Media Ownership Rules - Italy

07 November 2002

Rino Caiazzo, Studio Legale Ughi e Nunziante













ITALY


Introduction


 

The current media ownership rules in Italy deeply focus on the necessity of ensuring pluralism and avoiding the concentration of market power in few hands. However, last September the Italian Government presented to the Parliament a bill of law which, if approved in its current form, will significantly relax such rules. The proposed changes include the following:

(i) Cross-media ownership of television channels and newspaper and other printed publications will no longer be forbidden;
(ii) No single entity will be allowed to own more than 20% of the total revenue (any fee coming from any subscription, licence, sponsor, sale, marketing and the like) produced by the aggregate communication system (television, radio, press, film industry etc) irrespective of the communication means used; and
(iii) The state owned television channels will be privatised from 2004 onwards although the Italian State will maintain a control shareholding and no private shareholder will be entitled to hold more than 1% of the corporate capital.

It is therefore important to examine the current media rules in order to appreciate the proposed changes and how they could impact on the industry structure.

1. Television


  • Foreign Ownership Restrictions - Can a non-EU entity control the following broadcasting interests in Italy?


Satellite yes
Cable yes
Terrestrial (analogue) yes
Terrestrial (digital) yes
[1]



Non-EU control is permitted, provided that the home country of that entity applies reciprocal foreign ownership conditions to Italian broadcasting entities.


  • Ownership Aggregation Limits -



The following restrictions apply:

National Level

i. Ban on an entity/entities controlled by/affiliated to other entities holding broadcasting concession(s), from maintaining concessions enabling them to control more than 20% of analogue/digital terrestrial programmes.
ii. Limitations on means of financing the provision of television services.
Ban on raising revenue in excess of 30% of total national TV sector resources [made up of the financing of the public broadcasting service, (net of fees due to the Treasury] and revenue raised through national advertising) for the provision of encoded and terrestrial broadcasting, by holders of national TV concessions (including supply of the public service), holders of authorisations for nationwide encoded broadcasting, or both.
Ban on raising revenue through the provision of cable/satellite broadcasting services by holders of relevant authorisations, in excess of 30% of total resources for national cable/satellite broadcasting.

Local Level

i. Ban on a single entity being granted more than one broadcasting concession for a local area.
ii. Ban on a holder of a local broadcasting concession being granted further local concessions within the same region.


2. Radio

  • Foreign Ownership Restrictions -


Non-EU control is allowed, if the home country of the foreign entity applies reciprocal conditions to Italian radio broadcasters.


  • Ownership Aggregation Limits -


National Level

i. Restriction on an entity/entities controlled by/affiliated to other entities which hold broadcasting rights, from controlling more than 20%[2] of terrestrial analogue networks or digital programmes.


3. Newspapers

  • Foreign Ownership Restrictions -


Non-EU control is permitted, provided that the home country of the foreign entity applies reciprocal conditions to Italian publishers.


  • Ownership Aggregation Limits -


National Level

i. Ban on an entity controlling more than 20% of the overall newspaper circulation.
ii. Ban on an entity controlling other publishers with more than 30% of the newspaper circulation.

Local Level

i. Ban on an entity publishing more than 50% of the newspaper circulation in a region.


4. Cross-media Ownership Restrictions


An entity with share interests in both radio/TV broadcasting and newspaper publishing cannot earn a total revenue from both activities, in excess of 20% of the national aggregate revenue raised through:

(i) advertising in such sectors;
(ii) telemarketing fees;
(iii) sponsorship agreements;
(iv) compensation from public contracts;
(v) public service financing;
(vi) pay-TV proceeds;
(vii) newspapers and magazines sales and subscriptions; and
(viii) home consumption electronic publishing returns.


5. Local Competition Law Policy


The Italian Antitrust Authority (the “IAA”) adopts a rigorous approach when assessing the competitive consequences of concentrated media ownership, approving them only when measures aimed at increasing competition in the market are implemented.

The recent acquisition of Stream by Canal/Telepiu, was conditional in part, on the undertakings respecting certain restrictions on the scope and duration of broadcasting rights for football events; Telepiu granting the major movie producers with which it had exclusive pay-TV deals a unilateral right to withdraw from their contracts on 6 months notice, with a proportionate reduction in payments due; and restrictions imposed on it entering into future contracts with these producers. Telepiu was also prohibited from operating in digital terrestrial platforms either at the experimental phase or as a network operator, and therefore was forced within a specified period to dispose of its interests in Prima TV and Europa TV, which hold title to terrestrial TV frequencies.

The interventionist approach of the IAA was also illustrated in the acquisition of Cecchi Gori TV channels by Telecom Italia. The acquisition proceeding was conditional on access being made available to Telecom Italia’s civil infrastructure, and the absence of exclusive rights provisions in the agreements between Telecom Italia Group and Cecchi Gori Group for the acquisition of commercial programs for transmission via the Internet.

Whilst the IAA is afforded certain powers to protect competition in the media market, the regulatory function for the industry is actually vested in the Italian Communications Authority (ICA). The ICA has a general duty to supervise the TV market and veto acquisitions in the TV broadcasting sector where such acquisitions would lead to a dominant position or fall foul of regulation. The ICA initially banned the Cecchi Gori acquisition, but was overruled by the courts.



Footnotes

[1] Non-EU control is permitted for all classes of TV, provided that the home country of that entity applies reciprocal foreign ownership conditions to Italian broadcasting entities.
[2] An entity may be permitted to hold more than 20% of radio broadcasting activity nationwide, provided that pluralism and free competition are not jeopardized