Rupert Murdoch has lost his bid to buy a stake in three television stations in Italy but is spending $299m to buy out minority partners of Star TV, the Asian broadcaster now owned 63 per cent by his News Corporation.
Insiders at News Corporation confirmed that Mr Murdoch's insistence on taking a controlling stake of the Italian stations, put on the block by former prime minister Silvio Berlusconi, scuppered negotiations.
"We have long said we would only be interested if we could take control," a News Corporation executive said.
Under a deal likely to be announced today, a consortium of Saudi investor Prince al-Waleed, German media tycoon Leo Kirch and the Richmont Group of South Africa has bought 25 per cent of Mediaset, which groups Mr Berlusconi's television and advertising interests. Italian banks are taking an additional 20 per cent. Mr Berlusconi's Fininvest holding company is to receive $2.2bn for the 45 per cent holding, and will retain management control.
The new partners are expected to push Mediaset toward greater involvement in pay-TV services. The Richmont Group, the tobacco and cable company, has expanded recently in the pay-TV sector and electronic media, as has Kirch.
Mr Berlusconi entered negotiations with Mr Murdoch and the Saudi-led consortium earlier this year in a bid to defuse criticism about his dominance of the Italian television market. He is believed to want to return to active politics following his ousting as Prime Minister last year.
Although a referendum aimed at forcing him to sell two of his three stations was voted down in June, the Italian government has continued to work on anti-trust legislation in an effort to reduce Mr Berlusconi's influence.
Mr Murdoch and his aides have long made it known they were not unprepared to pay over the odds for the television stake.
The decision to buy out the minority stake in Star TV underlines Mr Murdoch's interest in the fast-growing Asian broadcasting market. The stake is being sold by Hutchinson and Asian investor Richard Li's Genza group.
The price attached gives Star TV a total value of $825m.Reuse content