V I D E O • A G E Se p t e m b e r/ Oc t o b e r 2 0 0 9 60 all over the world). All this compounded by an international financial crisis that is affecting advertising revenues, as well as increased competition, sure make for interesting times. VideoAge International: More than 80 percent of Endemol’s revenues are generated from unscripted content. Is this a negative factor? Pier Silvio Berlusconi: Not at all. On the contrary, it is a sign of strength. For a free-to-air TV network, unscripted programming represents a convenient way to balance costs and results. VAI: Considering that Mediaset is one of Endemol’s main clients (investing about 150 million euro per year), would you say it represents the partner of record? PSB: In terms of industry focus, we’d like Mediaset to become the partner of record in the future. At the moment, though, a key partner doesn’t exist for Endemol. VAI: Strategically speaking, it’s understandable to try and recoup some of the program investments with Endemol in the form of a profit sharing arrangement. However, as far as synergy is concerned, the advantages are not yet clear. PSB: For us, synergy comes from the fact that Mediaset will develop and launch new formats that Endemol can subsequently sell internationally. Basically, Mediaset can become a programming source for Endemol. VAI: How would you describe the future of Endemol? PSB: Great. Content is key at the world level and Endemol represents a strategic investment that is perfect for Mediaset. Even though it is a difficult world, this was a challenge we eagerly undertook. VAI: Does Endemol’s acquisition of Southern Star indicate some form of strategy? PSB: It is part of Endemol’s development mandates, which consist of development of new formats and the acquisition of content companies. VAI: Can you describe Mediaset’s two new divisions: Media Vivere and Med2? PSB: Media Vivere is a production company formed in a 50-50 partnership with Endemol Italia, with the purpose of producing long drama series. Med2 is a production unit formed by two of our divisions: [recently acquired] Tao2 and Medusa, with the purpose of developing new TV series from popular Medusa theatrical movies and new movies from Tao2’s successful TV series. VAI: Is Mediaset pulling its TV networks out of Rupert Murdoch’s Sky Italia satellite platform? PSB: Our signals, even on satellite, have always been free. Whether or not to be in the Sky [Italia] bouquet has never been our choice. What we planned is a way to make sure that, with the advent of digital television, our free terrestrial TV channels can be watched by all, particularly by viewers in areas in which the digital terrestrial TV signal is missing for technical reasons. For this purpose, a consortium was formed among Mediaset, RAI and La7 to create Tivú Sat, a new satellite TV platform that [carries] all the members’ free TV channels. It has a service purpose, not a commercial one. As soon as Tivú Sat became operational [in August 2009], the partners scrambled their free TV channels. This was in order to assure that our territorial rights were protected. To those viewers in the Italian territory who wish to receive all free channels, Tivú Sat provides descramblers [smart-cards] at no charge. VAI: How many digital TV channels do you envision for the future? PSB: Difficult to say at this stage. We believe that no more than 30 to 35 channels totally funded by advertising can survive. As far as “pay” is concerned, the market will say. Tivú Sat Tivú Sat (www.tivu.tv) is a Romebased consortium formed by Mediaset (48.25 percent ownership), Italian state broadcaster RAI (48.25 percent) and Italy’s telephone operator Telecom Italia (3.5 percent through its Telecom Italia Media division). The chairman is RAI’s Luca Balestrieri and CEO is Mediaset’s Alberto Sigismondi. It became operational on July 31, 2009 at the technical cost of one million euro, with each channel renting (and individually paying) for transponder space from the same Eutelsat’s satellite that carries Rupert Murdoch’s Sky Italia TV services. Tivú Sat is not a moneymaking operation and is billed as a public service for Italian viewers who, for various reasons, cannot receive the digital terrestrial TV signal (about three million TVHH). Furthermore, it is explained that Tivú Sat has been rendered necessary in order to protect rights-holders from other satellite carriers’ spillovers. Annual maintenance costs for Tivú Sat are shared among the channels bundled, at about 20,000 euro per year per channel, for a total annual cost of 440,000 euro, which will increase with the adding of more channels. At present, Tivú Sat bundles a total of 22 (soon to be 27) free TV channels that are received through a dishantenna, and costs users 150 euro (US$ 200) with a decoder that costs an additional 100 euro. The latter charge includes a “smart-card” which allows the descrambling of all Tivú Sat’s partners’ free TV channels. Mediaset’s free digital channels are Iris (films), MediaShopping and Boing (children’s programming), in addition to its three general-interest flagship stations (Canale 5, Rete 4 and Italia 1). Plus, starting in early 2010, it will include Italia 2, a teen version of its Italia 1. RAI’s free TV channels are its three general-interest flagship stations: Rai-1, Rai-2 and Rai-3, plus Rai New 24, RaiSport, Rai Storia, Rai Gulp (for children) and the newly launched Rai-4. Telecom Italia Media’s channels are La7 and MTV. The rest of the free channels on Tivú Sat are provided by BBC World News, France 24 and other Italian and international operators, such as K2-Kids TV from the San Marino-based Digital TV Channels Italy. At the end of last July, all satellitedelivered free terrestrial channels from Tivú Sat partners were scrambled at certain times (at the discretion of the channels) with the Nagravision system. This meant that viewers who received these channels through Sky Italia’s NDS encoding could no longer watch them without a Tivú Sat converter (even though they can use the same dish antenna). It is expected that in the future, the Tivú Sat platform will also carry all of Mediaset’s premium TV channels, which are now only available on terrestrial digital television (and thus received with a regular aerial and a digital decoder if not in possession of a digital TV set). Mediaset’s own premium channels are: Cinema, Calcio 24 (football), Joi, Joi+1, Mya, Mya+1, Steel+1 and Hiro. This year, Mediaset’s premium channels are expected to generate sales of 500 million euro (up from 400 million euro in 2008) from its 3.5 million subscribers and is estimated to break even in 2010. RAI’s premium channels are those under the RAI Sat banner (Extra, Premium, Cinema World, Yo-Yo and Smash Girls), which are now only available on terrestrial digital television, since being pulled out of Rupert Murdoch’s Sky Italia. Digital Terrestrial Television Now, if you think the above is complicated, wait until we explain how Mediaset was able to gain channel capacity for its TV networks. Mediaset owns three analog TV networks (Canale 5, Rete 4 and Italia 1), two DVB-T (DVB-T1 and DVBT2) and one DVB-H (TV on mobile phones). The DVB-H channel is rented to Telecom Italia and Vodafone for their own use. Mediaset’s DVB-H network is derived from the analog frequencies of an ex-TelePiú TV network that Mediaset has digitalized. This exTelePiú network was acquired by Tarak Ben Ammar, which entitled him to own frequencies for a digital network (with each analog network, owners are entitled to frequencies for a digital network). Ben Ammar kept the frequencies for his own digital network (D-Free) and sold Mediaset the analog ones (which Mediaset then digitalized for DVB-H). Since Mediaset cannot own more than three analog networks, those frequencies acquired from Ben Ammar had to be digitalized. Mediaset’s two DVB-T networks (DVB-T1, DVB-T2) were created by acquiring various frequencies on the open market (including frequencies from ReteMia). Therefore, currently, Mediaset operates with two DVB-T networks and one DVB-H. After the analog switch off in 2012, Mediaset will have (in the view of Italian trade publication Millecanali that VideoAgeconsulted for this story): Two new DVB-T networks converted from two of its three analog networks (Canale 5, Rete-4 and Italia-1). The two already existing DVB-T networks (DVB-T1 and DVB-T2). One existing DVB-H network from the ex-TelePiú analog frequencies (acquired from Ben Ammar). It is also possible that Mediaset and RAI could make a bid for digitalizing their third analog network (both organizations operate three analog networks). These frequencies have to be used for DVB-T by 2012. If that occurs, Mediaset (and RAI as well) will end up owning six digital frequencies. Each DVB-T network can carry up to seven TV channels, therefore Mediaset will ultimately be able to operate with a total of 42 digital channels. For now, however, in order to get channel space for all of its digital offerings, Mediaset has to rent space from D-Free. Similarly, D-Free rents its mux to other channels on Mediaset’s premium platform, like the two from NBC-Universal and three from Disney. Legally speaking, up until the 2012 switch off, Mediaset is obligated to rent up to 40 percent of some of its channels to third parties. Similarly, though, Mediaset can rent capacity from other DVB-T operators, which, in effect, balances out. The Murdoch Factor It’s clear that Italy, Inc. is ready to end (Continued from Cover) Pier Silvio Berlusconi (Continued on Page 62) Pier Silvio Berlusconi withVideoAge’s Dom Serafini during the interview
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