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Berlusconi pulls off Italian job

Grip on media will help him win at polls

ROME — Far from addressing the conflict of interest charges that have dogged him since his 2001 election, TV-tycoon-turned-Prime Minister Silvio Berlusconi continues to tighten his grip on the media.

Emboldened by his own tailor-made media law, Berlusconi’s Mediaset and his government areattempting to brighten the premier’s waning political star in the run-up to the 2006 election.

And this will bolster his web’s soaring profit margin.

The gislation replaced previous rules under which Mediaset would have been forced to get rid of one of its three terrestrial channels to make room for more players. It also raised the cap on the leading commercial player’s ad revenues and prompted the imminent partial privatization of pubcaster RAI.

Berlusconi’s election campaign began last month when his Mediaset removed Enrico Mentana, the respected managing director and anchor of Canale 5’s high-rating nightly “TG-5” newscast after 13 years.

Mentana, 49, believes his dismissal was purely political, prompted by the controversial media law that did away with impediments to Mediaset’s growth.

Having reinforced its dominant status, it was no longer a political necessity for Mediaset to have a balanced newscast to deflect criticism. He was replaced as “TG-5” chief by Carlo Rossella, the blatantly pro-Berlusconi editor of Berlusconi-owned newsweekly Panorama.

“Mentana’s dismissal is undoubtedly to be viewed in terms of the lead-up to elections, in which Berlusconi faces an uphill task,” says leftist historian Paul Ginsborg, author of “Silvio Berlusconi: Television, Power and Patrimony.”

The powerful PM controls or influences 90% of Italian TV via his three national channels and pubcaster RAI’s three channels.

His government appoints RAI’s top execs — and its influence was duly noted by RAI’s former prexy, Lucia Annunziata, who quit in May, accusing pols of interference.

Earlier, two top-rated RAI journos, Enzo Biagi and Michele Santoro, had had their shows pulled after being publicly criticized by the Prime Minister.

Now the pubcaster, which is 50%-financed by an annual TV tax, is prepping for a 25% IPO. Some pundits fear that Mediaset could benefit from RAI’s partial privatization and say RAI and Mediaset are in cahoots to drive down product prices.

“There is no free market in Italy: It’s a cozy duopoly that is getting cozier all the time, and we’re getting strangled,” complains Carlo degli Esposti, prexy of TV producers body ATP.

Degli Esposti, maker of popular series “Il Commissario Montalbano,” contends that TV producers are being squeezed by the cost-cutting that has been key to Mediaset’s stellar profits.

Mediaset announced a whopping 61% pre-tax profit hike to e723 million ($931 million) for fiscal 2004’s first three quarters.

Budget-slashing could also become integral to RAI’s flotation plan, which would put producers between a rock and a hard place.

Riccardo Tozzi, former Mediaset head of drama, disagrees.

“There is definitely a price problem in Italy,” the topper of film and TV producer Cattleya says. “But it is caused by skyrocketing manufacturing costs due to the transition from a devalued lira to the euro.”

While the impact of RAI’s IPO on the industry remains to be seen, there is little doubt that the media law has not stimulated competition.

The country’s antitrust authority recently deplored that Mediaset accounts for 65%, or nearly two-thirds, of the total TV ad pie.

But due to the new media law, the watchdog’s weary warning carries no sanctions.

And despite a nearly 2% drop in primetime ratings this year, Mediaset is forecasting an 8% to 10% rise in ad revs for fiscal 2004.

“Ratings don’t count anymore,” says media analyst Francesco Siliato.

“Companies buy ad time from Mediaset just to curry favor with Berlusconi,” claims Siliato, a regular contributor to financial daily Il Sole 24 Ore.

The only TV player apparently untied to the Italian government is News Corp.’s Sky Italia paybox, which — in the absence of competitors — recently reached its 3 million subs goal.

“It’s funny how Rupert Murdoch is playing the market in Italy by airing news with a leftist bent,” Ginsborg notes. “With Berlusconi in power, he knows how desperate Italians are for it.”

All this hasn’t gone unnoticed by the European Parliament, which warned in March of possible “breaches of the right to freedom of expression and information” in Italy, owing to “a unique combination of economic, political and media power in the hands of one man.”

However, if Berlusconi heard that warning, he is ignoring it.

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