Italy's P.M. turns difficult times to his advantage

MILAN Bruised and battered he may be, but Silvio Berlusconi, Italy’s prime minister and the controller of the Mediaset TV empire, probably allowed himself a quiet smile as he recuperated during his Christmas break.

It’s been a dreadful 12 months for the 73-year-old mogul, involving sex scandals, corruption charges and a bitter separation from his wife of 19 years, Veronica Lario.

Then on Dec. 13 came the attack at a Milan political rally that put him in hospital with facial wounds and a broken nose.

But Berlusconi is adept at turning events to his advantage. His supporters painted a picture of a brave leader under siege from leftist agitators, which hiked his poll ratings 7% within a week of the assault.

And while the country’s attention was gripped by the febrile political atmosphere in the weeks before and after the attack, broadcast policy changes were afoot that industryites believe will boost Berlusconi’s broadcast empire at the expense of his archrival, Rupert Murdoch.

This time last year his government announced controversial tax rises on pay TV subscriptions, to the fury of the News Corp. boss, who controls satcaster Sky Italia.

Twelve months on, the Italian government has decreed that the maximum airtime pay TV operators can give to advertisements will fall from 18% to 12% by 2012.

There’s no doubt that cutting advertising penalizes Sky and is a move that really can’t be justified,” Italo analyst August Preta of Rome-based IT Media Consulting, told Variety.

That wasn’t all. News Corp. was due to launch its own free terrestrial digital channel Cielo (Italian for Sky), on Dec. 1.

But the launch was delayed by Berlusconi’s communications minister Paolo Romani, and it missed out on the all-important Christmas advertising bonanza.While Berlusconi’s position as prime minister has undoubtedly helped Mediaset’s interests, some of the tawdrier allegations he now faces — of Mob links, bribery and partying with prostitutes — may now be a problem for the broadcast group.

The spotlight will be back on Berlusconi and Mediaset in January with the resumption of his trial on tax fraud charges, involving the purchase of U.S. film rights.

But analysts counter that spending power is the only real issue. The bottom line for the American market is that Mediaset is still going to be spending $300 million in 2010 buying U.S. content,” says Deutsche Bank analyst Alessandro Bai-Badino.

Mediaset’s financial clout was dramatically illustrated in December when the broadcaster finalized the $1.5 billion deal to take control of a second free-to-air television station in Spain as part of a tie-up with Spanish media conglom Prisa.

The link-up also saw Mediaset get into bed with the media company that this summer published the notorious photos of Berlusconi frolicking with topless showgirls at his Sardinian villa.

Was Piersilvio Berlusconi, the Prime Minister’s son and Mediaset VP, embarrassed? “Not a bit,” he told newspaper Corriere della Sera.

Bai-Badino says that Mediaset is in a strong position.

“All things considered, Mediaset has performed quite well this year. And next year, if things improve in terms of advertising, Internet and TV will be the first to feel the benefits.”

And it looks as if Murdoch will have the last laugh when it comes to pay TV.

At the end of 2009 Mediaset will have 3.6 million pay TV subscribers. By the end of 2010, it might have 4.1 million,” Bai-Badino says. “By then Sky Italia will have gone from 4.8 million to over 5 million.”

As ever, Berlusconi’s strongest competition comes not from a weak and divided political opposition but his implacable rival at News Corp.

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