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Nets fined for ad cap breach

Reg body fines Mediaset, RAI on ad rev

ROME — Italy’s Communications Authority has slapped multimillion-dollar fines on Mediaset and RAI, claiming the networks have breached advertising revenue caps meant to prevent their domination of the market.

The fines — equal to 2% of each company’s 2003 revenue — amount to about $60 million for commercial web Mediaset and $26.5 million for pubcaster RAI, according to an estimate by the media watchdog.

Both Mediaset and RAI will appeal the fines, which came after a lengthy probe of the period between 1998 and 2003.

Mediaset, controlled by Prime Minister Silvio Berlusconi, blasted the authority’s sanctions as “preposterous and lacking any legal basis.”

In the statement, Mediaset said the law allowed for a margin of flexibility, which the regulator had not taken into account.

According to the telecommunications regulator, Mediaset accounted for 31.4% of the total advertising market in 2003, RAI 38.3%. Ad rev cap is set at 30%.

Italian media experts are skeptical that the webs will ever have to pay the fines. An Italian appeals court recently annulled a $203 million antitrust fine against telco Telecom Italia for abuse of its dominant position.

Mediaset and RAI, which run neck and neck in the ratings, have long been under fire for their stranglehold on Italy’s TV market. Together they hold more than 90% of the country’s average annual aud share.

Earlier this month, the Communications Authority warned that their duopoly harmed pluralism and urged legislators to limit their advertising intakes in the country’s nascent terrestrial digital TV sector as a means to foster greater competition.

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