Murdoch in Italian pay-TV venture

RUPERT MURDOCH yesterday signalled his determination to break into the continental European media market when he set up a company which will invest in a pay-television joint venture in Italy and help launch a television channel in France.

It represents his latest attempt to establish a presence in continental Europe, the most obvious blank space in a media empire which spans the United States, Britain, Australia and the Far East.

It also reflects the importance attached by him to digital television, the multi-channel distribution system recently launched in Britain and which is beginning to catch on in other European countries.

Although details of the ventures have yet to be worked out, they look set to give Mr Murdoch his first foothold in continental Europe after several failed attempts. "He has rather missed the boat in Europe but not through lack of trying," a City analyst said yesterday.

The launch of the company also marks the end of an uneasy truce between Canal Plus, the French satellite television group, and Mr Murdoch's News Corporation, under which the two companies refrained from competing in each other's markets. The company, to be called News Corporation Europe, will be based in Milan and be run by Letizia Moratti, former head of the Italian state broadcasting company, RAI.

The company's first move will be to invest in a pay-television joint venture with Telecom Italia, the Italian telecom group. It also plans to set up a satellite television channel with TF1, the French television company, targeted at the 15-to-35- year-old age group. Ms Moratti said the Italian market was one of the most under-developed in Europe. Italians spend $300 a head a year on visual and printed media, compared to approximately $900 in the United States and Britain.

An initial attempt to set up a pay-TV joint venture in Germany foundered on objections from the European Commission and squabbling between the venture's partners. Since then Mr Murdoch has unsuccessfully attempted to woo Silvio Berlusconi, the Italian media mogul. Most recently he and Mr Berlusconi's Mediaset group have been in negotiations about taking a stake in Kirch, the privately owned German company which is suffering a cash crisis. But yesterday Mr Murdoch said negotiations with Kirch had been proceeding "very slowly."

Setting up a new company also shows his hopes of using British Sky Broadcasting, in which he holds a 41-per-cent stake, as his vehicle for investing in continental Europe have been rebuffed. "BSkyB and all its executives are totally concerned with the launch of digital television here and all that goes with that, so Britain remains their number one priority," he said. Mr Murdoch's strategy in Italy is likely to follow a similar pattern to Britain, where BSkyB became the country's largest media group by buying up the rights to Premier League football and Hollywood films.

However, yesterday Mr Murdoch said the advent of digital television meant other programmes mattered too.

"All sport is important. There are a lot of football rights available in Italy and a lot of alternative paths to them. But with the benefits of digital television it's a different game. We will be opening many small niche channels."

Mr Murdoch ruled out making an attempt to buy another football club, despite BSkyB's controversial pounds 623m bid to buy Manchester United, which is under investigation by the Monopolies and Mergers Commission. He also ruled out adding to his newspaper interests, which include The Sun, The News of the World and the Times titles. "This is basically electronic," he said.