| ROME, July 31
ROME, July 31 Italy's public broadcaster RAI is
pulling most of its channels from Rupert Murdoch's Sky Italia
and launching a satellite TV alliance with Mediaset (MS.MI),
which is owned by Prime Minister Silvio Berlusconi.
Contract talks between RAI and Sky broke down this week, the
two companies said, with each blaming the other for the collapse
of negotiations. The existing contract ends on Friday.
Sky Italia said it had offered 350 million euros "minimum
guaranteed" to RAI to keep the channels on its satellite pay
television. Corriere della Sera daily said RAI had asked four
times as much.
RAI is instead creating another satellite platform with
Mediaset, the private broadcaster which is supposed to be RAI's
main competitor, and Telecom Italia (TLIT.MI) to broadcast in
areas not covered by digital terrestrial services as the country
switches to the new technology.
This service will, at least initially, be free.
RAI's three main free-to-air (FTA) channels will remain on
Sky at least for now. RAI, in common with other state
broadcasters like Britain's BBC, is contractually obliged to
make its FTA channels available on all platforms -- satellite,
digital and via internet.
Critics of the deal with Mediaset say RAI's talks with Sky
broke down for political reasons. [ID:nLH84367]
The cash-strapped public broadcaster, whose top executives
were appointed by Berlusconi's government earlier this year, can
hardly afford to snub Sky's offer, they say.
"This affair has political rather than industrial
overtones," TV critic Aldo Grasso wrote on Friday.
"With the switchover to digital and pay-TV, the battle is
not between Mediaset and RAI, but between Mediaset and Sky. And
RAI seems to have decided to side with Mediaset," he said.
Relations between Berlusconi's government and Murdoch's News
Corp. (NWSA.O), Sky Italia's owner, have deteriorated since the
doubling of value added tax on Sky Italia's pay television.
Even RAI's President Sergio Zavoli, who is close to the
centre-left opposition, said on Thursday that breaking off with
Sky was "a big favour" to Mediaset.
For Italian viewers, the showdown on satellite TV and the
move to digital mean that they will need at least two different
decoders, and in some cases three, to see all the channels
(Editing by David Cowell)