Murdoch’s Sky Italy versus The Berlusconi’s Mediaset

Once upon a time Murdoch and Berlusconi were ‘business buddies’, to quote the words used in an article which appeared in Time magazine back in February this year.

Dennis Redmont
Dennis Redmont

Well, it so happens that I’ve just finished running a course on press release writing skills and understanding the foreign media for the media relations master students at the business school at which I often find myself.  Dennis Redmont, professor of international communication at the University of Perugia, was also present, and used his many years of experience in the media industry to tell the students all about the differences between Italian and ‘Anglo-Saxon’ media.

Professor Redmont, who acts as a media consultant and media trainer in Italy, contributed to the Time article which examined the battle of the airwaves simmering away between the Italian media mogul stroke current prime minister Silvio Berlusconi and global media baron, Rupert Murdoch.  Today, Dennis Redmont observed, as indeed he had done in the Time article, that the market share of Murdoch’s Sky Italy, despite Berlusconi’s supposed dominance of the television industry in Italy, is growing.

This growth must be much to the chagrin of one Silvio Berlusconi, who must have thought that he had the Italian market pretty well sown up.  The question is:  Why is Sky Italy gaining substantial ground, and, presumably, stealing advertising revenue from the all conquering Mediaset operation controlled by Berlusconi and family?  A good question, is it not?

Well, here’s an attempt at an answer.

Italians are Tiring of Trash Television

Sky Italia
Sky Italia

It is probable that the novelty of the initially winning recipe of sexy bums and breasts television which enabled Berlusconi to grow his television business in Italy is finally wearing off.  Indeed, it is also probable that Italians have become so darn bored with commercial breaks which last ten minutes and generally trashy programming that many have actually decided to pay for something better.  Hence the rise of Murdoch’s Sky pay TV service in Italy, which Italians are choosing in preference to free-to-air television.

We don’t have Sky, although we did have a ‘taster’ period for a couple of months, and we also know people who do have Sky.  The impression I get, both from personal experience, and from talking to Sky customers, is that Sky is considered to be much better quality television than the often paltry Mediaset offering, with its subliminal, but not always, message that ‘Berlusconi is great’.

That more people are migrating to Sky is a sign, perhaps, that Italians do really want better quality television, and they want it so badly, that they are prepared to pay money for it. Murdoch appears to be winning minds and wallets.

Berlusconi Knows Italians are Tiring of Trashy Television

Rosario Fiorello on Sky
Rosario Fiorello on Sky

Unsurprisingly, shrewd businessman Berlusconi has started his own premium pay television channel, called, wait for it: Mediaset Premium!  And, surprise, surprise, not, the programming of this basket of channels is of a much higher quality than that of the free to air Mediaset offerings.  In simple terms, Mediaset Premium is a copy of Sky Italy’s offering.  But Sky was first to market, and its success appears to have caught out Berlusconi.  Hence the launch of his Mediaset Premium offering.

Meanwhile, Murdoch, as the two media leviathans go head to head in what may well turn out to be nothing short of all out war, and Sky Italy – which is still smarting over an increase in VAT on Italian satellite based pay television services incidentally – has pulled off something of a master stroke.

What clever Mr Murdoch did was to induce one Rosario Fiorello, a very popular Italian entertainer, to work for Sky Italy.   The Machiavellian Mr Murdoch also managed to pinch a top Mediaset newscaster too.  These extremely shrewd moves may well convince those Italians who have had their fill of free-to-air trash, and who are on the point of signing up for a pay tv service, to go for Sky in preference to the Berlusconi offering.  Murdoch is tipping the balance in his favour, as this war of two television worlds hots up.

Update 22 April 2009: Sky Italy’s Profitable Porn

After I wrote this piece, a little bird whispered in my ever open ear that one of the other reasons why Sky is growing so quickly in Italy is its popular pornography offering.  Now I knew Sky offered an adult service, but I did not know too much about it from a business viewpoint, so I went looking for a little more information on the sexy side to Sky Italy’s offering.  And from what I’ve unearthed, it is true that ‘sex sells’, and it sells big time in Italy.

Apparently while porn films cost relatively little to buy (and to make), they make big bucks for Murdoch’s Italian operation.  Around one third of Sky Italy’s turnover comes from porn.  That most probably represents an exceptional return on investment.  And Sky is the only pay tv service in Italy which has managed to turn a profit from its 24 plus adult channels.

This would suggest that that Italians go for porn in preference to trashy TV, and that a few Italian heads of households may be using the quality Sky argument to obtain access to other more titillating channels, as well as the substantial football offering of Sky’s premium packages.

Italian readers might like to see this article from December 2008 over on Italia chiama ItaliaIl mondo del porno, Sky, e la porno tax – by Andrea Verde

As to how Berlusconi can deal with this aspect of Sky Italy – please see the update below.

What Can Berlusconi Do?

S Berlusconi
S Berlusconi

Berlusconi has already used his political muscle to hasten the passing of legislation which places an increased financial burden on Murdoch’s Sky operation in Italy with the introduction of the raised level of satellite-based pay TV VAT.  Murdoch responded with Fiorello.

What Berlusconi could try to do next would be to increase the quality of free to air television to stem the flow advertisers drifting off towards Murdoch.  Although this may not encourage more viewers to pay for either the Sky or Mediaset premium TV offerings.  However, at least Mediaset would cease to lose advertising revenue, as advertisers are lured back to the free-to-air channels.  Then again, Mediaset’s margins would be cut, because quality television costs money.

Another of Berlusconi’s options may be to pass further legislation to dent Murdoch’s operations in Italy.  Italy’s tanned media magnate must be well aware though, that Murdoch’s legal team will pull no punches in any resulting courtroom conflict.  Certainly Murdoch would not baulk at taking a case outside of Berlusconi’s control to Europe’s courts.  Europe has already slapped software and operating system behemoth Microsoft firmly on the backside for its monopolistic business methods and, driven by the convincing arguments of Murdoch’s top legal eagles, would have little fear of doing the same to the Berlusconi dynasty’s Mediaset.  This, as Silvio knows very well, would not make him look too good at home in Italy.  Both Berlusconi’s business and political standing would end up being severely dented as a result.

Follow up to April 22 2009 Update: Berlusconi would have a serious problem trying to counter Sky’s pre-eminence in the porno pay-tv market in Italy.  From what I can tell, Mediaset Premium does not, for the moment, offer adult entertainment.  If Mediaset Premium were to start offering something saucier, then Berlusconi would risk losing the support of a significant number of female voters, not to mention the adverse effect that a porn programming policy might have on indirect support from Vatican City.

To reduce porn power earning levels, a porn tax has been mooted, as Berlusconi tries to come up with other ways to make life difficult for the competition which begins with an ‘M’ and ends with an ‘h’.

As the Time article intimates, perhaps Rupert and Silvio will end up sitting down to a slap up lunch; at Berlusconi’s luxury villa in Sardinia possibly; and slicing up the market more favourably, but without resorting to the messiness of legal battles.

Fingers Crossed for Italian TV Viewers

But what about Italian television audiences?  With a little luck they might see an end to advertising drenched trash free-to-air television and, at long last, end up with something worth watching.  This viewer of Italian television’s fingers are crossed!

It is interesting to see that, at first sight, Italians seem to want quality television.  However recent additions to this post also indicate that years of Berlusconi’s bums and breasts programming has inadvertently increased demand for rather more extensive and in depth, er, coverage of those parts of the female anatomy which seem to go down so well with hard core Italian television audiences.  Murdoch has capitalised on this Berlusconi generated demand, and in doing so, is demonstrating that whatever Berlusconi can do, he can do better.

There is a chance though, that the Berlusconi Murdoch feud may end being forgotten with the advent of both digital, and web TV.  The rules of this ballgame are about to be turned upside down.

It’s going to be fun to watch!

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With thanks to Dennis Redmont for having provoked such thoughts.  Here is the Time article in which Mr Redmont provided some insight into this subject:
Berlusconi vs. Murdoch: Italy’s Real Reality TV

If you happen to work for a foreign company which is looking to gain a foothold in the Italian market, and want to understand what makes the Italian media tick, then you will find Dennis Redmont’s experience and pragmatism well worth exploiting.  Go to DennisRedmont.com to find out more.

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