to download Telecom Italia Annual Report 2011 - Company Reporting

After acceptance in December 2011 of three parliamentary demands, the Government is committed to
suspend the procedure for the assignment of TV frequencies by beauty contest and to identify a
frequencies assignment procedure in the general collective interest in financial terms and in terms of
the strengthening of pluralism in the information and television sector.
On January 20, 2012, TIMB received an official communication from the Ministry of Economic
Development which suspends the beauty contest for 90 days and, at the same time, gives TIMB 60 days
in which to submit any other observations in this sense.
On February, 1 2012, TIMB replied and asked that a round table be set up to compensate the Group for
the damages suffered in the conversion process of the networks from analog to digital and to settle the
dispute as a whole.
Principal appeals regarding digital frequencies
With the appeal filed on August 8, 2011, TI Media challenged the bid and bid rules relating to the beauty
contest intimating the illegality of:
• barring TI Media from bidding for Lot A as if it were on the same footing as RAI and Mediaset;
• considering SKY as a new entry operator and, in contrast, subjecting Telecom Italia Media to the
same restrictive measures as RAI and Mediaset, which are incumbents;
• the economic and technological restriction on Lot C.1, which for five years can be used only in DVB-H
(outside the market) or in DVB-T2 (without any commercial attraction since the penetration of this
technology in the market is presently inexistent and is not planned for at least five years from switch
off);
• the assignment criteria for the points which tend to favor operators which have a dominant position
(RAI and Mediaset);
• the absence of fixing asymmetrical measures regarding RAI (an enterprise in public ownership),
whose participation in the bid changes the competitive situation.
On November 8, 2011 Telecom Italia Media Broadcasting filed an appeal for the annulment, subject to
precautionary measures, of the admission of RAI to the beauty contest, challenging various elements
which violate the bid rules including: i) reaching the maximum number of DVB-T networks which an
operator may run by reference to the limit of 5 DVB-T networks set by the European Commission ii)
failure to comply with various requirements of the bid process such as the obligatory corporate
separation of publisher from operator of a digital terrestrial network. On January 11, 2012, in a closed
session of the court, the date was set for the merit hearing for April 4, 2012.
Auditel
At the meeting of the board of directors of Auditel on November 28, 2011, Telecom Italia Media raised
the following matters:
• the question of the underestimation of La7 audience size and of the consequent economic loss
arising from inability to fully realize the corresponding potential in the market for advertising
revenue;
• the failure to upgrade the company’s corporate governance, a matter raised by the Communications
Authority itself, so as to make Auditel effectively independent with respect to its two majority
shareholders RAI and Mediaset.
If responses to these matters are not forthcoming within a reasonable time, presumably by the end of
the first quarter of 2012, Telecom Italia Media will be compelled to take whatever steps are necessary
to safeguard its interests.
Following SKY’s formal complaint, AGCom fined Auditel for abuse of its dominant position.
According to AGCom, Auditel’s seriously abusive actions were the following:
• it impeded without justification the release of daily figures by channel and platform (in spite of the
fact that the technical problems with this metric were resolved in June 2009);
• until January 2010 it impeded the release of daily figures for “Other Digital Terrestrials” on the
grounds of opposition from one of the main shareholders, Mediaset, which only in January 2010
withdrew its reservations leading to the release of the data (there were no technical/statistical
obstacles and the context and benefit to the major Auditel shareholders must be considered);
Report on Operations The Business Units of the Telecom Italia Group – Media 74