European TV and sports rights 2006 Is Rai-Mediaset cartel ending? Italy’s highest appeal court ruled in November 2001 that Rai and Mediaset had acted as a cartel in the acquisition of sports rights....

European TV and sports rights 2006 Is Rai-Mediaset cartel ending? Italy’s highest appeal court ruled in November 2001 that Rai and Mediaset had acted as a cartel in the acquisition of sports rights. It said that the broadcasters had agreed to share out virtually all major sports rights from July 1996 to June 1999 in a deliberate attempt to prevent the small commercial channel Telemontecarlo (later to become La7) emerging as a rival. The cartel agreement covered Formula One, cycling’s Giro d’Italia and football’s Champions League, national team matches and Serie A highlights. Rai was fined L 1.45 billion (a750,000) and Mediaset L 997 million (a515,000). Two years later, UEFA chief executive Gerhard Aigner complained about the lack of Champions League competition in Italy. The market ‘does not correspond to an open market. It’s almost as if no one expects their competitors to make a move’. His complaint followed UEFA having to accept a significant cut in television rights fees after Rai decided not to bid. A joint bid was submitted by Mediaset and Sky Italia, but it was dependent on each party being awarded the rights. There is less evidence of collusion now. In the new bidding for the Champions League, for the three years from 2006/07, Rai won the free-to-air rights with a very high bid (against a low bid by Mediaset), Mediaset took the digital-terrestrial rights and Sky Italia the digital-satellite. Overall, UEFA increased its rights fees in Italy by 80 per cent. Mediaset retaliated by winning the Serie A highlights rights from 2005/06. Rai had shown the highlights since 1970. Rai also bid aggressively for the 2010 and 2014 World Cup rights. There are said to have been various reasons why it had become more aggressive. First, a new ninemember Rai board was elected in June 2005 for the next three years, and the board was worried that Rai might lose its target audience and market position if did not win major sports rights. Second, it is said that the new board, led by a left-wing acting president, Sandro Curzi, took advantage of the temporary power vacuum caused by the lack of a president and by the imminent departure of director general Flavio Cattaneo to make bold acquisitions to boost Rai. Third, Rai was under pressure to act positively after being fiercely criticised in the wake of losing some 2006 World Cup rights to paytelevision platform Sky Italia. Discussion questions 1 What is the welfare economic rationale for prohibiting broadcasters from collaborating? 2 Discuss the challenging of monitoring, and unveiling, collaborations between broadcasters.