Mediaset shares fall 4.3%

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ROME -- Mediaset shares tumbled 4.3% in an otherwise strong market for media stocks Tuesday, as investors reacted in an unexpected way to the likelihood that Silvio Berlusconi -- the company's leading shareholder -- will become Italy's next prime minister.

The shares added about 2% on Monday on speculation that Berlusconi could get a fourth run as the head of the Italian government. The shares continued to gain slightly in early trading Tuesday, but then gave back after the date for the next elections was announced for April and the resumption of Berlusconi's graft and corruption trial was scheduled for the end of this month.

"With a long lag until the elections and the trial date looming, everyone knows Berlusconi's full attention won't be on Mediaset," ABS Securities media analyst Gianluca Antonello said in an interview. "Mediaset is at its best when Berlusconi is calling the shots."

Mediaset shares closed Tuesday at 5.81 euros ($8.60) with a trading volume of 7.7 million shares -- more than double their normal volume. Despite Mediaset's losses, the Italian Stock Exchange's media sector index rose 1.1% on the belief that what was bad news for Mediaset would be good for the company's competitors.

The distractions come as Mediaset works to digest its acquisition of Dutch reality television producer Endemol and the move of Berlusconi's film production and distribution company Medusa to the Mediaset umbrella.

The elections were called for April 13 -- the next step in a protracted government crisis that started when Prime Minister Romano Prodi stepped down after a failed no-confidence vote on Jan. 24. Attempts to form a temporary caretaker government were abandoned, necessitating new elections. Though it was Berlusconi who opposed a temporary government to force elections, little has gone the way of the 71-year-old media tycoon since then.

First, the election date was set nearly 10 weeks away, giving more time for likely opponent Walter Veltroni -- the mayor of Rome and the founder of the three-year-old RomaCinemaFest -- to prepare. Veltroni is popular in Rome, but less well-known than Berlusconi outside the capital.

Additionally, the government announced it would hold a referendum in May that could make into law a series of electoral reforms Berlusconi sought to avoid.

And lastly, magistrates said Tuesday that Berlusconi's 16-month-old trial will restart Feb. 28, further distracting Berlusconi from his work at Mediaset and reminding voters of his troubled legal history.

Still, Berlusconi sounded confident Tuesday, expressing pleasure that the elections were called and predicting he and his allies would win enough support to form a government.

Berlusconi's most recent stint as prime minister -- he headed two consecutive governments that held power for nearly five years, ending in 2006 -- was good news for Mediaset, as he was able to tailor laws to benefit the broadcaster and shift government advertising money its way. Plus, an ongoing media sector reform, which Berlusconi has said would harm Mediaset, will almost surely stall if Berlusconi becomes prime minister.

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