* Cairo Communication to buy La7 for token sum
* Telecom Italia waives 100 million euros in receivables
* Deal underscores hard times for Italy's media industry
* Broadcasting sector faces prospects of regulatory overhaul
* Telecom Italia Media shares down 6.4 percent
(Recasts, adds details from statement)
By Danilo Masoni
MILAN, March 4 Telecom Italia Media
said on Monday it would pump money into its cash-burning La7
channel before offloading it to media firm Cairo Communication
for a token price.
The Italian broadcaster, controlled by telecoms group
Telecom Italia, has agreed to sell its flagship
network for 1 million euros in a deal that underscores the
difficulties of Italy's media industry.
"I have taken on a hot potato," the head of Cairo
Communication, Urbano Cairo, said in a radio interview after a
Telecom Italia Media board meeting on Monday to approve the
The sale comes as Italy's TV sector faces the prospect of
being opened up after years of dominance by Silvio Berluscon's
Mediaset but the economic outlook remains clouded by the
poor trend in advertising sales.
La7's share of Italy's domestic TV audience has risen in
recent years thanks to popular talks shows, but it still remains
at just around 3 percent, making it difficult to generate
sufficient advertising revenue to cover its high costs.
The purchase of La7 would give Cairo a foothold in a
commercial television market dominated by Mediaset and could
also help protect its lucrative contract to sell advertising on
La7, due to expire in 2019.
In 2012 La7 booked a loss of 66.3 million euros before
interest, tax, depreciation and amortisation (EBITDA), against a
4.7 million-euro profit in 2011, citing higher programming costs
and a fall in advertising.
Under the deal, La7 will be recapitalised before the
transaction to give it a positive net financial position of at
least 88 million euros, while Telecom Italia will waive 100
million euros in receivables due from its subsidiary.
Telecom Italia had been looking to sell its entire 77.7
percent stake in Telecom Italia Media to help cut a 28
billion-euro debt pile and fund costly network upgrades.
Its subsidiary has a market value of 240 million euros and
net debt of 260 million euros.
After the sale of La7, Telecom Italia Media would retain its
profitable broadcasting infrastructure business, which leases
bandwidth for La7 and other television channels.
The Milan-based company will also keep its 51 percent stake
in music channel MTV Italia.
Shares in Telecom Italia Media fell 6.4 percent on Monday,
against a 0.7 percent dip in the broader Milan index.
Cairo shares edged 0.7 percent lower and Telecom Italia ended
Centre-left leader Pier Luigi Bersani, who could become
Italy's next prime minister, has spoken in favour of an overhaul
of Italy's communications sector.
($1 = 0.7687 euros)
(Editing by David Goodman and David Cowell)