Can Rupert pull off the Italian job?

After Sunday's referendum, the question is not whether Murdoch will enter broadcasting in Italy, writes Andrew Gumbel, but when and how
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The Independent Online
Rupert Murdoch takes people by surprise. When it first emerged that he was interested in buying all, or part of, Silvio Berlusconi's private TV empire, the reaction in Italy was disbelief. Berlusconi would never sell if he could help it, and even if forced he would never sell to Murdoch.

Well, a lot has happened in the past month. The stage is set for reform of broadcasting regulations in Italy. Berlusconi may have won the right to hold on to his three channels in Sunday's referendums on media ownership, but he cannot continue to enjoy a virtual monopoly of the private sector.

Reforms can also be expected within the state service RAI, particularly since voters on Sunday called for the introduction of private share-holdings in the national broadcasting monolith. It seems likely that one or two channels in Italy will be up for grabs to outside investors - either by direct sale or through the creation of new frequencies.

As for Murdoch, no one doubts he is in earnest. The question is how far he can go and what he will do when he gets there.

So what's in it for him? With the exception of the UK, Europe is virgin territory for Murdoch's News Corporation and has proved a difficult hunting ground in the past because of the high level of regulation. Murdoch won't want to be reminded that his initial conception of Sky was as a Europe-wide satellite service that would rely on pan-European advertisers. He was quickly forced to retreat to Britain and take over BSB instead.

"Europe is a highly fragmented market, in which most countries don't want to liberalise their broadcasting sector," says Murdoch-watcher Christopher Hird. "But it is one of Murdoch's unconquered territories. Now that Stephen Dorrell's cross-media ownership proposals have effectively put a brake on him in the UK, he is on the look-out for the next opportunity."

Italy is ripe with opportunity and danger.

It may be advantageous that the country is in regulatory confusion - an atmosphere in which Murdoch thrives since, in Hird's words, "he is good at manipulating the rules". Moreover, it is a country with a number of broadcasting gaps - such as international news and coverage of world sporting events - which he is in a position to fill.

Most importantly, it's a country with a willing seller. Ever since Berlusconi entered politics 18 months ago, his Fininvest media empire has been a millstone. As his political fortunes have wavered, particularly since being forced to resign as prime minister, pressure has increased for him to sell.

Despite his victory, Sunday's referendums were an acute embarrassment to him, and several weeks ago he began looking for buyers. His own employees are in doubt about his intentions. "He's going to sell because he wants to stay in politics. He has no choice," says Enrico Mentana, editor of the news on Fininvest's Canale 5.

Murdoch himself understood this after lunching with Berlusconi in Rome at the end of May. He told La Stampa he wanted "to grab everything he could get", but on one condition. "We have sorted out one fundamental point. Whatever I buy will be 100 per cent without Berlusconi. I don't want him to keep a single share in anything I buy."

Murdoch wants to find another Italian partner to help to ease him into the market, while Berlusconi wants to hold on to a minority stake. Berlusconi's referendum victory will strengthen his hand and allow him to play Murdoch off against a rival German-Saudi consortium led by Leo Kirch and Sheikh Al Waleed Bin Talal.

The biggest danger for Murdoch is that he might get caught up in Italy's instinctively protectionist commercial atmosphere and come away empty- handed. But it is wrong to think that the big players in the Italian media are hostile to Murdoch. "We have an approach to news coverage that is so unprofessional as to be provincial," says Paolo Garimberti, former head of news at RAI2. "If he provides good news and sports coverage, I'll welcome it."

Murdoch will have to see what the possibilities are: if he can control a general network channel or settle for specialist broadcasting in news, sport or feature films. If his Italian gamble pays off, he will be able to make economies by importing and exporting programmes around the world, and beaming in news pictures gathered by Sky.

And what can we expect to happen to the cheesy game-shows, semi-naked women and other Fininvest hallmarks that established Berlusconi's notoriety? "It's unlike Murdoch to change much if an operation he buys is going well," Christopher Hird says. "His instinct is to take a product downmarket ... but in the case of Italian TV, there's nowhere further downmarket to go."