Telecom Italia Media Sells La7 TVs to Cairo Communication

By Manuela Mesco

MILAN--Italian broadcasting company Telecom Italia Media SpA (TME.MI) said Monday it will sell its La7 television channels to Cairo Communication SpA (CAI.MI) in a deal valued at 1 million euros ($1.3 million).

La7 television channels are controlled by Telecom Italia Media, a broadcasting company owned by Italy's largest telecommunications operator Telecom Italia SpA (TI).

Cairo Communication, which also manages advertising for La7 channels, will buy La7 S.r.l. after a recapitalization, which will bring La7's net financial position to EUR88 million and shareholding equity of EUR138 million. The agreement includes that the TV channels are sold without EUR100 million of debt owed to Telecom Italia, Telecom Italia Media said in a statement.

The decision, during a board meeting in Milan, comes several months after Telecom Italia decided to sell its television unit in a bid to raise cash and reduce net debt.

Telecom Italia Media will now only own some television frequencies and a 51% share in MTV Italia channel; it will continue to be controlled by Telecom Italia.

Telecom Italia Media also reported Monday its net loss widened in 2012 to EUR240.9 million from a loss of EUR83.8 million the year earlier. The company's net debt stood at EUR260.1 million at Dec. 31 2012, nearly double the EUR138.7 million at the end of 2011. Revenue fell to EUR222.7 million in 2012 from EUR238.2 million for 2011.

Telecom Italia Media said it expects revenue to increase at an annual average rate of 11% and is targeting a positive net cash flow from 2014, following the implementation of a three-year strategy plan aiming at restoring the group's profitability. The plan is expected also to lead to a rise in Ebitda, or earnigns before interest, taxes, depreciation and amortization, at an annual average rate of 36%.

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