UPDATE 2-Tl Media considers broadcasting asset options

* Says no plan to sell La7 TV channel

* Shares up 3.7 pct, off highs

(Adds details, Ben Ammar reaction, updates shares)

MILAN, July 10 (Reuters) - Loss-making Italian broadcaster Telecom Italia Media (TCM.MI) has no plan to sell its La7 TV channel, but is looking at possible options to extract value from its broadcasting assets, the company said in a statement on Friday.

Daily newspaper La Stampa had reported the company's La7 and MTV channels were being eyed for a possible acquisition by businessman Tarak Ben Ammar, who later denied the report.

The shares ended up 3.7 percent at 0.1190 euros, off earlier highs before the Telecom Italia Media statement. The company has a market capitalisation of around 400 million euros ($558 million).

Telecom Italia Media's broadcasting activities include the TV channels La7 and MTV as well as digital terrestrial network assets that are being auctioned off in an operation the company has said may be delayed to 2010.

"There is no sale plan for the La7 television network, while analysis is under way on hypotheses of valorisation of single broadcasting assets," said Telecom Italia Media, a unit of phone company Telecom Italia (TLIT.MI).

Its first-quarter revenues rose 16.4 percent to 29.1 million euros, driven by La7 and its digital content operations. In the quarter its daily share of TV viewers averaged 2.9 percent.

Ben Ammar, who is a board member of investment bank Mediobanca (MDBI.MI) and of Telecom Italia, said in a statement the report he was looking to buy La7 was "groundless".

The French-Tunisian businessman is seen as close to media chiefs Rupert Murdoch of News Corp (NWSA.O) and Silvio Berlusconi, Italy's prime minister and owner of Mediaset (MS.MI), Italy's biggest private broadcaster, La Stampa said.

Sky declined to comment. The broadcaster cannot enter digital terrestrial television until 2012 under commitments made to the European Union.

The Italian free-to-air TV market is dominated by state broadcaster RAI and Mediaset, while in the pay-TV market, the leading player is Sky Italia, a unit of News Corp.

Sky Italia took the No.2 spot in Italian television revenues last year, edging past Mediaset. The biggest earner was RAI.

"I confirm I have never talked with Murdoch and never had negotiations on issues relating to Telecom Italia Media," Ben Ammar said.

Ben Ammar controls digital terrestrial frequency DFREE which broadcasts several channels. The licence on the frequency is owned by PRIMA TV, in which Ben Ammar owns 95 percent and French broadcaster TF1 (TFFP.PA) the remainder.

Telecom Italia Media owns two digital terrestrial frequencies that cover more than 75 percent of the Italian population. ($1=.7173 Euro) (Reporting by Danilo Masoni and Gianluca Semeraro; Editing by Dan Lalor and Simon Jessop)