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Inside Move: IPO: inherently perplexing offer

RAI to float shares, but who's buying?

Anyone want to invest in RAI?

A 20% stake of the Italo pubcaster is set to be floated in 2005, according to communications minister Maurizio Gasparri.

The long-in-the-works IPO is supposed to make the national web accountable to the market rather than to the politicos who have always held sway at the overstaffed outfit known as “mamma RAI.”

Yet some wonder: How can you float a company that gets 51% of its revenue from the yearly E99.6 ($122) tax each Italo TV household is supposed to (many of them don’t) pay?

And who would want to buy tiny slices — no more than 1% per customer — of a company that barely turns a profit, while its main competitor — Silvio Berlusconi‘s Mediaset — is already a prime player on the Milan bourse?

After two years in the red, RAI in fiscal 2003 posted $101.5 million in net profits — some say thanks to creative bookkeeping. During the same period Mediaset posted a $453 million profit, 95% of which is generated by advertising.

The two three-channel webs run neck and neck in the ratings — each with a more than 45% average audience share. But RAI has 11,447 employees, while Mediaset has about half as many, 5,633. Understandably, the prospect of even a partial privatization has local labor unions up in arms.

Mediaset VP Piersilvio Berlusconi, the prime minister’s son, last week said the pubcaster’s possible IPO would be “good for RAI and for its viewers.”

Berlusconi Jr. jokingly added that his company is not eyeing a slice of its rival.

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