Italy's Prime Minister Looks to Bust TV Duopoly

Prodi Calls on Antitrust Officials to Pave The Way for More Competition

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ROME (AdAge.com) -- The days of Italy's TV industry operating as a duopoly may be numbered, according to incoming Italian Prime Minister Romano Prodi, who told Advertising Age he will ask Italian antitrust officials to figure out the best way to introduce more competition into the sector.

One option under consideration, according to Mr. Prodi, is peeling one network each away from the Media-set empire owned by outgoing Prime Minister Silvio Berlusconi and from state broadcaster RAI-though Mr. Prodi cautions it is not up to him to determine what steps will be taken (AA, April 24).

"This is about fair competition," said Mr. Prodi in an interview, one of his first since his coalition defeated Berlusconi's coalition in the vote held last month. "I have always said that in order to have a democracy you must have competition, and the Italian television sector is for all intents and purposes a duopoly, and it's practically a monopoly in terms of advertising."

RAI and Mediaset combine to dominate around 93% of all TV viewer hours in Italy. Media-set alone accounts for 55% of viewer hours and 66% of TV advertising sales. "That cannot stand, though it will not be up to me how it is remedied," Mr. Prodi said.

He indicated he will call on Italy's increasingly powerful antitrust authority to come up with the best remedy for the lack of competition in the TV sector. Officials from the authority declined to comment on the case when contacted. Mediaset executives could not be reached for comment at press time.

There are other possibilities for action, including legislation that would cap government advertising spending with any single media source and even a law that caps Mediaset's market share among TV viewers or advertisers. But the divestiture of one network each from Mediaset and RAI remains the most talked-about option.

According to a adviser to Mr. Prodi who spoke before the election, the two networks could be broken away to form a new company, with rights sold by auction and proceeds divided by Mr. Berlusconi's Mediaset and state broadcaster RAI. Mr. Prodi declined to discuss that level of detail during the interview.

Among Mr. Berlusconi's three networks, the smallest one, Rete 4, heavily programmed with sitcoms and Italian shows, is considered the likeliest to go on the block. His other two networks are Canale 5, Mediaset's leading and oldest network, airing mainly films and game shows, and Italia 1, which is full of sitcoms.

According to analysts, any significant changes are sure to be opposed vigorously by Mr. Berlusconi, Mr. Prodi's chief political rival.

"Don't think Berlusconi is going to sit back and let a Prodi government unravel the crown jewel of Berlusconi's massive business empire," said Antonio d'Aquilla, an author and retired academic and media sector analyst. "This would spark a pitched battle."

But it's a battle Mr. Prodi said he feels confident he'll win, though he insists that whatever happens, it will not be because of his personal rivalry with Mr. Berlusconi. Mr. Prodi is the only candidate to ever lead a coalition that beat Mr. Berlusconi's coalition, and he did it twice-both in 1996 and during the recent vote, which was the closest in Italian history.

"This is not a vendetta," Mr. Prodi said. "It is about what is best for the television sector."

Mr. Berlusconi is Italy's richest citizen, and Europe's most powerful media tycoon. In addition to Mediaset's three national TV networks, his media holdings include an advertising company, the country's largest media-buying firm, Italy's largest publishing house and second-biggest news magazine, a major newspaper, a film production studio, a movie-distribution company and a host of Internet-related ventures.

Options

* Strip one network away from RAI and Berlusconi

* Legislation to cap ad spending

* Legislation to cap market share
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