TV reforms will end ads on 2 RAI nets

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The next step in Italy's ongoing reform of its television sector will see state broadcaster RAI drop advertising at two of its three national networks and cap total advertising market share for individual companies, according to a statement from the country's Ministry of Communications.

Details of the plan will be written into the terms of a pending communications reform bill, but, according to Wednesday's ministry statement, changes will include stripping advertising from two of RAI's three national networks. The initiative dictates that those two networks must survive on budgets derived entirely from the annual fee paid by television owners and government aid. That would free the networks from commercial concerns and ostensibly allow them to focus on improving the quality of programming.

The changes will go into effect no later than the end of 2009.

But private broadcaster Mediaset — RAI's chief rival — is unlikely to benefit from the changes at RAI. The reform also will limit individual companies from owning more than 45% of the total television ad market. With Mediaset already near that market share, the extra advertising cash would in theory flow to smaller broadcasters or to startup companies in the sector.

The move also quashes speculation that RAI might be sold to private investors in the future, since no investor would want to acquire a broadcaster unable to sell ad time.

According to media reports, about half of RAI's €3 billion ($3.93 billion) budget comes from advertising sales. After the reform, ad revenue will be reduced to a third of a slimmed-down budget, the ministry said.

Mediaset — which is controlled by former Premier Silvio Berlusconi — would not comment on the proposed changes when contacted. In the past, however, the broadcast giant has been critical of the government's plans to reform the television sector.

Other reforms passed include requiring RAI and Mediaset to each switch one network to digital platforms by 2009 and for all Italian broadcasters to use digital signals by 2012.

RAI and Mediaset dominate the Italian television industry, controlling more than 90% of all viewer hours. The only national network not owned by one of the dominant companies is La 7, the smallest network with a total market share of less than 6%.
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