RAI exploring infrastructure merger

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ROME -- Italian state broadcaster RAI said Thursday that it is exploring a plan to merge its broadcasting infrastructure with that of rivals Mediaset and Telecom Italia Media as a way of cutting costs on the non-competitive side of the business.

RAI and Mediaset dominate Italian broadcasting, with three networks each. Telecom Italia Media owns La 7, Italy's smallest national broadcaster and the only one not controlled by one of the two larger companies.

RAI board member Carlo Rognoni said RAI was in discussions with its two rivals in order to reduce overhead costs on three separate broadcasting infrastructures. The companies would remain rivals in terms of content and advertising.

Rognoni's office confirmed the statements when contacted, but a spokesman declined to elaborate on the remarks.

If carried out, the plan would be to create a holding company that would operate the infrastructure. That company would be partially owned by RAI, Mediaset, and Telecom Italia but would also be open to foreign investors. Spain's Abertis Infraestructuras, Telediffusion France and the U.K.'s National Grid are reported to be interested in investing in the new company, which would have an estimated market value of around €2 billion ($2.56 billion).

The idea arises at a time when Italy is trying to hasten Italian broadcasters' move to digital broadcasting. In October, the government passed a decree forcing RAI and Mediaset to move one network each to solely digital technologies by 2009. All other broadcasters must make the move by 2012.

Opponents of that move say it will be costly to abandon all terrestrial broadcast equipment in favor of using only digital technologies over such a short span. But the RAI plan could reduce those costs.

Italy's antitrust authority on Thursday issued a statement about the proposal, warning the companies that the holding company would have to be set up in a way that it did not introduce the possibility of abuse on pricing or make it difficult for new broadcasters to enter the market.
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