Can Silvio keep his empire?

TV titan may give up channels for spot in history

MILAN — While Silvio Berlusconi has loudly criticized his detractors for harping on his legal troubles at such an inopportune moment, the TV titan turned politico has been unusually mum about his plans for the media industry.

That’s because the Milanese billionaire, who is widely tipped as a shoe-in for prime minister after the general election this coming Sunday, doesn’t want to rock the boat.

If he is elected, he will indirectly oversee all mainstream Italian television — his own three Mediaset channels and pubcaster RAI’s three rival channels. That would be like having Rupert Murdoch in charge of CBS, NBC, ABC — and Fox — as well as at the helm of the government.

Despite complaints from many national and international quarters about conflicts of interest between his $12 billion media empire and his political aspirations, bets are that Berlusconi will still try to exercise control over Mediaset once he’s in power.

Berlusconi did say last week that he would reveal his plans for the company before the general election, probably in an interview on his own flagship station Canale5 on Friday night.

No problem

Close friend and Mediaset chairman Fedele Confalonieri recently said that if Berlusconi’s conflict of interest problem becomes too great, “he will rid himself of it, because he will not allow the issue to interrupt his stroll into history.”

But the accent there is on the “if.”

Most Italian observers say that, despite the latest onslaught of media criticism of Berlusconi’s business practices, it’s unlikely that Italian public opinion will force him to relinquish control of the company he built.

Berlusconi has, however, vaguely promised to set up “a blind trust” in which to park his assets within 100 days of his electoral victory.

And potential buyers and allies are getting ready to bid for parts of his TV group Mediaset, if and when they become available. These include cash-rich Telecom Italia, which has recently beefed up its media interests. But Rupert Murdoch, whose News Corp. has often been rumored as a possible buyer, said late last week he wasn’t interested in acquiring Mediaset. Murdoch was in Italy to meet with partners in pay TV service Stream, which is planning to merge with rival Telepiu.

Any Mediaset sale would be for a minority stake, in any event, while a blind trust would be a much watered-down version of the U.S. variety. After all, Berlusconi got away with conflicts of interests in 1994, when he was prime minister for seven months and still kept control of his TV holdings.

And if he can get elected with a half-dozen legal suits against him for shady business practices still pending, why should he worry about something as nebulous as conflict of interest?

Kid power

The grip of the Berlusconi family on his holding company Fininvest and his TV arm Mediaset has actually tightened recently. Berlusconi’s children Pier Silvio and Marina have extended their power. Marina, 34, dubbed the Czarina because of her forceful ways, is Fininvest deputy chairman and works closely with group chairman Claudio Sposito, a former investment banker whom she and her father hand-picked to lead the group.

Since Berlusconi gave up day-to-day management of Fininvest in 1994 to enter politics, Marina has been considered the family shareholder inside the group: Initially just a go-between with her father, she has become a real decision-maker.

More recently, 31-year-old Pier Silvio has emerged as Mediaset deputy chairman and head of RTI, the TV division of the media group.

The growing power of the two young Berlusconis has already forced some top managers to resign, including former CEO Maurizio Carlotti, who left in 2000, and Giorgio Gori, a former protege of Berlusconi and managing director of Canale 5, who recently ankled.

Thus, the thinking goes, the two kids will run the shop up in Milan, while their father makes policy in Rome.

Specifically, he is likely to try to squelch legislation extending antitrust limits on the media, trying to protect the status quo in which Mediaset enjoys a 45% national audience share and a 66% slice of the TV ad market.

Meanwhile, RAI is likely to be affected dramatically by Silvio’s ascension. If elected, Berlusconi will do his best to bury plans to privatize RAI. The pubcaster would remain a weak competitor to Mediaset and a political pawn in the hands of the government — Berlusconi’s government.

A list of “undesirable RAI journalists and managers” is already circulating among Berlusconi backers; his political ally, the neo-Fascist party, has even promised “to make a clean sweep of the network.”

Another possibility is that a Berlusconi government would privatize only one of RAI’s three terrestrial channels.

That would leave the pubcaster to compete against Mediaset’s three channels with only two services, relatively low revenues and a mandate to reinvigorate its “public service mission” — a euphemism for not competing for entertainment shows.

The third, privatized channel would in this scenario not be strong enough to represent a commercial threat to Mediaset.

(Elizabeth Guider in Los Angeles contributed to this report.)

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