Media titans Murdoch and Berlusconi do battle

They are enemies, yet so much alike, media tycoons fiddling with empires and battling over market shares and airways.

The edge, though, goes to Italian Prime Minister Silvio Berlusconi, owner of his country’s largest TV corporation and head of a center-right government that regulates a network run by his voracious rival, Rupert Murdoch. The high-stakes tussle, which would make an enticing miniseries, is a saga of billionaires, pornography, technology, conflicted interests and the future of television in Italy and perhaps Europe.

The drama highlights the competition between two of the industry’s most relentless personalities. Murdoch, owner of Fox News, the Wall Street Journal and tabloids featuring topless women, epitomizes conservative populism. Berlusconi, whose topless women are more likely to appear on his yacht, is known for a scandal-prone government and outrageous quips, such as his description of President Obama as “young, handsome and suntanned.”

The skirmish is driven by the prime minister’s dominance of Italy’s commercial and political worlds.

Advocates of press freedom say he represents a threat to democracy, a man whose private and public ambitions shape what millions of Italians watch on TV, from variety shows with sexy presenters to investigative exposes. The prime minister’s Mediaset TV stations and RAI, the public broadcaster over which Berlusconi’s government wields considerable sway, control an astonishing 88% of the TV advertising market.

“An absence of a free market means an absence of democracy,” said Michele Sorice, a media analyst and communications professor at LUISS Guido Carli university in Rome. “In the Italian imagination, Murdoch is like a knight fighting Berlusconi. It seems, particularly to the weakened Italian leftists, that Murdoch has emerged as the strongest opposition to Berlusconi.”

Much of the protest against the prime minister is coming from Murdoch’s Sky Italia, a satellite pay-TV company with about 4.7 million subscribers that has been competing with Mediaset since 2003. Recent Italian regulations and proposed restrictions, including gradually reducing advertising on pay TV, limiting airtime for adult programming and pornography, and increasing a value added tax, appear to have been directed at Sky Italia. Murdoch’s company reported that it lost about 63,000 customers and $30 million in the fourth quarter of last year.

Most of Mediaset’s channels are free-to-air broadcasts and were not affected by the restrictions. Satellite channels will lose advertising hours, but Mediaset’s commercial time is expected to increase to 20% from 18%. Sky Italia has complained that Berlusconi is trying to cut its share even as one of the prime minister’s companies is broadening its pay-TV programming.

“There was no need to interfere in the classic process of supply and demand,” Andrea Scrosati, Sky Italia’s vice president for corporate and market communications, told reporters this year after protesting the new regulations before a parliamentary committee.

The restrictions and new tax “were a strike against Sky,” said Sorice, the media professor. “The owner of Mediaset decided to increase the taxation on his competitor. This is the question of a commercial war against Murdoch.”

The acrimony has at times turned personal. Berlusconi accused Murdoch of using his holdings, including the Times of London, to smear the prime minister over an alleged affair with a teenage model and other dalliances. Berlusconi, who often complains that detractors are conspiring against him, suggested that the stories were retaliation for the increased tax.

“It’s rather ironic, but in so many ways Berlusconi and Murdoch were born to love one another,” said Tana de Zulueta, a former Italian senator and member of Articolo 21, which supports press freedom. “But Murdoch went for the jugular on the sex scandal.”

It will take more than steamy headlines to outflank the 73-year-old prime minister. Sky Italia has filed an antitrust suit against two Mediaset companies, but a strategy of legal challenges could take years, winding through Italian and European courts. Murdoch, 79, has also faced allegations of unfair competition; his News Corp. recently paid $500 million to settle a U.S. lawsuit filed in a dispute over supermarket coupon distribution.

Berlusconi’s control of parliament gives him enormous power for advancing his political agenda, protecting his holdings and keeping himself out of criminal court. Parliament passed a law in March granting the prime minister and senior officials the right to postpone trials against them for six months. The action followed a Constitutional Court ruling that struck down a law granting legal immunity to the prime minister.

Berlusconi is trying to fend off trials: one on tax fraud charges involving film rights and Mediaset; the other for allegedly paying his former lawyer $600,000 to give false testimony regarding an illegal political contribution scheme in the 1990s. The prime minister has denied wrongdoing.

But it is Berlusconi’s control of private and public media that allows him to shape, both subtly and not, his message.

The appointment of ally Augusto Minzolini as director of RAI 1’s news channel gives him a well-positioned TV voice. And as ubiquitous as Berlusconi is on TV, the prime minister can also turn off the cameras. In the days leading up to the March 28 and 29 regional elections, RAI and Mediaset significantly curtailed political coverage so as not to jeopardize center-right candidates.

“Berlusconi didn’t have an agenda when he came to power,” said De Zulueta, a longtime critic of the prime minister. “He got into politics for business reasons. He never takes his eye off the ball and he consistently protects his interests. Being in office has made him rich. But to stay in office he’s had to change the rules.”

De Zulueta said fear of reprisal is causing news organizations and journalists to second-guess themselves.

“What you have in Italy now is self-censorship,” she said.

“As a media person you have to be careful of what you run, print or chase.”

An Italian court last year found that Mediaset violated fair competition guidelines. In a separate case, a regional TV station seeking a stronger frequency has filed suit with the European Court of Human Rights accusing the Berlusconi government of unfair regulation.

What effect such cases have on Berlusconi’s media empire is uncertain; the prime minister has little regard for the courts and once referred to Italian judges and prosecutors as a “cancerous growth.”

Murdoch, meanwhile, shows no signs of relenting.