Milan magistrates last week set July 4 for the first preliminary hearings regarding prosecution of Italy's former prime minister and owner of media group Finivest Group, for paying bribes to tax inspectors which he says were extorted. Also last week, the managing director of Fininvest advertising unit Publitalia was arrested; Marcello Dell'Utri is being investigated for alleged false accounting in several sports sponsorship deals.
But before Mr. Berlusconi's court appearance, Italians will vote June 11 on 12 popular referenda, four of them media antitrust proposals. The proposals would allow only one TV network per owner; ban ad breaks during TV movies, opera and theatrical works; allow ad time concessionaires to sell time on only two national networks; privatize state-owned TV group RAI.
Should the referenda pass, the results could be devastating for Fininvest-which owns three national TV networks, earns $1.8 billion in advertising revenue and sells ad space for six TV channels.
The vote's outcome will have a definite impact on Fininvest's current negotiations with Rupert Murdoch's News Corp. and with other international media groups such as Time Warner Inc. and Kirch Group of Germany to sell major stakes in its TV, advertising and entertainment holding company Mediaset.
Both News Corp. and Fininvest confirmed that they were in talks; however, a News Corp. spokeswoman in London said no firm offer has been made and that the numbers being reported-$2.8 billion for a 51% stake of Fininvest-are "highly exaggerated."
Sources close to the talks between News Corp. and Fininvest say the proposal to acquire the 51% stake includes the option to buy the rest of Fininvest's media holding at a price to be negotiated after the referenda.
In April, Fininvest President Fedele Confalonieri announced a plan to privately place up to 35% of Mediaset with international investors and float another 30% of the company on international markets.
The first phase of the operation, aimed at reducing Fininvest's nearly $2 billion debt, is a capital increase of $1.2 billion reserved for eventual media partners.
Morgan Stanley, Fininvest's adviser for its market flotation, estimated the value of Mediaset to be about $4.5 billion.
"The referenda are an excuse to get things going," said media analyst Francesco Siliato. He underlined that even if the TV ownership proposition does not pass, the Italian Supreme Court has ruled that the actual makeup of Italy's TV system violates antitrust and free-competition standards; thus, the Italian Parliament is still obliged to pass stricter legislation.
While popular referenda have played an important role in Italy's democratic process, media analysts say it's strange that the general public is being asked to vote on such issues. "This isn't about divorce or abortion," said Paola Cassoni, media analyst at Lintas Italy, referring to Italy's two famous referenda. "It is unrealistic to expect the man on the street to decide who can sell media space."
Advertisers and advertising trade groups express their desire to see an end to Italy's TV duopoly. With Fininvest controlling 60% of Italy's TV ad revenue and RAI almost all the rest, it is difficult for a single national network or regional channel to survive or even gain market access.
In February, Mr. Berlusconi's three TV networks broke a controversial ad campaign defending his commercial TV conglomerate against the pending referenda. The two-minute spot, created in-house, shows excerpts of famous movies, news events and popular TV shows and then suddenly the screen goes blank, and the audio dies. Eventually a message is typed across the screen-"1980-1995. In these years you have had something more in your life." The message continues arguing that the referenda threaten the freedom and well-being of Italians.
The spot was condemned in March by Italy's media watchdog authority, Garante per L'Editoria, who ruled that the spot misled viewers into believing that the referenda would abolish TV commercials altogether.
Fininvest changed the spot and has since aired several new ones-all with an infomercial style. A Rome court ruled several weeks ago that ads for or against the referenda would be allowed up until the day of voting and established a 35% discount for TV ad space.
Promoters of a "yes" vote have argued that they do not have an opportunity equal to that of Mr. Berlusconi to reach voters. A public appeal by novelist Umberto Eco has raised $2 million for the promoters who say they will break their highly secretive campaign the last 10 days before the vote. A Committee for Yes official said that famous actors and comedians have volunteered to appear in the ad campaign, and an ad agency is donating the creative work and production, but he declined to disclose any names.
Opinion polls show the referenda stand a good chance of passing.