While uncertainty over the size of Telecom's stake has recently clouded a planned deal between the two, Italian papers reported that a preliminary accord could be signed as early as this week.

However, newspapers diverged on how big a stake Murdoch would take in the new digital venture.

Financial daily Il Sole-24 Ore and Turin-based La Stampa reported that Murdoch's News Corp Europe was primed to take a majority 60 per cent stake in the digital satellite venture while French station TF1 would take 10 per cent.

But, daily La Republica reported that Telecom would not allow its stake to fall below the majority 51 per cent.

In addition to TF1, La Republica suggested that another shareholder, such as a bank, could be pulled into the deal.

The new venture will compete with Telepiu, which is 90 per cent owned by France's CanalPlus.

Corriere reported that according to "unconfirmed talk", a preliminary accord could already have been reached.

A planned deal between Murdoch and Telecom fell into doubt last week amid disagreement on the stake Telecom would take. Murdoch had announced two weeks ago in London that the two sides were close to a deal in which Telecom would take 51 per cent, News Corp Europe 39 per cent and TF1 10 per cent.

New Telecom managing director Franco Bernabe was understoodto be wary of committing a telecoms company to huge television expenditure.

However, News Corp Europe was keen to stress a deal was notoff and it had not abandoned its Italian ambitions. It has said it will enter the Italian pay-TV market with or without Telecom.