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Telecom Italia Media to sell La7 to Cairo CommunicationUS-TELECOMITALIAMEDIA-CHANNEL:Telecom Italia Media to sell La7 to Cairo Communication
MILAN (Reuters) - Telecom Italia Media, the broadcaster controlled by Telecom Italia, has agreed to sell its loss-making La7 television channel to Cairo Communication.
"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 that was expected to approve the deal.
In a separate statement, Telecom Italia Media confirmed the deal and said that Cairo Communication would pay a symbolic price of 1 million euros ($1.3 million).
La7's share of Italy's domestic TV audience is only about 3 percent, making it difficult to generate sufficient advertising revenue to cover its high costs.
The purchase of La7 would give of Cairo Communication a foothold in a commercial television market dominated by Silvio Berlusconi's Mediaset and could also help to protect group's lucrative contract to sell advertising on La7, which is due to expire in 2019.
In 2012 La7 booked an loss of 66.3 million euros before interest, tax, depreciation and amortization (EBITDA), against a 4.7 million euro profit in 2011, citing higher programming costs and a fall in advertising revenue.
Telecom Italia had been looking to sell its 77.7 percent stake in Telecom Italia Media to cut debt and fund investments. Telecom Italia Media has a market capitalization 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 to carry La7 and other television channels.
Shares in Telecom Italia Media were down by more than 5 percent at 11:20 a.m. ET, against a 0.6 percent dip in the broader Milan index. Cairo's shares had edged 0.5 percent higher.
(Reporting By Danilo Masoni; Editing by David Goodman)
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