Mediaset SpA History

Company Perspectives:

Mediaset is a company that is economically, financially and productively independent, with a solid company structure, competing in a sector characterized by concentrations and rapid change. Today the company is consolidating its position in generalist television in Italy and is embarked on expansion abroad.

Key Dates:

1975:

Fininvest Group is established by Silvio Berlusconi.

1978:

TELEMILANO is founded and later becomes Canale 5, a network of broadcasters that is owned by the Fininvest Group.

1980:

Canale 5 begins broadcasting in Italy.

1982:

The Fininvest Group purchases Italy's privately owned Italia 1.

1984:

The Fininvest Group purchases Italy's privately owned Rete 4.

1991:

Canale 5, Italia 1, and Rete 4 begin live broadcasting.

1992:

Canale 5, Italia 1, and Rete 4 obtain national broadcasting licenses.

1993:

Mediaset is created from the consolidation of Canale 5, Italia 1, and Rete 4 to become Italy's major private television and communications network.

1995:

Mediaset assumes control of Publitalia '80, the advertising arm of the Group's networks and takes over R.TI., the company which holds the broadcasting licenses for the company's three networks.

1996:

Mediaset obtains a listing on the Milan Stock Exchange and partners with Albacom, the telephone-line transmission company.

1997:

Mediaset acquires shares in Telecinco, Spain's second largest commercial broadcaster amd launches MEDIAVIDEO, a teletext service.

1998:

Mediaset launches Happy Channel, a thematic satellite channel.

1999:

Mediaset launches Mediaset Online (www.mediaset .it), a vertical television portal on the Internet and joins Blu SpA, the holder of Italy's fourth mobile telephone license.

2000:

Mediaset consolidates all its digital activities into Mediadigit.

2001:

Mediaset launches the digital platform MTChannel to promote programming of popular science issues; the company also launches TgCom (www.tgcom .it), an online general news service, and TgFin (www.tgfin.it) an online business and financial news service.

Company History:

Mediaset SpA is Italy's most important privately owned communications and broadcasting group and one of the largest in the world. Its success is based on the vision of the founder of the Fininvest Group, Silvio Berlucsoni, to create a totally integrated group able to control all aspects of the television business--signal broadcasting, in-house television production, the acquisition of film and drama rights, and the collection of advertising--to successfully challenge the monopoly of the state broadcaster Radio Televisione Italiana (RAI).

Mediaset is Born

The development of commercial television in Italy can be credited to Milan-born Silvio Berlusconi, who in 1975 set up a holding company, Fininvest, which provided direct competition to the public-sector broadcasting organization RAI (Radio Televisione Italiana). Over the next 25 years, Berlusconi built a communications conglomerate that would dominate Italian commercial television, become Europe's second largest media empire and Italy's third largest private company. Due to a Constitutional Court ruling in 1975 that legitimized private television operations, over 700 commercial stations sprang up around Italy. Berlusconi's first venture into television marketing was the result of the operations of Publitalia, a subsidiary that initially provided advertising for titles rented from his major film library to other local stations. Over the next ten years, television advertising increased from 15 percent to 50 percent, and to 70 percent by the end of 2000.

In 1978, Berlusconi became a television station owner himself when he founded TELEMILANO, which in 1980 became Canale 5, a broadcasting network owned by the Fininvest Group. By the mid-1980s, the Fininvest Group had acquired their major competitors, Italia 1 and Rete 4, thus breaking the state monopoly in television and advertising and dominating commercial television in Italy.

However, in October 1984, Italian magistrates ruled that this conglomeration itself was in breach of RAI's monopoly right to broadcast a simultaneous national service, and ordered them to shut down. Berlusconi appealed to powerful political associates, including the Prime Minister, Bettino Craxi, who signed a decree to reopen the Fininvest Group stations, thus establishing a duopoly in national television and giving the commercial networks and RAI's public channels an overall market share of between 40 and 45 percent each.

The fear of additional demands for the breakup of his company provoked Berlusconi to contest the forthcoming general election. Under the banner of a new party, Forza Italia, his coalition won 43 percent of the popular vote in March 1994 and formed a government seating Berlusconi as prime minister. Amid concerns of conflict-of-interest, Berlusconi resigned from all managerial positions and chairmanships of his company. Nonetheless, after nine months his administration fell. Berlusconi continued to divulge major interests in his company, including a 20 percent stake in Mediaset for EUR 1.1 billion to three outside investors, including Saudi Prince Al Waleed Bin Talaal, South African businessman Johann Rupert, and the Kirch Group of Germany. Over the next few years, he continued to sell shares to banks and other institutions, and eventually relinquished majority control.

In 1991, Canale 5, Italia 1, and Rete 4 began live broadcasting and obtained national broadcasting licenses the following year. Mediaset was born out of a reorganization project that created an integrated group of these television and communications entities, which would grow independently, and secure strategic investors and financial partners.

By 1995, Mediaset had assumed control of Publitalia '80, the advertising collector for the Group's networks and R.TI., the holder of their respective broadcast licenses. In addition that year, the Group took over control of Videotime, TRI Music, and Elettronica Industriale, a countrywide signal distribution network.

Mediaset obtained a stock exchange listing (MS) on the Milan Stock Exchange in July 1996, and became a partner in Albacom, a fixed-line telephone company of British Telkecom and Banca Nazionale del Lavoro the same year.

Mediaset Acquires Spanish Broadcaster

To establish alliances with other world players in television, electronic media, and telecommunications, in 1997 Mediaset acquired shares in Telecinco, Spain's second largest commercial broadcaster. The same year, Mediaset launched MEDIAVIDEO, a teletext service generating 800-plus pages of constantly updated information. The Happy Channel was launched in 1998 as Mediaset's first thematic satellite channel dedicated to comedy and broadcast digitally by Italian broadcaster Telepiu.

Mediaset Online

The vertical portal MediasetOnline (www.mediaset.it) was launched January 1999. Germany's KirchMedia, the subholding for the Kirch Group's activities in commercial television and rights trading, reached an agreement with Mediaset to address the challenges of globalization. Also in 1999, Mediaset joined Blu SpA, Italy's fourth mobile telephone license holder. Other acquisitions included Gestevision Telecinco SA and Publiespana SA. Through a joint venture with the Kirch Group, Mediaset partnered in the creation of Epsilon, for the development of the production, acquisition, and distribution of films, TV movies, series and other content on a European scale.

In 2000, Mediaset consolidated all its digital activities into Mediadigit, which consequently acquired a stake in CFN (Class Financial Network), owned by Class Editori, a thematic channel focusing on digitally distributed economic and financial news. Other Internet activities led to an agreement with Jumpy, the Internet portal of the Fininvest Group. Two new channels were introduced in April and produced by Mediadigit: Comedy Life, a channel dedicated to women, and Duel, dedicated to action programming.

The following year, MTChannel was launched to promote programming of popular science issues; and Tgcom (www .tgcom.it) was launched as the Group's new Internet news service. Mediaset Online (www.mediasetonline.com) was launched as the Group's new television vertical portal (vortal) to disseminate information and entertainment to a mass audience. Mediaset entered the online business and financial news sector with TgFin (www.tgfin.it), a Web portal that provided fast and reliable information for small investors and financial professionals.

Mediaset's operations were divided into the Commercial Television division and the Broadcasting and Content group. The Commercial Television division generated revenue from the sale of advertising on company television networks. The Broadcasting and Content group carried out the development and implementation of program schedules, the production of original programs, and the management of the television-signal broadcasting network. This group consisted of Italian TV, International Broadcasting, Telecommunications, and Finance. Mediaset also maintained operations with the recording industry through its subsidiaries and operations in the telecommunications sector through investments in subsidiaries operating in the fixed telephone market.

The 2001 consolidated net revenues of the Mediaset Group totaled EUR 2.351 billion, an increase from previous years as a result of the overall performance of television, and in particular, advertising revenues. With 4,370 full-time employees in 2001, Mediaset continues to direct control over all aspects of the television business, from scheduling to production, and from acquisition to broadcasting. Mediaset has developed economically, financially and productively into an independent, solid company. Originally a generalist television in Italy, Mediaset is embarking on expansion abroad through its strong alliance with Kirch Media, of Germany's Kirch Group and Spain's Telecinco, Europe's most profitable broadcaster.

Principal Subsidiaries:Albacom SpA; Electtronica Industriale SpA; Kirch Media Gmbh & Co.; Mediadigit SpA; Mediaset Investment S.a.r.l.; Mediatrade SpA; Publieurope International Ltd.; Publieuros Ltd.; Publitalia '80 S.p.A.; R.TI. SpA; Telecinco; Videotime SpA.

Principal Competitors:Bertelsmann; Radio Televisione Italiana (RAI); Vivendi Universal.

Further Reading:

• Boston, William, "Germany's Kirch Opens Gates to Investors in Drive to Grow," Wall Street Journal, January 5, 1999, p.17.
• "Building Blocks: Mediaset and the Kirch Group Join Forces," Variety, December 20, 1999, Volume 377, Issue 6, p. 46.
• Foreman, Liza, "TV Titans Go Euro, Global," Variety, May 29, 2000, Volume 379, Issue 2, p. 42.
• "Future of Italian Free TV Giant Depends on Political Maneuvers," Broadcasting & Cable's TV International, May 14, 2001, Volume 9, Issue 10, p. 10.
• "Gruppo Mediaset RTI," Video Age International, January 2000, Volume 20, Issue 1, p. S6.
• "Kirch Plans to Unload Tele 5," Broadcasting & Cable's TV International, October 29, 2001, Volume 9, Issue 21, p. 4.
• "Mediaset Takes Kirch Stake," Broadcasting & Cable's TV International, September 19, 2000, Volume 8, Issue 18, p. 5.
• "Questions Surround Mediaset Stake," Broadcasting & Cable's TV International, September 17, 2001, Volume 9, Issue 18, p. 3.
• Trofimov, Yaroslav, "Berlusconi Steams Ahead toward Italy's Vote on Sunday," Wall Street Joiurnal, May 9, 2001, p. A3.
• "Who's Who in Italy's 3G/UMTS Auction," Wireless Insider, October 2, 2001, Volume 18, Issue 39, p. 1.
• Zecchinell, Cecilia, "Evision Envisions $125 Million in Production," Variety, October 8, 2001, Volume 384, Issue 8, p. B8.

Source: International Directory of Company Histories, Vol. 50. St. James Press, 2003.

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