(The Nation, January 24, 2000)
EMPEROR OF THE AIR
Berlusconi owns Italian politics, but he wants more.
by ALEXANDER STILLE
(This essay on italian tycoon Silvio Berlusconi was written by A. Stille over a year ago, but is still very topical and politically sound a few weeks before the Italian national elections.)
If you combined the political roles of Republican front-runner George W. Bush and Senate majority leader Trent Lott, the media power of Ted Turner and Rupert Murdoch, the money of Ross Perot and Steve Forbes, and the real estate and personal arrogance of Donald Trump, you would begin to get an idea of how long a shadow Silvio Berlusconi casts over Italian public life.
It may seem incredible that the chief owner of the three largest private TV networks--and a huge print-media empire--could found his own political party, become prime minister, survive numerous criminal trials and convictions, and bounce back stronger than ever, but that is what has happened in Italy. In what is perhaps the most dramatic example of the confluence between media and politics anywhere in the world, Berlusconi is a kind of Citizen Kane on steroids and is now expanding his power on the European stage. In elections last June for the European Parliament, Berlusconi's Forza Italia ("Go, Italy!") became the largest Italian party in the legislature and, as head of the political opposition in Italy, is pushing hard for new national elections so that he can make his triumphal return as prime minister. At the same time, because of his massive media dominance, much of the Italian public remains blissfully unaware of the evidence being presented in numerous trials of Berlusconi and his closest associates on charges of political corruption, fraud and association with the Sicilian Mafia.
Berlusconi's three national TV networks, Canale 5, Rete 4 and Italia 1, control more than 90 percent of the television advertising revenue in the country and 45 percent of the audience. By entering politics, Berlusconi has effectively neutralized the other great television power, the state company RAI, since any investigation into his activities can be painted as being politically motivated. The two television groups together have a 90 percent audience share. "Since the state network is too timid to raise its voice, Berlusconi's 45 percent, in the political arena, feels more like 80 percent," says Giovanni Sartori, professor emeritus of political science at Columbia University and a longtime observer of the Italian political scene. "It is a situation without precedent in the Western world."
Television is only one part of Berlusconi's empire. His publishing conglomerate, Mondadori, is overwhelmingly the largest in the country, with more than 30 percent of the trade book market--more than twice the size of its nearest competitor. His magazine group includes Panorama, the biggest national newsweekly, and a raft of other women's and mass-market magazines whose position is roughly equivalent to that of S.I. Newhouse's Condé Nast. He has two daily newspapers, Il Giornale, the favorite of Italy's conservative classes and the fourth largest in the country, and Il Foglio, a smaller-circulation paper that serves as a kind of ideological Rottweiler, used to attack Berlusconi's enemies. His investment company, Mediolannum, is the Italian equivalent in scope to the investment firms Fidelity or Vanguard. His championship soccer team, Milan, has brought him, in a country where soccer is followed with almost religious devotion, more prominence and popularity than any property other than his television stations.
In the political realm, Berlusconi's Forza Italia holds 18 percent of the seats in Parliament and is the biggest party in the center-right opposition coalition, making Berlusconi the presumptive prime minister should the current center-left government falter. Members of Forza Italia know very well that they owe their cushy and well-paid positions to their leader, and--like the employees of his companies, which many of them already are--they fall into line when he raises his voice. Moreover, all the parties depend on Berlusconi's networks for airtime, the oxygen on which all contemporary democracies live. Politicians inimical to Berlusconi are almost invisible on his networks, while Berlusconi himself is the most visible figure on Italian TV--more so even than the elected prime minister or the president of the republic. Because Italy's state TV has a longstanding policy against running political advertisements, Berlusconi's three national networks give him a virtual monopoly on election ads. Thus while Forza Italia can advertise essentially for free on Berlusconi's networks, his political rivals are in the no-win situation of paying him or doing without TV ads entirely. "This is the only country in the world where the political parties must pay their political adversary in order to run an election campaign," says Giuseppe Giulietti, a communications expert and member of Parliament with the Left Democrats (Democratici di Sinistra), the main party of the center-left governing coalition.
In the June European Parliament elections, Forza Italia blitzed the nation with 803 national ads, about four times more than any other party. The center-left coalition ran exactly zero. Not surprisingly, the left suffered a near collapse, and Berlusconi's party, with 25 percent of the vote, won 22 seats in the European Parliament in Brussels. In the process, Forza Italia became the biggest political party in Italy.
The expansion of Berlusconi's political sway is fueling new media alliances across Europe; as in Italy, his political and economic interests are neatly dovetailing. Last year, Forza Italia was admitted to the European People's Party--the union of conservative European parties, which includes the Christian Democrats in Spain and Germany, the British Tories and France's Gaullists. At the same time, Berlusconi has struck numerous partnerships with conservative German TV magnate Leo Kirsch, who is close to the German Christian Democrats. Kirsch and Berlusconi have bought portions of each other's media empires in order to allow them to get around national antitrust laws in their own countries while retaining effective control. Together, Berlusconi and Kirsch own a television station, Telecinco, in Spain, where their political ally, the Christian Democrat José Maria Aznar, is in power. Spanish prosecutors have launched an investigation into Berlusconi's participation in the project, claiming that it violates Spanish law limiting foreign ownership of television networks to 25 percent. The prosecutors claim that Berlusconi skirted the law by bringing in a series of dummy investors, and that he actually controls 80 percent of the company and has defrauded the Spanish government out of about $40 million in taxes.
Berlusconi's new political alliances have already begun to serve him well in the newly constituted European Parliament. His first move after this summer's election was to obtain the right to appoint one of his own deputies to head the Parliament's Culture Commission, which makes legislative proposals to the European Commission. The EC may take up the delicate issue of media concentration and will be undergoing a review of its policy on domestic content in European television--two areas of considerable personal interest to Berlusconi. The bread and butter of Berlusconi's networks are cheap American imports; European Union regulations require broadcasters to show 50 percent European content, but don't specify when. Berlusconi generally chooses the wee hours of the morning for such shows, while reserving prime time for the likes of Schwarzenegger and Baywatch. "If they are forced to run 50 percent European content during prime time," an executive for Berlusconi's company Fininvest told me, "that would hurt."
There is, however, a threat looming for the media mogul, in the form of the new President of the European Commission, Romano Prodi, who defeated Berlusconi in the Italian elections in 1996 and was Prime Minister until last year. Prodi, who was forced to run an election campaign with almost no television coverage, is highly sensitized to the issue of media concentration; competitive tensions between the two men have been an ongoing feature of Italian politics since Berlusconi was deposed. Thus, the political-media drama of Italy is becoming a Europe-wide problem.
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Berlusconi's political adventure dates from early 1994, when he addressed the nation on all three of his national networks from his study, announcing his decision to enter politics for the good of the country, as if he were a US President speaking to the public from the Oval Office.
Berlusconi's timing could not have been better. The political parties of the center and the right had fallen apart and dissolved after their principal leaders were indicted by Milan prosecutors on corruption charges. Berlusconi's Fininvest was itself under investigation for paying political bribes and was badly in debt, and the parties of the left--which appeared ready to triumph--were talking openly about passing antitrust measures that would have forced him to unload one or two of his three TV networks.
Squeezed on the judicial and financial fronts, Berlusconi launched a political campaign that took Italy by storm. He combined telegenic charm, can-do entrepreneurial rhetoric and a confident "It's morning in Italy" smile. Berlusconi was anything but a political outsider: He needed to enter politics because party protection had always been central to his entrepreneurial success. As a young real estate developer in the early seventies, Berlusconi convinced politicians to reroute the flight patterns of a Milan airport, turning a noisy and unattractive piece of real estate into a financial gold mine. And, in his rise as a real estate and, later, media mogul, Berlusconi was provided critical assistance by Bettino Craxi, whose ascent to the top of the Italian Socialist Party coincided with Berlusconi's own rising prominence. Craxi built the Socialist Party on a vast system of political patronage and bribery that financed the party and feathered his own nest.
* * *
In the late seventies, Berlusconi shifted from real estate into the new market of private television. Until that time, television was a monopoly of the state, but a court decision in 1974 allowed the broadcasting of private television stations on a local basis. Berlusconi, however, found a way to skirt the law and create a national network. He bought numerous small, regional stations and, by having each one broadcast the same program just seconds apart, achieved a national audience (and high ad rates) while appearing to obey the letter of the law.
Various judicial authorities saw through the ruse and tried to shut down Berlusconi's operation. When the battle came to a head and Fininvest was threatened with a court-ordered blackout, Craxi, then prime minister, issued a special decree keeping Berlusconi's television stations on the air. Berlusconi's gratitude was expressed in several ways. He made Craxi the best man at his wedding to his second wife. And prosecutors in Milan have located at least $6 million that was moved from foreign bank accounts belonging to Fininvest to bank accounts in Tunisia they insist are controlled by Craxi.
During the eighties, attempts were made to introduce antitrust legislation threatening Berlusconi's holdings, but the initiatives were in each case blocked by Craxi's Socialists. In 1990 Parliament passed its first major television law; the final version of the bill appeared to be tailor-made to fit Berlusconi's interests. It established that no individual could own more than three national networks, the number Berlusconi happened to own. It contained two measures that created the appearance of sacrifice on Berlusconi's part. One forced him to give up most of his share of a pay-TV satellite network, while the other established that the owner of a national TV network could not also possess a national daily newspaper. Berlusconi got around the second by "selling" his daily newspaper, the conservative Il Giornale, to his brother, Paolo. (He sold off most of his stock in the satellite TV venture to a group of investors, to some of whom he actually lent money enabling them to make the purchase.)
But the real scandal of the so-called Mammi Law, named after Communications Minister Oscar Mammi, is that Berlusconi's company Fininvest had paid off the principal drafters of the legislation. In 1993 a government official acknowledged receiving a 10 billion lire bribe (approximately $8 million at the time) for Minister Mammi and his party. Mammi's legislative aide, David Giacolone, received a personal payment of more than $300,000--which Fininvest insists was a "consulting fee" but which magistrates consider a bribe.
By 1994, when Berlusconi decided to enter politics, prosecutors had begun to discover the trail of Fininvest bribes, and Berlusconi's political protectors were either in jail, under indictment or, like Craxi, had fled the country. "If I don't enter politics, they'll tear me to pieces," he told Indro Montanelli, the editor in chief of his paper Il Giornale. Montanelli was to become one of the first victims of the conflicts of interest created by the new hybrid creature, Berlusconi-politician. Sharing a basic conservative orientation with Montanelli, Berlusconi had left him free to run the newspaper, which Montanelli himself founded. But when Il Giornale refused to endorse Berlusconi as candidate the editor found himself under siege. First there were angry calls from Berlusconi himself--even though he had officially sold the paper to his brother. Then the anchorman of one of Berlusconi's TV networks actually called for Montanelli's resignation on the air. Finally, Berlusconi entered the newsroom and insisted on addressing the staff himself, berating them for their fainthearted support. Montanelli resigned in protest after the incident and a more pliant editor was hired.
In the election campaign Berlusconi showed how powerful the synergy of media and politics can be. His campaign manager, Marcello Dell'Utri, was the head of the advertising wing of Fininvest, a company called Pubblitalia. Dell'Utri used the sales staff of the company as his electoral machine and recruited a vast number of candidates from among Berlusconi employees, consultants and business partners. Some twenty new members of the Italian Parliament were people who depended directly on Berlusconi for their daily bread. Forza Italia became known as the partito-azienda, the "company party."
Berlusconi introduced a new level of media sophistication into Italian political life. He blanketed the airwaves with catchy, slickly produced commercials and was constantly present on every network. Moreover, the Fininvest network newsbroadcasts were virtually indistinguishable from advertisements. When handling the delicate issue of political bribery, Berlusconi network news broadcasters would actually read company press releases as if they were independently prepared newscasts. (One anchorwoman told me that she was yanked off the air and berated violently when, out of professional scruple, she added the words, "according to the company," to one of these press-release broadcasts.)
The blatant partiality of the Berlusconi networks has to be seen to be believed. Emilio Fede, the news anchorman of Rete 4, boasts on and off the air of his loyalty to his paymaster. Fede wept with joy after Berlusconi's 1994 election victory and insisted he would leave the country if the "communists" won the election of 1996. In one of his 1996 election broadcasts, he led the nightly news with eight and a half minutes of a Berlusconi campaign rally; it may as well have been an infomercial. This was then followed by a minute and a half segment on Massimo D'Alema, the secretary of the Left Democrats, who was shown at a Bari fish market discussing various kinds of fish.
When Berlusconi became prime minister in the spring of 1994, the conflicts of interest multiplied. Almost immediately, the only two issues to which he paid any real attention were those that most deeply affected his personal interests: television and criminal justice. In the latter realm, he appointed his personal lawyer, Cesare Previti, as Defense Minister. Then he removed the board of directors of RAI, the state television corporation, and replaced the news directors of all three state networks with pro-Berlusconi people, in some cases former Berlusconi employees.
* * *
In the seven months of Berlusconi's prime ministership in 1994, his problems with the criminal justice system virtually paralyzed the country. In July of 1994, during the Operation Clean Hands campaign, when numerous investigations were launched against corruption in business and political circles, prosecutors in Milan moved to arrest Paolo Berlusconi, who had admitted paying out numerous bribes. Brother Silvio suddenly introduced a government decree that would have made it nearly impossible to arrest anyone for white-collar crimes, and, almost overnight, many of the politicians arrested in Operation Clean Hands were released from jail. Known as the Decreto Salva-Ladri, the "Save the Thieves Decree," the move caused a popular revolt, and Berlusconi was forced to withdraw it. His shaky government coalition collapsed after he himself was indicted for bribery in November 1994.
The tragicomic seven-month experiment of Berlusconi government might have shown the impossibility of having a media giant/criminal defendant in politics, but it did not end Berlusconi's career. Every time his vital interests are at stake, he has shown just how powerful videocracy can be. "The conflict of interest means that the government is under continual blackmail," says Mauro Paissan, a Green Party member of Parliament. "His being in politics is a kind of life insurance: Any move to regulate or investigate his companies is seen as a political attack."
In 1995 Berlusconi faced his most significant challenge to date: a national referendum that would have limited him to owning one national network. His Fininvest networks pulled out all the stops to attack the referendum. Weepy game-show hosts waved goodbye to their viewers suggesting that they might soon be off the air. Before broadcasting films, the Fininvest networks warned viewers that they would no longer be able to see movies on TV if the referendum succeeded. The referendum went down to defeat, although the company was cited for producing ads that were inaccurate and misleading.
Though Berlusconi lost the 1996 elections--by a narrow margin--he has been able to use the political process to gain parliamentary immunity for those business associates who are most vulnerable to arrest for corruption and in the best position to implicate him. One of the most glaring examples was the election of a company lawyer named Massimo Berruti, who is believed to have participated in the cover-up of bribes paid to tax inspectors who were supposed to audit Berlusconi's companies.
In another case, Parliament turned down a request from prosecutors in Palermo to arrest Berlusconi's campaign manager and Forza Italia MP Marcello Dell'Utri. Numerous Mafia witnesses have testified that Dell'Utri was the conduit for Mafia investments in several of Berlusconi's early real estate projects. While the Mafia charges have not yet been proven, Dell'Utri has been convicted in another case of falsifying company records to hide political slush-funds. In case the Italian Parliament changes its mind, Dell'Utri has now gained double immunity by getting himself elected to the European Parliament as well.
In the five years since Berlusconi entered political life, no Italian television network, private or public, has aired a full examination of the Fininvest/Mafia connection, despite the existence of thousands of court documents and police wiretaps documenting it. The Italian people know far more about the US President's sexual relationship with a White House intern than the relationship of the most powerful man in Italy with the Mafia.
The situation persists despite a center-left government on the opposite side of the political spectrum from Forza Italia. "Every time we touch on the question of television or criminal justice, they go crazy," says Vincenzo Vita, Under-Secretary of Communications. "They have a very compact company party and we have a small and not very compact majority."
Nonetheless, Vita admits that "many people underestimated the importance of this issue." First and foremost is Prime Minister Massimo D'Alema. D'Alema calculated that the problem of conflict of interest was of secondary importance and made Berlusconi politically vulnerable, and might even be an advantage: A center-right coalition would be hobbled as long as it was led by a man who carried as much baggage as Berlusconi, with all his legal, financial and criminal justice problems.
D'Alema reached out to Berlusconi to initiate negotiations about electoral reform, which he feels is critical to stabilizing Italy's notoriously volatile shifts in political power. But, says Vittorio Foa, a member of the constituent assembly that founded the Italian republic in 1946 and a retired member of the Senate, "D'Alema proved too clever for his own good." Berlusconi dragged out the negotiations on electoral reform for three years, while gaining time and valuable concessions in the criminal justice and television arenas. He was able to refinance his company, renaming it Mediaset, getting new bank loans and selling shares to outside investors. Moreover, Berlusconi was able to prevent the arrest of trusted lieutenants such as Dell'Utri and to persuade D'Alema to make a number of changes in the criminal justice system that could be enormously beneficial to Mediaset.
After the recent European elections, Berlusconi declared that "since court sentences are read 'in the name of the Italian people,'" the Italian people had already spoken by making him the most popular politician in Italian history. Thanks to the support of approximately 25 percent of the Italian electorate, Berlusconi was insisting, essentially, that he was above the law. He likes to cite polls taken by his own polling company that show the mogul beating out Jesus Christ and Arnold Schwarzenegger as the figure most beloved of Italian children.
D'Alema and the center-left appear to have rediscovered the conflict-of-interest problem. "D'Alema has woken up," says Vita, his fellow party member. The government introduced legislation that would prohibit campaign advertising in the month before elections, establish equal-time requirements for television and block any political figure from owning substantial shares in a mass media company. Unfortunately, having allowed three years to lapse in which Berlusconi has continued to control 45 percent of the TV audience and 90 percent of the television advertising market, the center-left's new offensive appears to be more a response to its poor results in the European elections than an important battle of principle. Indeed, the center-right has already branded the measures "political revenge" for the left's recent defeat at the polls, and Berlusconi has labeled the legislation the "Save the Communists Decree." "Unfortunately, D'Alema and the left appear to be acting opportunistically--and they are," says Professor Sartori of Columbia, "but that doesn't diminish the validity of the issue." Through the fall, Berlusconi has been threatening parliamentary filibusters, popular demonstrations and a national referendum--well publicized, no doubt--to block any legislative initiatives on conflicts of interest or restrictions on the political use of television.
As for Berlusconi trying to direct European media policy, Walter Veltroni, secretary of Italy's Left Democrats, said: "We have had this embarrassment in Italy--of having the head of a political party deciding policy of the media of which he is owner--and now we have exported it to the European level.
Alexander Stille is the author of Excellent Cadavers: The Mafia and the Death of the First Italian Republic (Vintage) and writes for The New Yorker.