A French-U.S. Merge for Italy's Pay-TV.

The deal is closed. Well, almost closed. After all, it is a French-Italian-American-Australian deal. Italy's two pay-tv services, Tele+ and Stream, have a "gentlemen's agreement" to merge. All they need now is the green-light from the Italian and EU's antitrust authorities. Jean-Marie Messier of Vivendi-Universal (which controls Tele+) is hopeful.

After many months of negotiations on the standard decoder to be adopted, the resulting solution was a merge. Last year, Tele+, with 1.72 mil lion subscribers lost $400 million, while in 2000, Stream -- which has 800,000 subscribers -- lost $250 mil lion. The new company created by the merge will be two thirds owned by Tele+ and one third by Stream.

Stream ownership configuration will change. Currently the company is equally divided between Murdoch's News Corp. and Telecom Italia. Telecom has agreed to sell its shares to the Australian mogul.

Once the merge is approved by the antitrust authorities, Rupert Murdoch can have his 50 percent of the new company, whose name will remain Tele+. News of this deal was well received by investors. Shares of Vivendi-Universal, which controls 98 percent of Tele+ through Canal Plus, went up 2 percent on the Paris stock exchange. No problems are expected for Italian State broadcaster RAI, which owns 2 percent of Tele+. "We have a multi-year agreement with Tele+. A merge with Stream will not change anything. We have already had confirmation of this from our partners," said RAI general director Claudio Cappon.

Subscribers will finally be able to get their hands on the long-awaited compatible decoder, which was required by law, but previously impratical to implement.

Only Italy's soccer teams seem to be worried, since they receive about $400 million from Stream and Tele+ for the TV rights to the Italian soccer championship. The contracts, however, don't expire til 2002.