Italian Broadcaster RAI Bests Forecasts, Ends Year $143 Million in the Red

Company expects that lower operating costs and rise in subscriber fee will help it break even in 2011.

Italian state broadcaster RAI closed the year €108 million ($143 million) in the red, the company said Thursday, beating earlier forecasts by 10%.

RAI also predicted it would break even in 2011, far better than estimates from October that predicted a rising tide of red ink that could have left it with as much as a €600 million ($795 million) deficit in 2012. The same forecasts suggested RAI could have finished €120 million ($158 million) in the red this year.

RAI has suffered from rising acquisition costs because of stepped up competition from Mediaset, the broadcast giant controlled by Italian Prime Minister Silvio Berlusconi, and from News Corp. unit Sky-Italia. RAI has also complained that the "canone" -- the annual fee Italians pay for each television they own -- has failed to increase in step with operating costs in recent years.

The company said that slashing costs and the first rise in the canone -- the fee will increase €1.50 ($1.98) per television -- in more than two years will help it break even in 2011.

The fee next year will rise to €110.50 ($145.86) for the first television in every household and less for subsequent sets.