Media moguls continue to clash in Italy
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ThE MaStEr
2010-10-08
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Media moguls continue to clash in Italy
Sky Italia, Mediaset battle over digital TV space
By NICK VIVARELLI
The clash between Rupert Murdoch's pay TV platform Sky Italia and Silvio Berlusconi's Mediaset TV group is heating up in Italy, as each mogul makes inroads into the other's turf.
The newest battlefront opened in late September when local Media regulator Agcom, prompted by a European Commission decision, lifted the ban on Sky Italia being able to bid for free-to-air digital terrestrial TV channels.
The decision came as Sky Italia CEO Tom Mockridge advocated in newspaper Corriere della Sera for Sky to be allowed access to DTT in the name of "more freedom in the TV sector to encourage competition."
Mockridge started the most recent war of words between the megacongloms, lamenting that "the Italian system has permitted a single company, Mediaset, to have such a dominant position in the TV sector to the extent that it receives 65% of advertising revenue."
Mediaset chairman Fedele Confalonieri fired back, "We won't take lessons in competition from a member of the world's most dominant media groups."
It was a strange trade of insults for two companies whose moguls are so used being the biggest fishes in their respective ponds.
In the U.K., regulator Ofcom and others are sounding alarm bells over News Corp.'s plan to take full control of BSkyB, the dominant pay TV platform by a wide margin.
But Italy's media landscape is quite unique. Berlusconi -- who is serving his third term as prime minister -- controls one of the two main TV players, Mediaset, and holds sway over pubcaster RAI, thanks to his political office.
In Italy, "any sort of interloper, like Murdoch, is on their own; they are going to go up against everybody," Screen Digest analyst Tim Westcott says.
But the EC, which operates outside national governments, ruled in July that the Italian competitive landscape had changed enough for Sky Italia to be allowed to bid for upcoming DTT allocations.
The ban dates back to 2003, when the EC greenlit the merger of failing rival payboxes Teleplus (owned by Canal Plus) and Stream TV (owned by News Corp. and Telecom Italia), with News Corp. taking total ownership of the platform, which it rebranded Sky Italia.
Because this created a monopoly, the EC limited the new entity's influence by denying it access to DTT.
"The EU Commission is counterbalancing some of the advantages that Mediaset may have due to Italy's regulatory framework," says media analyst Augusto Preta, head of Rome's ITMedia Consulting.
Italy is also unusual because "in most other markets, free TV players don't compete with pay TV players," Preta points out.
Berlusconi's Mediaset Premium pay TV operation, launched in 2005 on DTT, began breaking even this year.
It caused Sky Italia subscriptions to stagnate and even briefly decrease.
"Sky Italia has undoubtedly been affected by Mediaset parking its tanks on (Sky Italia's) lawn," Westcott says.
As of December, Sky Italia operates one DTT station, Cielo (which means sky in Italian), on frequencies it rents from Berlusconi rival Carlo De Benedetti.
The move by Sky into selling free-TV advertising seems to have particularly nettled Mediaset, because that is a market it dominates, Westcott adds.
And he predicts the conflict will only escalate -- especially when Serie A soccer rights, which expire at the end of the next season, come up for renegotiation.
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