April 18, 2012 / 12:25 PM / 7 years ago

Mediaset unsure on TV auction participation

COLOGNO MONZESE, Italy (Reuters) - The chairman of Italy’s biggest commercial broadcaster, Mediaset, refused to say on Wednesday whether it would take part in an upcoming auction of television frequencies, already billed by some market observers as unattractive.

The Rome government said this week a competitive auction will be called within 120 days, reversing plans by the previous administration led by Mediaset’s key shareholder Silvio Berlusconi to give them away in a so-called beauty contest. Berlusconi owns 41 percent of Mediaset.

“We still cannot say if we’ll take part in the auction. We’ll see the rules,” Fedele Confalonieri told shareholders at a meeting at the broadcaster’s headquarters just outside Milan.

The government said some of the five frequency rights packages, or multiplexes, would be auctioned for a shorter period than others and could be assigned to telecoms operators. Reports say the timeframe could be three years.

For market observers the auction could be potentially unattractive for investors. “The rights must have a 10-year duration to justify investments,” said Augusto Preta, CEO of consultancy firm IT Media Consulting.

“There is much less interest for the digital terrestrial market than two years ago, when the 300 million euros ($394 million) market was still substantially open. Now games are mostly over and only the crumbs are left,” he said.

Other broadcasters active on the Italian market such as SKY Italia, a unit of News Corp, and Telecom Italia Media have yet to detail their plans for the auction.

The previous process for assigning frequencies drew criticism for favoring incumbent broadcasters Mediaset and state-owned RAI. It was also attacked for overlooking potential revenue for cash-strapped Italy after an auction of fourth-generation mobile telephone frequencies last year raised almost 4 billion euros.

Press reports at the weekend said that Mediaset could secure additional TV frequencies without even taking part in the auction by getting permission to use its own frequencies now limited to mobile TV.

Confalonieri on Wednesday defended the beauty contest saying it was a procedure used by most European countries and allowed by European authorities. “Are we sure that the auction will generate significant revenue for the state?” he said.

Estimates point to more than 1 billion euros in revenue from the auction, a figure which Mediaset board member Gina Nieri recently said was exaggerated.

($1=0.7610 euros)

Reporting by Danilo Masoni; Editing by Mike Nesbit

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