Telecom Italia Reaches Internet-TV Deal With Sky

Telecom Italia SpA, the country’s largest phone company, is teaming with Rupert Murdoch’s Sky Italia SpA for an Internet-television service to attract broadband subscriptions, giving consumers an alternative to satellite TV.

Starting next year, Telecom Italia clients with a My Sky HD decoder will have access to all of Sky’s TV programs over the Web, the companies said in a joint statement today. Sky offers about 180 channels and programs including Formula 1, MotoGP and soccer’s Champions League. Telecom Italia’s mobile-phone customers can also watch Sky TG24 all-news channel on their smartphones and tablets.

Bloomberg News reported the alliance earlier today.

Telecom Italia Chief Executive Officer Marco Patuano, accelerating his efforts to revive the indebted former phone monopoly, is adding services in a bid to boost phone bills as competition hurts margins in Italy’s saturated market. A broadband pay-TV service may shake up the Italian TV and video market -- the country doesn’t have major cable carriers.

“Phone carriers need to enter the game of entertainment to renew their business,” said Francesco Siliato, a professor who specializes in media and telecommunications at Milan’s Politecnico University. “At the same time, TV broadcasters need new partners to spread out contents via the Internet.”

Sky Italia, established in 2003, is part of 21st Century Fox Inc., the film and TV company controlled by billionaire Murdoch. The Italian unit, headed by Andrea Zappia, has about 4.8 million paying households and an audience of more than 15 million viewers, according to its website.

Network Deal

Telecom Italia shares climbed 2 percent to 88.6 cents at 12:58 p.m. in Milan. They have risen about 37 percent since Patuano took over in October, giving the company a market value of 16.2 billion euros ($22.5 billion). Fox added 2.1 percent to $32.30 yesterday in New York.

Telecom Italia, based in Milan, is trying to end years of losses and sales declines caused by falling prices. Patuano, a 24-year company veteran, has sold Telecom Italia’s headquarters in Milan and its Argentine business, and scrapped dividends in a bid to stabilize finances.

Yesterday, Telecom Italia’s television unit, Telecom Italia Media SpA, signed a deal with media company Gruppo Editoriale L’Espresso SpA. Putting together their TV frequencies, the companies agreed to create a digital-broadcasting infrastructure in Italy that rivals can rent to distribute their own channels.

Fox’s Expansion

Vodafone Group Plc’s Italian unit, a rival to Telecom Italia, this month teamed with Mediaset SpA, the broadcaster controlled by former Italian Prime Minister Silvio Berlusconi, to offer movies and TV-shows on its Web-based on-demand service called Infinity.

“The first target now for a phone carrier is upgrading networks and transform it to a platform for high-value services,” Patuano said last week in an interview.

Fox, based in New York, has been expanding its European pay-TV holdings, buying control of German provider Sky Deutschland AG last year. That unit, which has elected Rupert Murdoch’s son James as chairman, is holding a shareholder meeting today to decide on a change of its fiscal year.

Sky Deutschland in 2013 reached 3.67 million subscribers and returned to operating profit. The provider distributes its content through agreements with fixed-network operators such as Vodafone Group Plc’s Kabel Deutschland and Liberty Global Plc’s Unitymedia KabelBW, as well as Deutsche Telekom AG, Germany’s former phone monopoly.

James Murdoch, 41, is also taking a larger role at parent company Fox. He was named co-chief operating officer last month.

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