Battle of the billionaires: Has Murdoch met his match?

Both are billionaire septuagenarians. One is a media mogul turned politician, the other a media mogul with enough political firepower to influence elections.

Both are charming, ruthless warriors who are fighting one another and apparently relish the action. Who will win? My bet is that Rupert Murdoch, unstoppable so far, has finally met his match in Silvio Berlusconi.

Mr. Berlusconi and Mr. Murdoch are embroiled in a riveting media war, one that has triggered outbursts from both men.

The former is the Prime Minister of Italy and the controlling shareholder or Mediaset, the country's biggest commercial broadcaster (guaranteeing a Colosseum-sized conflict that is shrugged off by most Italians and would not be tolerated in any other civilized country).

The latter is the chairman and controlling shareholder of News Corp., the global TV and newspaper juggernaut whose names include Fox, The Times and BSkyB.

Not long ago, the old men were buddies and carved up the Italian TV map as if they had convened a latter-day Yalta Conference.

Mr. Berlusconi, then in his second stint as prime minister, allowed Mr. Murdoch to merge two struggling broadcasters to create the Sky Italia satellite-TV service.

Modelled on Mr. Murdoch's BSkyB in the United Kingdom, it launched in 2003. The Berlusconi family's Mediaset and RAI, the Italian state broadcaster effectively controlled by Mr. Berlusconi through his role as head of government, would keep a lock on terrestrial broadcasting.

Mr. Berlusconi must have thought Mr. Murdoch a fool. Satellite-TV at the time seemed a money-sucking folly. In retrospect, letting Mr. Murdoch steal the broadcasting heavens was one the few entrepreneurial miscalculations of Mr. Berlusconi's career. Sky Italia has soared. Free-to-air terrestrial TV has gone in the opposite direction. Mediaset's formula of cheap-and-cheerful talk and game shows, most decorated with barely clad beauties, is wearing thin. Some 4.8-million Italian subscribers pay about 50 euros a month for Sky Italia's vast suite of sports, cinema, news, music and porn offerings.

The uneasy truce ended in December, when the government sleazily doubled the valued-added tax (or VAT, the equivalent of Canada's GST), to 20 per cent on pay-TV services. Since Sky Italia utterly dominated pay-TV, it was effectively a Murdoch shake-down, though one dressed up as a tax to help the poor during Italy's brutal economic downturn.

A month later Sky Italia recruited Rosario Fiorello, the top Italian TV entertainer who had worked for both Mediaset and RAI. Not to be outdone, Mediaset and RAI joined forces to create Tivu, a free-to-air satellite service whose launch is set for mid-July.

The slug-fest was just getting started. Much to Mr. Murdoch's delight, Mr. Berlusconi is up to his belt buckle in girl problems. It all started in May, when the 72-year-old prime minister attended the birthday party of Noemi Letizia, an aspiring underwear model exactly one-quarter his age. When the news broke, Mr. Berlusconi's long-suffering wife, Veronica Lario, said she could not stay with a man who "frequented minors" and demanded a divorce.

Mr. Scandal-o-metre nudged further into the red when a Spanish paper published pictures of naked and semi-naked women and men cavorting at Mr. Berlusconi's fantastically luxurious Sardinian villa. Italian consumer groups wanted to know why official government jets were used to fly them there. If all this weren't enough, a former model named Patrizia D'Addario claims she was paid to attend parties at the Sardinian villa and at Palazzo Grazioli, Mr. Berlusconi's Rome residence. Ms. D'Addario now says she has a secret video of her in the residence with the prime minister's bedroom in view.

The fleshcapades, of course, have been duly chronicled in The Times, Mr. Murdoch's flagship British paper. Mr. Berlusconi managed to keep his cool until earlier this month, when The Times published an attack on him entitled "The Clown's Mask Slips." The paper also carried an opinion piece by University of Cambridge professor Mary Beard, which compared Mr. Berlusconi's behaviour to that of the Roman emperor Tiberius.

Mr. Berlusconi used his own TV network to lash out at Mr. Murdoch. "I don't mean to be nasty, but unfortunately with the VAT episode, there was a breakdown in relations with the Sky group and with Mr. Murdoch's group, which has published a series of very critical articles attacking me," he said.

Mr. Murdoch fired back in an interview on the Fox Business Network. "I don't control what the editor of The Times says in London or the economists which have been attacking him, saying it's a disgrace to have him as a prime minister for the last five years."

Even Conrad Black, writing from Florida, where he is a guest of the U.S. government, was moved to comment on the feuding billionaires. Writing in thedailybeast.com, he had kind and unkind things to say about both men, though Mr. Murdoch who "Like Napoleon, has no policy except war," came off somewhat worse.

While it looks like Mr. Murdoch and the editors he employs are having fun, it is Mr. Berlusconi who might get the last laugh. As the owner of Mediaset, the effective controller of RAI and the leader of government with a parliamentary majority, his weapons cache is wide and deep. Lifting the VAT on pay-TV and launching Tivu may have only been the start of a nastier campaign. RAI has already announced it will not renew its carriage deal with Sky Italia when the contract expires shortly. Mediaset is expected to do the same. Without the RAI and Mediaset channels, Sky Italia's offerings will be far less substantial.

What next? How about a TV porn tax? Mediaset has been careful not to lunge into "adult" programming, for fear of alienating the Vatican and female voters. That left an open market for Sky Italia, one ripe for a sin tax. Here's another idea for Mr. Berlusconi. Basta with the bums and boobs. Produce quality programming and watch TV viewers come back. A radical idea, to be sure, but a country as culturally sophisticated as Italy deserves better television that Mediaset delivers.

ereguly@globeandmail.com