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Outlook

The recovery of the global economy is continuing, despite widespread uncertainty, with considerable differences from one geographic area to another. On average in 2010, the global product grew 5% with respect to the previous year's decline by almost one percentage point. However expansion is expected continue at the same rate as last year.

In the euro zone, the strongest impulse to growth is provided by the German economy, due to the important growth of exports and investments in machinery and equipment. As regards Italy, development rates are around 1%. The expansion of production is concentrated in exporting companies, particularly big companies, aimed at emerging economies, while domestic demand remains weak.

In this context, following a 2010 characterised, after the previous year's sharp decline, by a recovery in income from advertising, market estimates for 2011 are still rather cautious, assuming a slightly positive sign. However, considering the high level of uncertainty and volatility, forecasts could change. 2011 will be a crucial year for the switchover of the whole country to DTT and will be fundamental to strengthen the positioning of operators in a highly dynamic competitive context.
Consequently 2011 will be a particular important year for Rai.

The company has to reconcile two opposing needs: to speed up the structural recovery of the company's income statement, intervening first and foremost in terms of costs, also at structural level, while simultaneously opening a new phase focused on development, with an editorial and industrial rethink of the role of the Public Service in the new digital era.

The capacity for reinventing its role, warding off the risk of a decline due to a slow but progressive marginalisation, passes necessarily through the central positioning, as global free broadcaster, on the digital terrestrial platform. The centre of the Rai project is the digital platform, with an investment focused on human resources, technological innovation and, obviously the product.

The importance of the commitment lies in a number: for the advancement of the project for the construction of the network alone, Rai will have to commit resources of almost 100 million euros in 2011.

The economic forecasts for 2011 show a substantial breakeven, due to the absence (this being an off year) of expenses for big sports events, and - above all - to the consolidation of management initiatives, also at structural level, which will be implemented and actuated during the year.

In consideration of the consolidated growth in public resources, in line with adaptation to inflation, and the critical structural situation which seems to characterise the advertising market, especially with regard to television, it is becoming increasingly important to tackle the subject of resources decisively with a view to regaining a structural balance and improve development opportunities.

This rebalance will have to rely on public resources, which are still insufficient to meet the costs sustained by Rai for the activities assigned to it by law and by the Service Agreement, which are expanded every time the agreement is renewed.

Once again in 2011, the per-unit licence fee has been increased in line with inflation. Consequently, in relation to the effects on the year in progress, positive results could derive only from a prompt review of the mechanisms to contrast evasion which, as we all know, are blatantly inadequate to cope with the phenomenon which is pathological. Encouragement comes from the new Service Agreement for 2010 - 2012, signed on 6 April 2011 by the Ministry for Economic Development and Rai.

The Ministry has taken on the commitment for identifying, with the involvement of the competent administrations, the most effect methods for contrasting licence-fee evasion, proposing appropriate legislative initiatives initiatives and taking the necessary administrative measures.