Italy's Pay TV Sector After Berlusconi? Expect Big Changes
In a research note, Bernstein Research speculated that telephone giant Telecom Italia could merge with 21st Century Fox unit Sky-Italia.
ROME – With the political influence of billionaire media tycoon Silvio Berlusconi on the wane, one leading research group predicts a shakeup of the country's pay TV sector, including a possible entry by former state telephone monopoly Telecom Italia.
In a research note, Bernstein Research said Tuesday that Berlusconi's eroding influence would open up the possibility of a restructuring of the pay TV sector with Telecom Italia either entering on its own, or through a merger with 21st Century Fox subsidiary Sky-Italia.
Sky-Italia dominates Italy's pay TV sector, which is growing much faster than the free-to-air sector controlled by Berlusconi's Mediaset, state broadcaster RAI, and La7, the former Telecom Italia Media unit now controlled by businessman Urbano Cairo.
Berlusconi has entered the pay TV sector with Mediaset Premium, but that subsidiary remains a niche player.
While the developments described in the note would indeed represent a dramatic shake-up of the sector, they seem unlikely at first glance: Telecom Italia sold La7 to pay down debt and concentrate on its core telephony business, and Sky-Italia has steadfastly avoided merger talks (the company even declined to bid on La7, an acquisition that would have given it a foothold in the free-to-air television market).
But Bernstein Research's note is based in part on problems with Telecom Italia's current financial and market positioning situation -- Telecom Italia's "status quo is unsustainable," the research note said -- while the potential threat of an aggressive new competitor for Sky-Italia represent a risk that could force it into merger talks.
It is worth noting that Sky-Italia was formed a decade ago by the merger of two troubled rivals: Telepiu and Stream.
Berlusconi's political muscle is diminishing thanks to a decision from Italy's Supreme Court to uphold a lower court's conviction on charges of tax evasion and false accounting. The 76-year-old faces a year of house arrest, and parliament is debating whether to strip him of his Senate seat.
While the Bernstein Research scenario is far from likely, it does illustrate the magnitude of the changes that could be in store when Berlusconi is gone from the scene.
- MOST SHARED
- MOST POPULAR