1. Regulation of media concentrations and pluralism Sebastiano Sortino Prague, 17 May 2007 The experience of Italy

2. 2 1.General context 2.Italian rules on media concentrations 3.Practical implementation Summary

3. 1. General context

4. 4  Protect media pluralism  Declarations of the Council of Europe  Communication of European Commission  Ensure a balanced media market  A look at the whole as communicating vessels  Growth in one sector must not impoverish other  Foster culture and consumers’ interests  More sources of information  Independence of the media Aims of regulation 1. General context

5. 5  Media concentrations between:  Pluralism: the establishment of a dominant position is forbidden per se  Competition: only the abuse of a dominant position is forbidden  Regulatory approaches between:  Ex ante regulation: thresholds are established in advance for the specific market  Ex post sanctioning: specific remedies are adopted according to the need of the market 1. General context Main features

6. 6  Mono-media media concentration rules  Avoid excessive strength within any single media  Multi-media media concentration rules  Avoid that market powers in one media extend excessively to other media and dangerous synergies between different media dangerous Specific thresholds 1. General context

7. 2. Italian rules on media concentration

8. 8  1981: The press as the first sector where a specific interest in concentrations arised  the first public register for transparency purposes and thresholds based on circulation (max 20% of all printed copies)  1990: the example of the press is followed in the broadcasting sector according to the Constitutional case-law:  Broadcasting Act fixes a threshold of 25% of frequencies (= 3 channels out of 12) per subject, of 20% of the resources of the massmedia sector and cross-ownership limits:  >16% circulation = no TV  8%-16% circulation = one TV  < 8% circulation = two TV 2. Rules on media concentrations Evolution of the rules (1/2)

9. 9  1997: General prohibition of dominant positions in the communications sector and sectorial limits:  thresholds of 20% of frequencies (= 2 channels out of 11) per subject and 30% of the resources of television / radio / cable and satellite / advertising agencies sectors;  Cross-ownership rules between telecoms and broadcasting (prohibition to hold licenses in both sectors) and additional rules for press and broadcasting (max 20% of both sectors);  Institution of AGCOM in order to monitor the existence of dominant positions in the communications sector. 2. Rules on media concentrations Evolution of the rules (2/2)

10. 10 2. Rules on media concentrations Dominant operators in 2002- 2003  According to the 30% limit both RAI and Mediaset are in dominant positions:  RAI – 43% in 2002 40% in 2003  RTI – 33% in 2002 33% in 2003 Source: Agcom Annual Report 2003-2004

11. 11  2004: Radio and television broadcasting (1/2)  Technical threshold: Number of concessions ( Art. 43, para. 7-8, Act no. 177/2005)  a single subject may hold max 20% of:  analogue and digital television or radio programmes, according to the national digital terrestrial frequency plan.  The law confirms the existing threshold of 20% of the frequencies, but reference is made to the DTT frequency plan. 2. Rules on media concentrations Horizontal media concentration

12. 12  2004: Radio and television broadcasting (2/2)  Economical threshold: Revenue shares ( Art. 43, para. 9-10, Act no. 177/2005)  a single subject may collect:  max 20% of resources of the integrated communications system (SIC) as determined by technological developments and the converging process between different sectors;  the existing threshold is lowered from 30% to 20%, while the terms of reference for the calculation is the SIC and no longer relate to the traditional broadcasting sector;  the single markets composing the SIC will be analysed according to competition law. 2. Rules on media concentrations Horizontal media concentration

13. 13  2004: Broadcasting and telecoms (Art. 43, para 11, Act no. 177/2005):  Telecoms operators collecting more than 40% of the revenues of the telecommunications services market may not collect more than 10% of the revenues of the integrated communications system.  2004: Broadcasting and press (Art. 43, para 12, Act no. 177/2005):  Publishing companies may freely enter the broadcasting market, while television broadcasters may not have any share in newspapers companies until 2010. 2. Rules on media concentrations Cross-media concentration

14. 14 ______________________________________________________ Radio TV Newspapers Periodicals Books Cinema Music Electr. publishing Sponsoring 22.144 MiO € in 2005 21.567 MiO € in 2004 The integrated communications system (SIC) Source: Agcom deliberation no. 341/06/CONS 2. Rules on media concentrations

15. 15 Italian “integrated communications system” in 2005 2. Rules on media concentrations

16. 16 2. Rules on media concentrations Dominant operators in 2004- 2005  According to the 20% limit RAI and Mediaset are not in dominant positions:  RAI – 11.8% in 2004 11.2% in 2005  RTI – 10% in 2004 10.2% in 2005  They would have been dominant under the 30% of the old law:  RAI – 40% in 2004 37.5% in 2005  RTI – 33.9% in 2004 33% in 2005 Source: Agcom Annual Report 2005 - 2006 and deliberation no. 341/06/CONS

17. 3. Practical implementation of the rules

18. 18  Deliberation no. 136/05/CONS of 02/03/2005  AGCOM adopts seven remedies to balance the oligopolistic position of Rai and RTI on the market:  RAI and RTI: 1) speed up the digitisation of their terrestrial television broadcasting networks; 2) maintain the obligation to reserve 40% of their digital capacity to independent content providers until the complete switchover;  RTI: 3) employ an advertising agency different from Publitalia on dtt broadcasts; 4) hourly advertising limits reduced to 12% on dtt broadcasts;  RAI: 5) launch a new generalistic program capable of attracting audience without advertising advertising on dtt networks  Publitalia: 6) introduce a separate accounting between analogue and digital advertising revenues until separate companies; 7) ensure transparent, fair and non discriminatory conditions in the sale of advertising time. 3. Practical implementation Adopted remedies

19. 19  Thresholds may ensure certainty on the existence of dominant positions once exceeded, but should not as such exclude a case-by-case market analysis  Competition law criteria are a useful tool for NRAs to combine with pre-defined limits to adapt to the peculiarities of each market  Towards an integration of ex ante thresholds and ex post competition law remedies? Thresholds vs market analysis 3. Practical implementation

20. 20 For any query: s.sortino@agcom.it Visit our website: www.agcom.it Thank you for your attention!