Italian TV Frequency Sale Now Expected to Fetch Less Than $140 Million, Half of Estimates

The sale was originally expected to earn more than $300 million, but prices have fallen due to weak economy and a lack of interest from current players.

ROME – The sale of three digital terrestrial television frequencies is now expected to pull in less than half the amount originally predicted, with fingers pointing toward the country’s slow-growing economy and initial figures that may have been exaggerated.

Originally expected to pull in around €240 million ($307 million) total -- Angelo Marcello Cardani had said it was “plausible “ to expect each to be valued at €4 million ($5.1 million) per year for 20 years, for a total of €80 million ($102 million) each -- the latest analyst reports say they are more likely to fetch between €30 million and €36 million ($38 million-$46 million). In that range, the best-case scenario for the three is €108 million ($138 million), or far less than half the original estimates.

The original estimates stem from the parliamentary debate over whether or not to sell the three frequencies at once, and there is speculation that the figures might have been exaggerated to make the move seem more attractive. But it is also likely that the value has fallen since the decision to sell the frequencies was first raised two years ago: since then, the health of Italy’s television sector has deteriorated dramatically.

It is also significant that none of the sectors biggest players -- Italian state broadcaster RAI, Silvio Berlusconi’s Mediaset, and Sky-Italia, a subsidiary of Rupert Murdoch’s News Corp. -- are said to be interested in the frequencies. All three broadcasters have seen eroding ad revenue and anemic economic growth hit their bottom lines, though RAI reported Monday it expected to return to profitability in 2014.

Whatever amount the sales raise it will be more than when the plan to award the frequencies was first broached in 2011. Berlusconi, who was prime minister at the time, wanted to give the frequencies away based on a broadcaster’s plan how how they’d be used -- a process dubbed a “beauty contest” in the Italian media. But Minister of Economic Development Corrado Passera said last year those plans would be scrapped and that the frequencies would be sold.

The winners of the bidding will automatically have a foothold in a sector dominated by RAI, Mediaset, and Sky-Italia, along with La7, the smallest national network acquired by former Berlusconi crony Urbano Cairo in March, from former state telephone monopoly Telecom Italia.

Twitter: @EricJLyman

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