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Berlusconi’s crisis hits his media empire

November 11, 2010

By Rachel Sanderson in Milan and Guy Dinmore in Rome, published: November 11 2010  

A widening political crisis in Italy is driving investors away from Silvio Berlusconi’s media empire on the Milan stock market as concerns mount over the stability of the prime minister’s centre-right coalition.

Gianfranco Fini, a one-time ally of Berlusconi turned bitter rival, reiterated a threat on Thursday to withdraw his support from the government unless the billionaire media mogul agreed to step down.

An aide to Mr Fini told the Financial Times that he would announce he was pulling out of the government when Mr Berlusconi returned from the G20 summit in Seoul at the weekend. Mr Fini’s Future and Liberty party has one minister and three senior officials in the coalition.

Shares in Mr Berlusconi’s Mediaset company have fallen nearly 10 per cent on the Milan stock market in the past two days, stripping €600m ($842m) from its value.

Investor concerns about Mr Berlusconi’s connection to Mediaset have long been a cause for volatility in the stock, commonly described in the industry as the “Berlusconi discount”. Mr Berlusconi controls Mediaset with a 40 per cent stake held through his family holding company Fininvest.

Should Mr Fini, speaker of parliament, then take the next step and support a vote of no-confidence in the government, using his 37 deputies in the lower house, then Mr Berlusconi could be forced to step down and ask the head of state, Giorgio Napolitano, to call snap elections.

“In my country I have some difficulties in this moment,” Mr Berlusconi was quoted as saying in Seoul.

The prime minister’s political crisis has been exacerbated by the latest scandal involving his private life and his relationship with a teenage Moroccan nightclub dancer. Ansa news agency reported from Seoul that Mr Berlusconi, midway through his five-year term, had no intention of quitting.

Umberto Bossi, leader of the rightwing Northern League, which has so far remained loyal to Mr Berlusconi, failed to persuade Mr Fini on Thursday to accept a cabinet reshuffle without the prime minister first resigning.

Commentators said Mr Berlusconi feared presenting his resignation to Mr Napolitano without a guarantee he would be called on to try to form a new government. Some senators in the prime minister’s People of Liberty party are wavering and could be tempted to transfer their allegiance to a new prime minister, with Giulio Tremonti, finance minister, seen as a leading contender.

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