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Cable Technology Feature Article

March 05, 2013

Telecom Italia Says Arrivederci to Italian Broadcast Channel for just 1M Euros

By Tara Seals, TMCnet Contributor

Telecom Italia (News - Alert) Media is planning to sell its Italian, cash-hemorrhaging La7 broadcast channel to Cairo Communications. The deal is worth a mere 1 million euros, but even at that, Cairo calls it a “hot potato”—and for Telecom Italia, it’s a big financial hit any way you slice it.

According to a Yahoo! Finance analysis, La7 has a market value of 240 million euros and net debt of 260 million euros. But in 2012, La7 saw a loss of 66.3 million euros before interest, tax, depreciation and amortization (EBITDA), a significant fall-off from its 4.7 million-euro profit in 2011. The network said that higher programming costs and a fall in advertising conspired against its fortunes.

Even so, for Cairo to agree to the deal, La7 will need to be recapitalized to a positive net financial position of at least 88 million euros. Yahoo! reported that Telecom Italia will waive the 100 million euros in receivables due from its subsidiary to help ease that process along.

"I have taken on a hot potato," the head of Cairo Communication, Urbano Cairo, said in a radio interview.

La7 has long languished in the shadow of Silvio Berlusconi’s Mediaset conglomerate, which dominates most of Italy’s TV airwaves—and most of its advertising. La7 has a 3 percent share of Italy's domestic TV audience, drawn mainly by its popular talk shows.

Telecom Italia Media also approved its 2013-2015 business plan which foresees a positive net cash flow from 2014. EBITDA is expected to rise 36 percent and EBITDA margin to reach 33 percent at the end of 2015. After the sale, Telecom Italia Media will still have its broadcasting infrastructure and content delivery network business, and it will retain its controlling 51 percent stake in music channel MTV Italia.

Edited by Ashley Caputo

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