United Press International
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January 24, 2005
Murdoch, Berlusconi in soccer battle
ROME -- The media empire controlled by Italian Prime Minister Silvio Berlusconi entered the lucrative world of Italian soccer over the
weekend, attracting around 40,000 viewers and setting up a pitched battle against the Italian company owned by Rupert Murdoch's
Over the coming weeks and months the battle over the right to broadcast to soccer fans in one of the most soccer-crazy countries in the
world is sure to remain a pitched one.
Until Berlusconi came on the scene, News Corp's Sky-Italia SpA had a monopoly on broadcasting of soccer games. The company --
which charges about $65 per month for access to a mix of soccer games, recent films, and foreign programming -- has around three
million subscribers. The company is said to be adding new clients at the rate of around 25,000 per month.
It may sound line a lot, but Murdoch's Sky is small compared to Italian media's 800-pound gorilla: Berlusconi's massive Mediaset SpA
empire. Mediaset just acquired the country's second leading radio network and it already owns a film production company, the country's
largest advertising company, a leading newspaper and news magazine, and three of the seven national television networks.
Furthermore, as prime minister, Berlusconi also has indirect control over the three state-run broadcast networks.
Berlusconi also has indirect control over the Ministry of Communication, which over the last two years has subsidized the development
of a technology that allows users to gain access to digital programming for short periods of time using a simple password. That's the
technology Mediaset is using to sell broadcasts of soccer games to viewers who might not want the kind of long-term contract Sky-Italia
To gain access to any single game, a view must pay only $4 for a special scratch-off card that is sold by thousands of newsagents
around the country.
"We believe this is going to be an attractive option for thousands of people who want to watch occasional soccer games or different
games from different locations, but without the kind of contract the competition requires," a spokesman for Mediaset told United Press
According to local media reports, around 40,000 of the cards were sold in the two weeks leading up to the first games, though Sky-Italia
declined to say whether the quick start for the Mediaset venture came at the expense of its own subscriber base.
Sky-Italia officials say that the product on offer from Mediaset is by nature different than their own and that the company remains
unconcerned about the threat represented by Mediaset's venture. But the announcement of the Mediaset plan two months ago must
have been a shock to Sky-Italia, which in 2003 agreed to combine its money-losing satellite television venture Stream SpA with its
money-losing rival Telepiu under the condition that it not face competition in the satellite television sector for at least ten year.
But the Mediaset plan does not break those rules because it uses different technology.
Whether Mediaset's initiatives end up taking clients from Sky-Italia or creating a new market of its own, it's clear it will change the way
soccer coverage in Italy operates. Traditional broadcast companies are prohibited from showing game footage live, and with only one
company broadcasting games, fees paid to individual teams did not change much from year to year. But team owners -- among them
Berlusconi, who also owns the AC Milan soccer team -- will gain from what could end up being a bidding war for soccer broadcast
rights. And customers will have the luxury of shopping around for the television coverage that best suits them.
"This for-pay television market is really a market that Rupert Murdoch created," Piergiorgio Santini, a media analyst with the research
consultancy ADD SpA told UPI.
"Three years ago there were two companies losing tens of millions each month, and now there is one healthy company turning a profit. If
it hadn't been for the groundwork that has been done, Mediaset would never have thought about getting involved."
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