This article originally appeared in
April 18, 2006
Mediaset faces new world order

By ERIC J. LYMAN

ROME --The newly elected Italian government of Romano Prodi is mulling a reform of
the country's media laws that could see ousted Prime Minister Silvio Berlusconi's
Mediaset and state broadcaster RAI each stripped of one national network,
government officials said.

As things stand, Mediaset controls three of seven national networks, and RAI controls
three more. La7, the newest and smallest national network, is owned by former state
telephone monopoly Telecom Italia.

On the campaign trail, Prodi mentioned the possibility that such a move might be
considered in the future, and Si-mona Carroso, an economist and advisor to Prodi,
said in an interview that such a divestment is one of the options being considered for
the troublesome sector.

"Obviously, some kind of reform in this sector is necessary, and, yes, some sort of
obligatory divestment is one of the options under consideration," Carroso said.

During the campaign, Prodi told the Rome daily Il Messaggero that he favored some
dramatic move to create more competition in the television sector.

"I desire a truly independent and multifaceted television sector," he said. "The duopoly
doesn't work any more. There cannot be a real democracy without real competition."

In the same interview, Prodi also called for new regulations governing how state
advertising contracts are awarded. He said that, during Berlusconi's five-year tenure
as prime minister, Mediaset received an extra €2 billion ($2.4 billion) per year in state
advertising contracts compared to levels before he was in power.

Mediaset officials were not available for comment Monday, a holiday in Italy. But in the
past, Mediaset officials denied any wrongdoing and have said they would take steps
to block any regulation that would force the company to surrender a national network.

According to local press reports, Mediaset and RAI would each be stripped of one
network. The two networks would be combined to form a new company that would
be sold in a public tender, with Mediaset and RAI splitting the proceeds.

The divestment would include the two networks' bandwidth, their intellectual property,
ar-chives, programming and personnel under contract. The result would be a sector in
which there are three major players with two networks each rather than two players
with three each.

In the interview, Carroso did not say how soon a move could be made, but Il
Messaggero reported that the first moves could be made in parliament before the end
of the year.
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Volume 77; Number 9
Volume 77; Number 9