News Corp launches free channel in Italy

MILAN, Nov 6 (Reuters) - News Corp (NWSA.O) said on Friday it will launch a free digital terrestrial television channel in Italy next month in a move that heats up competition with Italy's Mediaset (MS.MI) and state broadcaster RAI.

The new Milan-based channel called Cielo, which means Sky, will start broadcasting on Dec. 1 on third-parties' bandwidth, reaching 12 million families, News Corp unit News Corporation Stations said in an emailed statement.

"Cielo will enrich the offering available on digital terrestrial in Italy, increasing competition in a sector currently dominated by Mediaset and RAI," Cielo General Manager Gary Davey said.

Media tycoon Rupert Murdoch's News Corp dominates Italy's pay-TV market through its Sky Italia satellite broadcasting unit but Mediaset, owned by Prime Minister Silvio Berlusconi, and RAI have the lion's share in free-to-air.

Mediaset itself is pushing to expand into pay-TV, clashing with Sky Italia, and has launched a satellite TV alliance with RAI.

Mediaset's pay-TV channels are broadcast on digital terrestrial frequencies. In 2012 Italy will switch off the analogue TV signal in favour of digital terrestrial. (Reporting by Danilo Masoni; Editing by Tim Dobbyn)