AP R I L 2 0 1 0 A n a l y s i s ( C o n t i n u e d ) other eyeing its strategy, Mediaset has in the past tested the waters for a possible acquisition of Telecom Italia, sacrificing (i.e., selling) its broadcast entity in the process. Mediaset’s interest in Telecom Italia is widely known, both in Italy and in Spain. Italian media newsletter Key4Biz has stated, “The true interest of [Italy’s prime minister Silvio Berlusconi] concerns the possible entry of Mediaset in Telecom Italia.” Berlusconi is also Mediaset’s key shareholder. Spain’s elEconomista has even reported that “Mediaset could enter into Telco [Telecom Italia’s key shareholder] through Telefonica.” about it being taken over by Telefonica, calling it “an inevitable merger,” since the Spanish group has the first option to buy out its fellow shareholders, who could be willing to get out of Telecom Italia’s $49 billion debt. However, it is possible that Intesa (one of the three Italian financial groups that, together with Telefonica, own 24.5 percent of Telecom Italia through their holding company, Telco) and Unicredit (the bank that has a stake in Generali, the other Telco shareholder) are aware of this plan and, as representatives of the political left, are for now derailing the whole deal. Coincidentally, the TV interests of the Italian political left in Spain are held by the De Agostini group, which controls Antena 3. Recently, De Agostini unsuccessfully tried to acquire Spain TV network La Sexta, expecting to create Antena-Sexta, a formidable group the company hoped would be more effectively competing with Mediaset’s SuperCinco (Telecinco and Cuatro). The left’s strategy for the future of communications in Italy is basically the one developed years ago by former prime minister, Romano Prodi, a onetime president of the holding company that owned Telecom Italia prior to its “privatization.” Prodi always resisted Berlusconi’s involvement in Telecom Italia, but, aware of the telephone company’s inevitable role as Italy’s main distribution “pipe,” he advised splitting Telecom Italia into three branches: the fixed lines, the last mile and the service company. In order for Telefonica to fully take over one aspect of the Italian telephone company, Telecom Italia has to be split at least in two: The infrastructures and the service provider, with the latter going to the Spanish group and the former remaining under Italian government control. Mediaset only needs the infrastructure (after all, IPTV allows for triple-play: TV, data and telephony), which, once separated from the service business, will be much easier to acquire. A similar strategy will work well for Telefonica in Spain as well, having Mediaset as a partner, considering that Mediaset controls content in Italy and in Spain. When television around the world will inevitably phase out its over-the-air operations to move into broadband and use the terrestrial frequencies for the Wi-Fi broadband service, Mediaset will be ready. The general reaction to Mediaset’s desire to buy Telecom Italia wasn’t pretty, but the need to own some sort of “dumb pipe” still remains. To realize this need it is sufficient to look into the Comcast-NBC and Shaw-CanWest deals (see front cover stories). For Berlusconi the only solution for Mediaset’s needs, was to let Telefonica (with which has a good relationship) enter into Telecom Italia’s control. In 2007, Telefonica sold its control of Endemol to Mediaset and, recently, the center-right Berlusconi government entered into talks with Telecom Italia industry-related development. In Spain, Telefonica owns 21 percent of Digital Plus, the pay-TV platform developed by Spain’s Prisa. Prisa recently sold its other TV network, Cuatro (created in 2005 from the ashes of Canal Plus), and 22 percent of Digital Plus to Mediaset’s Telecinco. Like other over-the-air broadcast service around the world, Mediaset knows that it has only 10 more years; after that, broadcast will be replaced by broadband, which Telecom Italia is offering. For that reason, with one eye looking at its future and the (Continued from Page 34) V I D E O • A G E 36
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