Spending rules put RAI in pinch

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ROME -- A freeze on almost all forms of public spending puts Italian state broadcaster RAI at a big disadvantage in its efforts to attract new talent, hold on to existing talent and acquire new programs, RAI general manager Claudio Cappon said Monday.

The government announced in late October that it would freeze most public spending categories as part of a strategy to curb the country's massive budget deficit, which is the highest in Europe in gross domestic product terms. But it was unclear whether the cap would apply to RAI and other state-run companies that compete against private companies that would not have to work with such spending limits.

Over the weekend, it became clear that RAI will, in fact, have to work within the spending limits.

That means that in 2008, total spending must stay within 1.5% of 2007 levels and no individual area can increase more that 5%. In less abstract terms, the rule says that RAI's €274 million ($397 million) operating budget will remain virtually unchanged next year -- while the budget for the broadcaster's main competitors could increase substantially.

Speaking with local reporters after the details were revealed, Cappon and other RAI officials said that the television sector was too dynamic to work within such limits.

"The ceiling for expenditures is like a gift to Mediaset and Sky," Cappon said, referring to RAI's most important rivals.

RAI said it will look for ways to work within the rules and still remain competitive in the race to attract and retain talent and buy new content, but officials did not give any details about how it would do so.
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