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Italy’s prime minister faces electoral losses

Berlusconi's up against erosion of power

Silvio Berlusconi’s stinging back-to-back defeats at the polls in the past two weeks are being called an Italian Spring by those who hope the long-ruling TV tycoon-turned-politico’s star is finally falling.

But what might “the sunset of a long (Berlusconi) season,” as newspaper Corriere della Sera put it, mean for his multipronged Mediaset empire?

Interestingly, Mediaset is in the midst of a complicated and controversial megamerger of its broadcasting infrastructure with Italian telecommunication tower operator Digital Multimedia Technologies in a deal that would make Mediaset the leader in the field of TV signal transmission towers.

If DMT shareholders and local regulators greenlight the deal, Mediaset could hold major sway over potential competitors in Italy’s expanding digital terrestrial TV business, regardless of who runs the country in the near future.

Meanwhile, on June 14, national media regulator Agcom said Mediaset, whose core biz is TV, surpassed Rupert Murdoch’s rival Sky Italia paybox in 2010 in terms of overall revenues, valued at €2.77 billion ($3.96 billion), after Sky had overtaken Mediaset two years earlier.

Agcom chairman Corrado Calabro said Mediaset leads the Italian media sector with a staggering 56% of overall advertising spending, noting that it’s also building a strong position as Sky Italia’s competitor in the pay-TV field.

This indicates that Berlusconi’s influence on the national media landscape may have given Mediaset an edge, at least up until recently.

But despite the revenues, what’s certain is that a strong link exists between Berlusconi’s politics and how the market sees Mediaset.

Swiss bank UBS last week noted that Mediaset shares dropped 19% this past month. UBS also cited “political uncertainty” as a prime motive to maintain its “neutral” rating for Mediaset, despite there being “room for a re-rating” upward.

In the recent elections, Berlusconi first lost key local races in his Milan power base and in Naples.

Then he was hit by another clear-cut slap in a referendum to halt plans for nuclear energy, block privatization of water utilities and prevent him from skipping court cases involving Mediaset and his latest sex scandal by claiming government duties as a “legitimate impediment.”

Now political pundits see Berlusconi’s erosion in popularity as a sign of his weaker TV influence over Italy’s electorate, with the rise of the Internet and social networks as campaign tools that are leveling the playing field.

Opponents have noted that at the recent G8 meeting in France, Berlusconi, who launched private TV in Italy, was the only world leader without a Twitter account. They hope that in the age of Facebook and Twitter, after holding Italians in the thrall of his skillful TV spin for 18 years, the 74-year-old mogul’s political magic may be slipping into history.

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