Mediaset shares get boost as Prodi resigns

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ROME -- Shares in Italian broadcast and cinema giant Mediaset rallied in heavy trading Friday, outpacing a strong day on the Italian Stock Exchange on speculation that the company's leading shareholder Silvio Berlusconi could earn a fourth stint as Italy's prime minister.

The share's closed at 6.08 euros ($8.93), up 3% on a day when the main index on the Milan bourse gained 1.3%. But the shares traded as much as 8.8% higher earlier in the session before retreating late in the day as investors sold shares to lock in profits ahead of the weekend.

Italian Prime Minister Romano Prodi turned in his resignation late Thursday after narrowly losing a no-confidence vote in the Italian Senate. Giorgio Napolitano, the country's president, will soon decide whether to ask Prodi or another figure to head a caretaker government that will push through an electoral reform to set the stage for new elections, or whether to call snap elections without the reform.

In either case, new elections are in the works and Berlusconi says he is poised to win them.

"The only sensible way out of this crisis is to let the Italian people speak" through new elections, Berlusconi said, buoyed by reports that his popularity levels are around 50%, higher than at any point since he was barely defeated by Prodi in April 2006.

Analysts speculate that a Berlusconi government would halt the ongoing Gentiloni media sector reform, which has weighed on Mediaset shares for months. When he was prime minister, Berlusconi also directed a percentage of the government's advertising budget toward Mediaset television networks, helping their bottom line.

"The shares performed well Friday, especially in the morning, in part based on speculation that Berlusconi may be headed back into power," said Giovanni Conti, a media and communications analyst with investment bankers Hildebrandt and Ferrar. "But the real rally will come if he actually becomes prime minister again."
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