BERUSCONI, SILVIO

While still a student, Silvio Berlusconi, the son of a Milan bank official, displayed two of the main qualities that marked his later career as a media tycoon; business acumen and a penchant for performing. While preparing a dissertation on "The Newspaper Advertising Contract", for his honours degree in law from Milan University, he helped finance his studies by working as a crooner on cruise ships.

On graduating, he was quick to recognise the entrpreneurial opportunities opened up by the wave of post-war affluence that rolled across Italy in the 1960s. He moved into the booming contruction sector, and in 1969 borrowed 3 billion lire to build a prestigious dormitory suburb, Milano 2, on the edge of the city. His decision to install a cable network in the complex in 1974, was his first entry into a television marketplace that was about to undergo a massive expansion.

The historic monopoly over national broadcasting enjoyed by the public sector organisation, RAI (Radio Televisione Italiana) had been confirmed by Law 103, passed in 1975. But the following year, the Constitutional Court ruled that it did not extend to the local level. This decision legitimated the mushrooming "pirate" television operators and attracted new investors with around 700 commercial stations springing up around the country. Berlusconi was quick to see the enormous potential in this explosion of activity and in 1975 he set up a holding company, Fininvest, to manage his expanding interests. In 1979 he established a major film library, renting titles to stations on the condition that they carried advertising purchased through his Publitalia subsidiary. He rapidly became the dominant force in a market that saw television increase its share of national advertising from 15% in 1976 to nearly 50%, ten years later. By 1983, Publitalia's advertising revenues had overtaken those of RAI and by the end of the decade they accounted for around 70% of all television advertising expenditure.

His power within the new commercial television marketplace was further cemented by his own moves into station ownership. Between 1977 and 1980, he created a nation-wide network, Canale 5, creating the illusion of a single channel by dispatching video tapes by courier for simultaneous transmission. Programming was unashamedly populist relying heavily on imported films and soap operas and home produced game shows. In 1981, the Constitutional Court revised its earlier decision and ruled in favour of national private networks providing there were strong anti-trust provisions. Berlusconi took full advantage of this opening, buying out one of his main competitors, Italia 1, in 1982, and acquiring his only other serious challenger, Rete 4, in 1984. These moves confirmed his domination of commercial television earning him the nickname Su' Emittenza ("His Transmitter-ship", a pun on the traditional title for a Cardinal).

His power did not go unopposed however. In October 1984 magistrates ruled that his channels breached RAI's monopoly right to broadcast a simultaneous national service, and shut them down. But he had powerful political friends, including the Prime Minister, Bettino Craxi, who returned from overseas early to sign a decree re-opening them. Even in a climate of growing enthusiasm for deregulation no other European government had allowed a single individual to accumulate such concentrated control over terrestial television. This political support established an effective duopoly in national television for the rest of the decade, giving Fininvest's three commercial networks and RAI's three public channels an overall share of between 40-45% each.

Reviewing this situation in 1988, the Constitutional Court sent a warning to parliament urging them to introduce strong anti-trust provisions at the earliest opportunity. Parliament's response, the Broadcasting Act of 1990 (known as the "Mammi Act" after the Post and Telecommunications Minister who presented it) fell some way short of this. The parliamentary debate was bitter with the former chair of the Constitutional Court arguing that the Act disregarded the Court's anti-trust instructions and was far too sympathetic to private television power. The new law legitimated the status quo. Berlusconi was allowed to keep his three broadcasting networks and Publitalia's domination of the television advertising market remained untouched. However, new cross ownership rules did require him to sell 90% of his shares in the country's first pay-TV venture, Telepiu, and to divest his majority stake in the Milan daily newspaper, Il Giornale Nuovo, which passed to his brother Paolo. Critics of his communicative power were unimpressed and in 1992 media workers mounted a strike to protest against Finivest's domination of the advertising market.

Renewed pressure for tougher anti-trust legislation concided with a worsening fiancial situation within Finivest, as the group absorbed the costs of recent acquisitions. In 1986, Berlusconi had bought the football club AC Milan and spent substantial sums on making it into the most sucessful Italian club of all time. In 1988, he acquired the Standa department store chain, one of largest in Italy. And, after an expensive and bitterly fought contest with Carlo de Benedetti of the computer company Olivetti, in 1990, he had made a major move into newspaper, magazine and book publishing with the purchase of the Mondadori group, giving him control of 20% of the domestic publishing market. These outlays led to a 12 fold increase in the group's debt, which stood at $2 billion by 1994.

Faced with continuing demands for the break-up of his television empire, he siezed the the political initiative and at the beginning of 1994, announced that he would contest the forthcoming general election. Luciano Benetton, head of the clothing group, spoke for many when he wryly observed that, "Silvio Berlusconi's love of politics is motivated by fear of loosing his television interests." His vehicle was an entirely new party, Forza Italia (named after the football chant "Go Italy") in coalition with the federalist Northern League and the remnants of the neo-fascist MSI movement, renamed the National Alliance. During the campaign he relied heavily on orchestrated support from his press and television interests leading the distinguished journalist, Indro Montanelli, to resign the editorship of Il Giornale in protest. He projected an image of a man untouched by the old corruption, in touch with the aspirations of young Italy, and in favour of low taxation, free markets and personal choice.

 

His coalition of the Right won 43% of the popular vote in the March 1994 poll and formed a government with Berlusconi as Prime Minister. There were immediate allegations of conflicts of interest. He had tried to forstall these at the start of his election campaign by resigning from all managerial positions and handing chairmanship of his major company to his old piano accompanist, Fidele Confalonieri. But since he and his family still held 51% of the group's shares, critics were unconvinced. These suspicions, coupled with the defection of the Northern League, led to fall of his administration after nine months.

His exit from office coincided with other shifts in his personal circumstances. In July 1995 he announced that he had sold a 20% stake in his new subsidiary, Mediaset (covering his television, advertsing, film and record interests) to three outside investors (including the German media magnate, Leo Kirch) for $1.1 billion. More shares were sold later to banks and other institutions, reducing his holding to 72%. Then, two days before the April 1996 election, he announced a public flotation that would eliminate his majority control.

His political standing was also under threat. His carefully cultivated image of a man outside the corrupt old guard had been dented by revelations that in 1978 he had joined the the secretive masonic lodge, P2 (Propoganda 2) that had formed a powerful state within a state with connections to the armed forces, secret services, banks and government. Then in January 1996 he was called before magistrates in Milan to answer charges that he had bribed financial police to present a favourable tax audit of his corporate accounts.

This helped to sour his return to politics in the General Election in April 1996. Although he was elected as a member of parliament, his right wing bloc was forced to conceed control of government to the Olive Tree Alliance, Italy's first successful centre-left coalition since the war.

Whether or not he remains a central figure in Italian politics and business in the future, Berlusconi will be remembered as the man who in the space of just 25 years, built a conglomerate that rose to dominate Italian commercial television, and to become Europe's second largest media empire (after Bertelsmann of Germany) and Italy's third biggest private company, and who used his communicative power and his flair for showmanship to launch a new political party that gathered enough votes to secure his election as Prime Minister in just four months. Overall, his career over the last 25 years stands as an impressive illustration and warning of the power of concentrated media ownership in a lightly regulated marketplace.

-Graham Murdock

SILVIO BERLUSCONI. Born in Milan, Italy, 29 September 1936. Educated at the University of Milan, degree in law, 1971. Married: 1) Carla Dall'Ogglio (divorced), children: Marina and Pier; 2) Veronica Lario, 1990. Founded real estate development companies Cantieri Riuniti Milanesi, 1962, and Edilnord, 1963; financed construction of suburbs Milano 2, 1969, and Milano 3, 1976; created Telemilano cable television system, 1974; established Canale 5 television network, 1980; purchased television networks Italia 1, 1983, Rete 4, 1984; purchased movie theater chain, 1985; purchased Milan AC soccer club, 1986; acquired the La Standa department store chain, 1988; acquired interests in publishing conglomerate Arnoldo Mondadori Editore S.p.A., 1990; formed political party Forza Italia, 1993; Prime Minister of Italy, 1994. Member: Masonic lodge Propoganda 2, 1978 (disbanded, 1981); Confindustria (Italian Manufacturers' Association). Honorary degree in managerial engineering from Calabria University, 1991. Recipient: Cavalliere del Lavoro, 1977; named Man of the Year by the International Film and Programme Market of Television, Cable,and Satellite, 1991.

FURTHER READING

"Blind Trust--in Berlusconi: Italy." The Economist (London), 30 April 1994.

Emmrich, Stuart. "Don Silvio." Mediaweek (Brewster, New York), 25 February 1991.

Fisher, William and Mark Shapiro. "An InterNation Story: Four Titans Carve Up European TV." The Nation (New York), 9 January 1989.

Henderson, David. "Berlusconi at Bay." New Statesman & Society (London), 9 December 1994.

"The Lord of the Transmitters." The Economist (London), 22 August 1992.

Lottman, Herbert. "Italy's Berlusconi Extends Media Grasp." Publishers Weekly (New York), 21 November 1994.

"Playing Silvio's Song: Italian Television." The Economist (London), 29 July 1995.

"Unstoppable." The Economist (London), 22 July 1995.

Walter, David. "Winner Takes All." Index on Censorship (London), September-October 1994.

"The Way Things are in Italy." The Economist (London), 17 June 1995.

Zucconi, Vittorio. "White Stallion of TV." New Perspectives Quarterly (Los Angeles, California), Summer 1994.

 

See also Italy