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Bill would force Italo nets to digital

ROME — State pubcaster RAI and Silvio Berlusconi’s Mediaset each must transfer one terrestrial television channel to digital TV to dismantle their combined dominance of Italy’s advertising market, a government minister prescribed Thursday.

On the news, Mediaset shares fell 1.2% to E8.53 ($10.69). Analysts at Euromobiliare estimate the decision could shave $502 million off Mediaset’s bottom line.

Telecommunications minister Paolo Gentiloni issued the statement at a special Cabinet meeting Thursday, unveiling a media bill that packs considerably more punch than most analysts had expected.

RAI and Mediaset control 85% of Italy’s terrestrial TV market, prompting European Union officials to call for reform.

Under the measure, RAI and Mediaset would have 15 months from the time the law is passed by Parliament to shift one of their three terrestrial channels to digital TV. If it passes, the law would open up the market for TV ad revenue to players such as Telecom Italia’s La 7.

“This should not be seen as a threat, but as an opportunity,” Gentiloni told reporters.

Berlusconi reacted angrily to the proposal, branding it an “act of banditry.”

All terrestrial channels will be forced to switch over to digital by 2012 under the law, Gentiloni said in an attempt to minimize the fallout. However, 2012 is four years later than was previously planned.

Gentiloni’s radical proposal comes as a surprise. Most analysts thought the government would introduce watered-down reform, noting the Romano Prodi government has only a slim majority in Parliament and would certainly see any reform of the media industry vigorously attacked by the Berlusconi-led opposition.

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