Tennis: French Open, live from Paris
29.V - RAI TRE, 17:00h - Tennis: French Open, live from Paris
29.V - RAI DUE, 20:40h - Football: Italian Cup - final, VICENZA-NAPOLI
30.V - RAI TRE, 17:00h - Tennis: French Open, live from Paris
31.V - RAI TRE, 15:25h - Tennis: French Open, live from Paris

31.V - RAI DUE, 22:30h - L'albero - Jovanotti's new CD 
31.V - RAI DUE, 23:45h - Notte Italiana - Concert by the Berlin Philharmonic
Orchestra conducted by Claudio Abbado. The works of Verdi, Rossini and
Bellini will be played.


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