This article originally appeared in
April 12, 2006
Berlusconi won't yield to Prodi

By ERIC J. LYMAN

ROME --Challenger Romano Prodi was declared the victor Tuesday in Italy's hotly
contested national elections, pushing media tycoon and incumbent Prime Minister Silvio
Berlusconi into an opposition role for the second time in a decade.

But it seems unlikely that Berlusconi, who controls Europe's largest media empire,
Mediaset, will remain on the sidelines.

Berlusconi said he will contest Prodi's razor-thin margin of victory, possibly calling for
a recount, which could succeed in overturning the results or forcing a new round of
voting. But the results, which will be certified officially by the Ministry of Interior today,
assure that Prodi will be asked to form a new government in the next month.
Berlusconi will remain in charge until the new government is formed.

In Italy, the prime minister is not elected directly but instead selected by the coalition of
parties that hold a majority in the two houses of parliament.

Berlusconi, who has been in power since 2001, is Italy's richest citizen, with a
reported net worth of about $12 billion. His massive personal media holdings combined
with those of the state gave him unprecedented control of the nation's airwaves.

Now Europe's most extensive media empire — which includes three of seven national
television networks, the country's largest publishing house, a major newspaper, Italy's
second-largest news magazine, a film production studio, a movie distribution company
and a host of Internet-related ventures — will become a tool of the opposition.

"Berlusconi could and probably will make it very difficult for Prodi to govern,"
Alessandro Sensi, a political scientist at Roma Tre University and a frequent
commentator on media issues as they relate to Italian politics, said in an interview. "No
opposition figure ever had the level of access to the media Berlusconi will have."

Berlusconi also was in opposition between his first loss to Prodi in 1996 and his return
to power five years later, but the influence and size of his media holdings were
smaller then.

Although Berlusconi is considered to be the more media savvy of the two candidates,
it was Prodi's use of the media — including Berlusconi's Mediaset networks — that
analysts said tilted the scales toward him for good early Tuesday.

With a slim lead in the vote for members of the lower house of parliament and the
results of the upper house still too close to call, Prodi declared victory around 2 a.m.
local time Tuesday, smiling, thanking supporters and toasting his win with spumante
wine. The move came just in time for local papers to include the news in their Tuesday
editions, and it was the top story on Tuesday morning news shows.

"Italians woke up to the news that Prodi had declared a dramatic victory, and only later
in the newscasts and articles did it explain that the outcome was still technically in
doubt," author and political commentator Carlo Lorenzo Topini said in an interview.
"Most people started their day thinking Prodi won when that wasn't necessarily true."

It turned out to be true later in the day.

Nonofficial results — results will not become official until certified — gave Prodi's
coalition a delicate 49.805%-49.739% margin in the lower house, a difference of less
than 25,000 votes among nearly 39 million cast.

In the upper house, Berlusconi's coalition actually won the popular vote with 50.212%
of the votes cast, but because of a new law that assigns seats in that chamber
based on regional performance, Prodi's coalition will have 158 seats compared with
156 for Berlusconi.

One senator not aligned with either party said he will support the winning coalition.

Italian media reported that about 500,000 ballots had been declared invalid. If they are
re-examined, it could reverse the result. Judges also will consider Berlusconi's
expected call for a recount over the next week.

All the uncertainty actually has boosted investor interest in Mediaset, which rose more
than 2% in trading Tuesday amid the uncertainty.

According to Javier Noriega, chief economist with investment bankers Hildebrandt and
Ferrar, investors theorized that an unstable political environment could increase
television news viewership and ad revenue.

"In the news and media business, sometimes bad news is good news," Noriega said
in an interview.

Berlusconi's spokesman said in an interview that the prime minister would not
acknowledge the results until they were "checked and checked again," and he
scoffed at the notion that Berlusconi would enjoy a quiet retirement if Prodi indeed
proved to be the winner.

"I think Silvio Berlusconi will be more active than ever over the coming months, no
matter what the results of the election are," the spokesman said.
(c) 2006 The Hollywood Reporter
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Volume 77; Number 9
Volume 77; Number 9