* Fiat fights off challenge to control
* RCS shares fall to lowest since 1997 listing
(Recasts, adds background, analyst comment)
MILAN, July 17 Carmaker Fiat has won a
battle for control of RCS MediaGroup, quelling already
faint hopes of a buy out and sending shares of the influential
Italian publisher to a 16-year low on Wednesday.
RCS is a relatively small publisher compared to its European
peers, but for Italy's business elite it is a much coveted asset
because its flagship newspaper, Corriere della Sera, plays a key
role in shaping public opinion.
The move gives Fiat, Italy's largest employer, control over
three national newspapers at a time when the carmaker is under
fire from unions and politicians for putting investment in new
car models in Italy on hold.
Fiat emerged as RCS's largest shareholder on June 28 with
the surprise announcement it spent about 90 million euros ($115
million) to almost double its stake to 20 percent. The results
of an auction of unsubscribed rights announced late on Tuesday
effectively ruled out any other investor rivalling that stake.
Loss-making RCS completed a vital 410 million-euro rights
issue this week, but left a portion of unsubscribed rights that
could have potentially allowed investor Diego Della Valle to
Della Valle, chairman of luxury shoemaker Tod's,
has publicly blasted Fiat over RCS's strategy and threatened to
increase his stake to over 20 percent from below 9 percent.
But data released by the company on Tuesday showed the
auction of unsubscribed rights - the last chance for Della Valle
to up his stake - gave unknown investors a holding in the
publisher of only 6 percent.
Media investment is not new to Fiat. Fiat has held a stake
in Turin daily La Stampa since 1924, and has invested in RCS on
and off since the 1970s. Fiat's controlling shareholder Exor
also holds a stake in The Economist, and Exor Chairman
John Elkann sits on the board of News Corp.
Nor is it unusual in Italy for industrial groups to hold
stakes in media companies. Rome daily Il Messaggero is
controlled by a construction magnate, and Corriere's competitor
La Repubblica is controlled by the CIR conglomerate.
Fiat has said its investment in RCS is strategic. A person
familiar with the matter said it would give the publisher's
management the stability it needs to continue with a turnaround
Shares in RCS MediaGroup fell to their lowest level since
listing 16 years ago on Wednesday as the speculative appeal of
the shares collapsed. The publisher is controlled by a
shareholders' syndicate where Fiat holds its stake along with
By 1302 GMT RCS fell 3.2 percent to 1.17 euros and Fiat was
down 0.7 percent at 5.83 euros.
($1 = 0.7612 euros)
(Reporting by Jennifer Clark and Danilo Masoni; editing by