Prodi exit mixed news for Mediaset

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ROME -- Italian broadcaster Mediaset could begin to come under pressure if Silvio Berlusconi's efforts to earn a fourth stint as Italian prime minister keep him out of the Mediaset board room for an extended period of time, financial analysts said Thursday.

Berlusconi, Mediaset's controlling shareholder, has been trying to position himself to re-take the prime minister post ever since a government crisis resulted in the Jan. 24 resignation of political rival Romano Prodi.

Berlusconi's best chance to return to power took a blow Wednesday, when Italian president Giorgio Napolitano asked the head of the Italian Senate, Franco Marini, to form a temporary caretaker government with a mandate to re-write Italian electoral laws. Such a move would likely hurt Berlusconi's chances to win new elections.

Berlusconi said Thursday that he will refuse to back Marini's government, demanding immediate elections instead.

"The result is likely to be a drawn out fight that could ultimately result in snap elections or re-shape the electoral laws in a way that favors Berlusconi and his allies," said Giacomo Levy, a political scientist with Romanina University in the Italian capital. "Either way, Berlusconi's calendar is full for the foreseeable future."

There is still a chance that the situation could be resolved quickly. But if it isn't, it could be bad news for Mediaset investors, according to Javier Noriega, chief economist with investment bankers Hildebrandt and Ferrar.

The company's shares originally surged when Prodi resigned, on speculation that if Berlusconi returned to government it would be good for Mediaset's bottom line. But they've performed poorly since then, losing a total of 4.4% of their value over the first four sessions of this week amid analyst downgrades, an eroding ad market and dimming prospects that Berlusconi could return to the prime minister's office quickly.

"Mediaset is in the midst of a transformation from a three-network broadcaster into a world-class content producer," Noriega said, referring to the company's acquisition of Dutch reality television producer Endemol and its decision to make film production and distribution company Medusa -- another Berlusconi company -- a Mediaset subsidiary.

"The company may find itself in the position of trying to digest these recent moves with only limited attention from Berlusconi as he fights his political battles," Noriega concluded.

But analysts have said that if Berlusconi does find himself wearing the prime minister's sash again, it would be a boon to Mediaset, as the ongoing media reform process that could take a chunk out of Mediaset's profit margin would likely stall and Mediaset would again get a greater share of the government's oversized advertising budget.

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