MILAN — These are the worst of times and the best of times for Italian tycoon-turned-politico Silvio Berlusconi.
As prime minister, he has stumbled through a series of political, economic and diplomatic disasters since he was re-elected four months ago.
But as the owner of Fininvest, Italy’s most important media group, he is basking in unprecedented success and power, thanks in no small part (che sorpresa!) to favors from his own government.
The Italian parliament, for example, last month pushed through legislation making it harder to prosecute fraud and corruption. Coincidentally, this will reduce long-standing legal threats against Berlusconi himself.
At the same time, talk of Berlusconi being forced to sell his Fininvest stake, or at least to park it in a blind trust, has died down.
Instead, the government is proposing to set up a toothless watchdog, with powers to scrutinize but not to punish any conflicts of interest between Berlusconi’s twin roles as head of state and head of a $12 billion media empire.
Opposition parties have decried this maneuver as “a banana republic solution unworthy of a civilized country.”
That might be so much political hot air, were it not for the fact that Berlusconi’s clumsy conduct has recently done much to discredit his regime, and by extension his country, in the wider geo-political arena.
His most egregious blunder came when he publicly characterized Western society as “superior” to the Islamic world, thus endangering the effort by the U.S. and its allies to draw Arab countries into a global coalition against terrorism.
In response, the BBC News quoted one British government source describing Berlusconi as “a moron” — exceptionally blunt language for such sensitive times.
Berlusconi’s domestic popularity had already begun to wane, following his much-awaited international debut as host to the G8 summit in Genoa. That event ended with two days of rioting, several deaths and much criticism of Italian police tactics.
The economic downturn is also putting pressure on the electoral promises of his Forza Italia government to create jobs, reduce taxes and reform pensions.
Fininvest and its broadcast unit Mediaset have not been immune from the effect of this slump. Mediaset, the only TV company listed on the Milan stock exchange, has seen its share price drop 54% since last October.
But Mediaset is suffering no worse than other Euro media stocks, and analysts are confident the company will close 2001 with a profit. In 2000, Mediaset revenues rose strongly to $2.1 billion and profits reached $385 million.
More importantly, within the Italian TV market Mediaset has seen its challengers melt away after Telecom Italia’s plan to relaunch debt-ridden TeleMonteCarlo as a serious competitor failed to materialize.
Pubcaster RAI, which offers the only real ratings rivalry to Mediaset’s three webs, has been hit the harder of the two by the slump in ad revenues.
It also is hampered by the fact that its management is in a holding pattern, waiting for February when a new board close to Berlusconi’s center-right coalition will be appointed.
Fininvest’s film unit Medusa is on a roll, emerging from the 2000-01 box office season as the undisputed Italian market leader, with a 23% share and nationwide grosses of more than $100 million.
Berlusconi also has consolidated his personal control over Medusa by installing daughter Marina as president and Giampaolo Letta, son of his own right-hand man, Gianni Letta, as her deputy.
Even Silvio’s soccer team, AC Milan, has bounced back from its steep decline in recent seasons and is outperforming most other Italian clubs both on the pitch and financially.
On the legal front, Berlusconi still faces court action for alleged corruption, bribery and financial irregularity. But the chances of these charges sticking have been significantly reduced by new laws passed recently by parliament that effectively decriminalized false bookkeeping.
This might even force magistrates to drop two cases against the prime minister.
On Oct. 3 the Senate approved an even more controversial bill, which lays out strict guidelines for Italian magistrates involved in cross-border investigations. This will make it harder for investigators to obtain financial information from abroad, which might be vital for probing Berlusconi’s international dealings. The prime minister’s critics accused him once again of using his political power to protect his personal interests at the expense of Italy and the international community.