Thursday, November 09, 2006

Mediaset fails to buy ProSiebenSat

Mediaset has been excluded from the short-list of companies competing to buy German TV group ProSiebenSat. Reuters, citing an anonymous source, claims that the exclusion was made on political grounds.

It is not uncommon to argue that Berlusconi's business success is built on political connections rather than business acumen. The contrast between Berlusconi's failure to make headway in the French television market, where he lacks such connections, and his dominance in Italy, is often cited as evidence. Yet it seems clear that such a politicised business strategy carries risks, and seems likely that such a strategy has now become a drag on the group. Mediaset share prices dribbled away their value in anticipation of a centre-left victory in April this year; further expansion abroad is now out of the question, and new markets (TV-over-IP) are less suited to political rent-extraction. The only chance for media entrepeneurs now is to lock customers in through, in Andy Kessler's terms, better pipes; content that forms a unit capable of locking in viewers/browsers. And, although Berlusconi was quick to spot the potential of American soaps like Dallas (Rai had the option on the second season and dropped it; Berlusconi picked it up and made it the centrepiece of one of his channels), original content is not Mediaset's strong suit.

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