Mediaset Warns Digital Market May Not Fund Production

PREMIUM: Future growth in television revenues will not necessarily translate into growth of resources for the production of quality programming, warns a new report on TV’s contribution to Italy’s creative industries presented at a meeting organized by the Association of Commercial Television.

Italian television invested 4.5 billion euros in drama programming during the period 2000-10, as TV consumption grew by about 10 percent, according to the study commissioned by Mediaset. That total investment accounted for about 7,000 hours of content, an average of about 643,000 euros per hour.

The report, prepared by the Istituto italiano per l’industria culturale, warns against the “myth” that an increase in channels corresponds to an increase in resources for production. The traditional, generalist and free-to-air channels continue to be the major sponsors of quality production, and the economic contribution of new television channels in this respect is “still marginal and likely to remain so.” 

It says the increase in audience, and advertising investment in digital and thematic channels, plus Internet consumption, will be “insufficient to guarantee adequate resources for the production of quality broadcast scheduling." If advertising consumers migrate towards online advertising, the displaced revenue “will not necessarily continue to fuel quality production.”

Moreover, it predicts: “In the medium to long term, we shall witness a continuous impoverishment in the structure of the European production industry, to the advantage of American multinationals.”

In Italy the TV industry is worth about 12 billion euros, or 1 percent of GDP, and employs about 50,000 people, with 12,000 companies operating in the sector, including 800 television production houses, 500 cinema producers and 500 broadcasting companies, according to the report.  The main broadcasters employ 28,000 people with 13,400 at RAI, 4,700 at Mediaset, 2,400 at Sky, 700 at La 7 and MTV Italia and the rest in local and thematic channels.

“The audiovisual sector is at the core of the media and culture industry in Italy and generates investments reaching 25 billion euros yearly,” Neri stated. “In order for us to remain competitive in the future, it is essential to ensure fair competition and a true level playing field with new entrants in the market.”

Italian television viewing grew from an average of 8.9 million viewers per minute in 2000 to 9.8 million/viewers per minute in 2010, and average daily viewing rose from 274 minutes to 302 minutes.  Today, 82 percent of Italian homes have over 50 free-to-air channels.

The Mediaset paper questions whether digital expansion, with a reduction in production costs and more open access to the market, will bring about an increase in quality content and freedom of expression. It concludes, “We believe extreme caution should be exercised before proposing the overhaul of such traditional principles as territoriality and the introduction of practices such as collective licenses.”