Silvio Berlusconi’s Fininvest became Europe’s third-largest communications group April 26, when stockholders of the giant Mondadori publishing group came to terms after 17 months of squabbling.
The war over the control of Mondadori, which pitted two of Italy’s leading industrialists, Carlo De Benedetti and Silvio Berlusconi, against each other, concluded with the company splitting into two parts. To Berlusconi go most of the Mondadori “classics,” including the weeklies Panorama and Epoca, and a controlling share of the presses belonging to the Elemond group (Einaudi, Electa, Scolastica).
Fininvest now will control a third of all the weeklies and roughly a fifth of all the monthlies published in Italy, as well as much of Italy’s commercial television. In practical terms, the acquisition brings Fininvest’s annual turnover to over $5.2 billion, placing it behind Bertelsmann ($7.13 billion) and Hachette ($5.56 billion).
De Benedetti’s company, Cir, retains control over the weekly L’Espresso and Italy’s largest daily newspaper, La Repubblica, whose editor-in-chief, Eugenio Scalfari has fought a decade-long battle against Berlusconi’s rise to numero uno in the Italian media.
Prior to the agreement, Mondadori was the country’s biggest publishing group, owned 50.3% by the holding company Amef, controlled by cousins Leonardo Mondadori and Luca Formenton; 27.3% by the De Benedetti group; 12% by Berlusconi; 2% by Carlo Caracciolo; and 2% by Scalfari.
With this deal, Fininvest has crowned itself Italy’s major multimedia group, while the dismembered Mondadori drops to the also-ran class.
Exact terms of the pact were not hammered out at presstime. However, it is believed that De Benedetti will pay Fininvest some 170 billion to 180 billion lire ($130 million to $140 million) to even out a reshuffling of stock packages.
Of note is the fact that two other Italian groups fall into Europe’s top 10 in media. RAI-TV is classified seventh with $2.65 billion of yearly activity, and RCS (Rizzoli-Corriere della Sera) ninth with $2 billion.
Just as significant is the vast advertising empire under Berlusconi’s sway. Among his three tv networks, newspapers and periodicals, he will control 43% of Italy’s advertising market.
As part of the agreement, both parties are withdrawing all legal action pending against the other (there are about 10 cases from the Mondadori “war” going through the courts right now). Fininvest also insisted on inserting a clause specifying that Berlusconi is selling back his interest in La Repubblica to De Benedetti (part of the stock shuffle) because he is “forced by the tv law to give up editorial holdings in daily newspapers.”
The controversial tv law passed last August contains antitrust provisions that prohibit cross-ownership of tv networks and publishing concerns. It will be up to the new Telecom minister, Carlo Vizzini, to decide whether Fininvest has gone beyond the letter of the law with its Mondadori acquisition. This will be clarified when Vizzini hands out national tv licenses. The licenses were to be assigned this month, but the most recent government crisis has caused a delay.
In the very small world of Italian media, Mondadori has come full circle. At the end of 1980 it was one of several publishing groups that ventured into the new field of private broadcasting. Its web was called Retequattro. In 1984, Berlusconi bought up the competition, and Retequattro became Fininvest property.
To salvage a debt-ridden company, one of Mondadori’s owners, Mario Formenton, brought in De Benedetti, head of Olivetti, against the will of Leonardo Mondadori. In the series of alliances that followed, heir Luca Formenton and Leonardo Mondadori took sides with stockholder Silvio Berlusconi, while De Benedetti allied himself with Scalfari and Caracciolo, who had sold Mondadori L’Espresso and La Repubblica in 1989, making it Italy’s major publisher.
With the latest developments, Mondadori returns to its pre-1989 size. The leading news magazines L’Espresso and Panorama are once more rival publications. And the gulf separating Retequattro from the great publishing concern is again only psychological, not financial.