MILAN (Reuters) - The award of broadcast rights for Italy's Serie A football league to Sky Italia and Mediaset (>> Mediaset SpA) is clarifying valuations for the two rivals and may trigger merger activity in Europe's pay-TV market.

Under Thursday's deal, Sky Italia - a unit of 21st Century Fox (>> Twenty-First Century Fox Inc) - and Silvio Berlusconi's Mediaset will both have rights to air matches featuring the eight leading teams in Italy's top division over the next three seasons, a person familiar with the matter said.

Talks are under way to combine Sky Italia in a 10 billion euro (7.99 billion pounds) deal with media tycoon Rupert Murdoch's other European TV interests, BSkyB (>> British Sky Broadcasting Group plc) and Sky Deutschland (>> Sky Deutschland AG)

While the football rights auction does not have a direct bearing on those discussions, it could pave the way for a deal by helping to pin down the valuation of the Italian arm.

"With visibility on Serie A, we think BSkyB could formerly announce its plans on Sky Europe in the next few weeks," said a UBS analyst in a note.

People close to the situation said that deal talks were progressing and could bear fruit during the summer.

The Italian rights were initially due to be awarded in early June but legal challenges by rival suitors delayed the process.

The conclusion of the auction could also help Mediaset restructure its pay TV business, Mediaset Premium, in view of a possible stake sale to a partner, analysts said.

Italian news agency ANSA this week quoted a member of Qatar's royal family as saying Qatari-owned broadcaster Al Jazeera was looking at Mediaset's pay-TV business.

"Qatar has officially confirmed its interest in Mediaset, after years of speculation. We think a partnership announcement is imminent," analysts at Exane BNP Paribas said.

Mediaset shares rose 3.6 percent to 3.60 euros at 1037 GMT (11.37 a.m. BST), outpacing a 0.1 percent fall in the Milan blue-chip index.

Sky Italia and Mediaset already had rights to Serie A football matches.

Under the new deal Mediaset will broadcast fewer games than currently and pay 100 million euros more. Sky Italia will pay roughly what is it paying at the moment but have exclusive rights to a larger number of matches.

The Italian football league had considered repeating the auction in view of the legal complaints.

But that was viewed as too risky for cash strapped football clubs facing financial problems and the grim state of the game, beset for years by match-fixing scandals and stadium violence.

(Reporting by Danilo Masoni, Elvira Pollina, Kate Holton and Anjuli Davies; Editing by John Stonestreet)