Italian TV control in spotlight

ROME, Italy (CNN) -- Italian Prime Minister Silvio Berlusconi is at the centre of a new row over his control of the media in a shake-up of the state-owned TV broadcaster RAI.

The government is set to appoint a new board to oversee the three channels.

But Berlusconi's political opponents are concerned he will push for a board that reflects his political views.

Berlusconi, who already controls three of Italy's largest private TV stations through his company Mediaset, made an election pledge during his successful campaign last year to avoid conflicts with his business interests.

Mediaset, a publicly-listed group controlled by the Berlusconi family through holding company Fininvest, attracts 43 percent of Italian viewers.

RESOURCES In-depth: Italian election 2001

Together, Mediaset and RAI, which overseas three channels, command 90 percent of the TV audience.

The five-member board wields enormous power, choosing who heads each of the three channels and who directs their news programming.

These decisions also have an impact on advertising, where RAI and Mediaset compete directly and where RAI already feels it loses out due to government-set limits on selling airtime.

Berlusconi, who led a conservative coalition to power last June, promised to deal with the conflict of interest problem during his first 100 days in office.

However, instead of selling his media assets, he has proposed a conflict of interest bill that would set guidelines for how government members should run their business activities. The bill is expected to be introduced next week.

A self-made billionaire, Berlusconi's business activities also include publishing, advertising, financial services and sports.

"Berlusconi is the head of a system of information that is completely skewed to his advantage and which cannot guarantee the pluralism a democracy needs," says Francesco Rutelli, leader of the centre-left opposition. "The conflict... is fundamental to everyone's freedom."

But for many investors the issue is "an interesting side show" but not significant to the television sector as a whole, said Sarah Simon, an analyst at Morgan Stanley Dean Witter.

"Anything that results in less competition would be good [for Mediaset]," she said. "Anything that makes RAI more aggressive would be bad."

Regardless of the outcome, she said there would still be room for two dominate TV networks in Italy. "This is a highly profitable business."

Italy's advertising market has turned in a better-than-expected performance so far this year. Simon said sales growth was running in the high single-digits, rather than in the low double-digits which "is down but not too bad."

But Berlusconi's opponents appear more concerned about who will dominate the airwaves.

An independent survey of media coverage conducted from June 2001, when Berlusconi took office, through to January 10, showed Mediaset gave its owner more coverage than its state-run competitor, Reuters reported.

On RAI's three channels, the government received an average 46 percent of all news coverage and the opposition 26 percent. On Mediaset's three channels, the government received an average 67 percent of coverage and the opposition 15 percent.

During the same period, RAI gave Berlusconi's government 388 minutes of airtime and Rutelli and the opposition 155 minutes. On Mediaset, Berlusconi received 675 minutes of airtime and Rutelli 39 minutes.