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Media Moguls, United

In its current fury of television takeovers and deregulation, is the United States following the Italian model of media ownership?

During Silvio Berlusconi’s eight months as Italy’s Prime Minister, when he controlled the state television system along with his own three private stations, the “Berlu-sconi phenomenon” seemed like something that could happen only in Italy. The United States, by comparison, seemed the model of fairness and sanity.

Now Congress has voted to change all that. Bills passed in the House and Senate this summer call for a sweeping deregulation of telecommunications law which would remove many restrictions from media ownership. If the reconciled bill survives a threatened veto from President Clinton in the fall, nothing would prevent a modified version of the Berlusconi phenomenon from happening here.

The legislation is based on the assumption that in the age of cable and satellite television — with hundreds of different channels — the old restrictions on media ownership are obsolete. But as the recent spate of mergers like Disney-ABC, Westinghouse-CBS, Viacom-Paramount and Time-Warner show, media ownership is only becoming more concentrated.

A shake-out is occurring around the world from which six to 10 colossal conglomerates are beginning to emerge: along with the powerful American concerns there are Leo Kirch in Germany, Johann Rupert in South Africa, Rupert Murdoch in Australia, Britain and the United States, Mr. Berlusconi in Italy among others.

Many of these media barons happen to be conservative and have used their ties to the political world to obtain huge business advantages. Leo Kirch, the largest private owner of TV networks in Germany, is a prominent supporter of Chancellor Helmut Kohl. Mr. Kohl has led efforts to scale back German public television, which he sees as hostile to his Government.

Newt Gingrich has called for the complete elimination of public television in the United States — a potential bonanza for his publisher, Rupert Murdoch, whose Fox Network could buy up the public frequencies if deregulation goes through as planned.

Some members of this emerging group of media entrepreneurs are already teaming up, trading ownership in different companies to help one another skirt the antitrust laws of individual countries.

Leo Kirch in Germany and Johann Rupert in South Africa came to Mr. Berlusconi’s rescue by buying him out when he was forced by Italian law to “sell” most of his shares in his pay-per-view channel. The management, though, remained unchanged, and Italian magistrates are investigating possible fraud in what they believe may have been a paper transaction. Similarly, Mr. Berlusconi bought a large share of one of Mr. Kirch’s TV networks in Germany when the Kirch Group ran afoul of the law there.

There’s more. Planning his return to power, Mr. Berlusconi sold a substantial minority stake in his main holding company last month to a group led by Mr. Kirch and Mr. Rupert. Mr. Berlusconi promises if he becomes Prime Minister again he will “freeze” his shares in the company, removing his representatives from the board of directors. But the sale still leaves him as the largest shareholder by far, and his management firmly in place.

American companies fit into this cartel-building in several ways. Both Rupert Murdoch and Time Warner have explored buying a share of Mr. Berlusconi’s Fininvest company. And Time Warner already owns a large chunk of Ted Turner’s CNN, which, in turn, is trying to buy CBS.

The triangular relationship among media, money and politics is emerging as a central problem of late 20th-century life, and it is becoming hard to tell who the real power brokers are — the politicians or the media barons. One of Senator Bill Bradley’s first steps in exploring an independent candidacy for President was to meet with Michael Eisner, the boss of the newly formed Disney-Capital Cities/ABC. And Ross Perot’s vast fortune and purchase of TV air time were critical in his capturing nearly 20 percent of the vote in 1992.

Because it is a smaller country with monopolistic traditions, Italy may act as a kind of laboratory where problems flourish in a more extreme form. But it offers a particularly naked example of a trend that appears to be taking root worldwide.

– August 28, 1995

As published in The New York Times

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