By Joe Lynam BBC World Service business reporter

Silvio Berlusconi's media empire faces a challenge from Rupert Murdoch

The flotation of Germany's satellite TV service Premiere in March was well oversubscribed and has been a success thus far - rising some 7% on its first day of trading alone.

Its previous foray into the German pay TV market was a flop when it was owned

by the now defunct Kirch Media.

One of the main reasons behind the failure back in the 1990s is that Germans are used to getting their TV free-to-air on one of the 30 or so terrestrial channels.

British model

Premiere hopes to change that and wean Germans off these and onto pay TV.

The German market has some 30 free-to-air channels - representing more quantity than quality, commentators say.

Premiere reckons the time is ripe for a strong pay TV service featuring sports and films.

Premiere hopes to emulate the pay TV success in the UK, where one-third of households subscribe - three times as many as Germany. And British users are paying more as well - almost half as much again compared to Germany.

The main player in Britain has always been Rupert Murdoch's BSkyB.

His Sky channels snapped up the rights to premiership football in 1992 and correctly guessed that people would pay a substantial premium to see live English soccer matches.

Media moguls clash

Italy is a different prospect, though.

That country's television has been predominantly free of charge and dominated by state broadcaster RAI and Italian Prime Minister Silvio Berlusconi's Mediaset.

Recently though, Rupert Murdoch's News Corporation has taken control of the country's pay TV market and aims to make it profitable through its sports and entertainment offering.

Italians, however, now have a growing list of ways they can access premium TV services - especially the coveted Serie A football.

Since the start of the year, they can buy access to top football matches using new pre-paid vouchers for pay-per-event services from Mediaset and Telecom Italia. In the first month alone some 1.5 million of these vouchers were sold at a cost of only �5.

Increased competition

But could the Italian market yield average revenues per user approaching the �50 per month currently enjoyed by Sky in Britain?

"That kind of money might be too much for many [Italian] families," says Luigi Pugliese, a partner with the consultants Booz, Allen and Hamilton in Milan and author of the book Next TV.

"Also there is increased competition for Sky Italia from companies such as Telecom Italia and BT. There needs to be some sort of low cost model to cover this kind of service."

The up side for the Italian pay TV market is that it is young and underdeveloped but, it has yet to produce any substantial returns.

Growing trend

The trend towards paying for sport and specialist programmes shows no sign of abating.

But with new ways of watching TV being devised all the time, strategies for dealing with new formats, such as mobile phones or broadband Internet, are still in their infancy.

And as the analogue signal gets switched off around Europe, consumers will be the ones who decide what they want to watch, how they want to watch it, and whether they are willing to pay for it.