October 11, 2009 10:03 pm
Rodolfo De Benedetti doesn’t want to comment about Silvio Berlusconi. Mr De Benedetti, chief executive of the family-controlled conglomerate CIR, owns La Repubblica, one of the fiercest newspaper critics of the Italian prime minister. But in spite of an escalating war of words – and lawsuits – between the two sides after the newspaper exposed the prime minister’s still unexplained relationship with an 18-year-old, Mr De Benedetti sees the dispute as an editorial matter.
“The quarrel between Berlusconi and La Repubblica should stay between them,” the 48-year-old says, repeatedly refusing to comment further.
Nonetheless, in a wide-ranging discussion during a recent trip to London, Mr De Benedetti finally joins in the criticism when asked about Mr Berlusconi’s recent comments to a group of businessmen. “The left and the media sing every day the song of defeatism and pessimism,” Mr Berlusconi said, referring to La Repubblica, the country’s biggest selling left-leaning daily. “Do not give advertising to those who behave like this.”
“It was extremely troublesome,” Mr De Benedetti says. He explains that he is speaking out because this is now a business issue, not an editorial one. “Berlusconi has been a very successful media entrepreneur. As a prime minister, to talk to an audience of entrepreneurs and tell them they should direct their advertising according to the political direction of the media, I think it is something the prime minister shouldn’t do. It is a competition issue. It is a democracy issue.”
The dispute intensified last week when a court ruling ordered Fininvest, Mr Berlusconi’s company, to pay €750m ($1.1bn, £694m) in damages to CIR. The case dates back 20 years to when CIR was run by Rodolfo’s father, Carlo De Benedetti, who was thwarted in his ambition to take over Mondadori, a publishing house, by Mr Berlusconi.
The latest ruling came after Mr De Benedetti’s interview with the Financial Times and both he and CIR declined to comment further.
But the dispute with Mr Berlusconi – both in the past and present – illustrates the challenges that Mr De Benedetti faces in running CIR and how his style differs from his illustrious father.
Carlo De Benedetti is one of Italy’s pre-eminent businessmen. His aggressive and buccaneering style hit the headlines in the 1980s with a series of audacious bids for companies such as Telecom Italia and Société Générale de Belgique. He also took over Olivetti in 1978 when it was a struggling typewriter maker and transformed it into a big technology company. He resigned in 1996 when the company posted disappointing results.
Rodolfo says he and his father are different characters. “I think my father is more impulsive. I think I’m more thoughtful. He is more impatient than I am. He is very intuitive,” he says.
An Italian industrialist who knows both men says: “Carlo is the classic founder who has a lot of energy but has been in lots of scrapes. Rodolfo definitely comes more from the second generation stereotype: he got his experience elsewhere, he runs things in a very professional rather than emotional manner, he is more reserved.”
Rodolfo says his father “always used moral suasion” on him to enter the business. But he started his career outside of the family business at Lombard Odier, the Swiss private bank.
He then joined Shearson Lehman Bros because his father knew Peter Cohen, then chief executive. Rodolfo has no illusions. “I’m sure it was because I was the son of my father,” he explains.
Twice he resisted his father’s overtures to come back to CIR – first in 1987 and then to take over as chief executive in 1993 at the age of 32 – before finally relenting. “My father can be very persistent,” he says.
Rodolfo has set about reforming CIR. First, he made it more focused. It now has only five businesses – media, car parts, energy, healthcare and financial services – compared with more than a dozen when he joined.
He radically changed the corporate structure, eliminating most of the seven levels of holding companies and the different classes of shares. Today, the De Benedetti family owns about half of Cofide, an investment vehicle, which in turn owns half of the listed CIR.
Rodolfo also toughened up the corporate governance, making a majority of the board non-executives and disclosing quarterly earnings before it was mandatory. “He put CIR on a proper footing rather than the somewhat ad hoc way it was run before,” the industrialist says.
Dealing with his father, he says, was “difficult for him and difficult for me in the beginning ... We have had disagreements on how to do things, sometimes on people but we have never really experienced any real disagreement on the direction the group should follow.”
But, because his father was so preoccupied with Olivetti in the beginning, they have now built a relationship of chief executive and owner with two scheduled meetings every month.
In the meantime, as head of the holding company, Rodolfo has focused on what he calls “the ownership function” and the “entrepreneurial function”.
The former includes setting a clear strategy, finding the right people and ensuring the performance is correct in each of the companies in their portfolio. Mr De Benedetti says there are some similarities in his approach with private equity but the main difference is “permanent capital”: CIR is invested for the very long term.
As an example, he points to the fundamental issues thrown up by the recent downturn, such as whether they should stick with some businesses. “I don’t think management alone is enough to make the right decisions. They are there by definition for a time and these are decisions that last for a lifetime,” he says.
Mr De Benedetti has also had a big impact in the entrepreneurial function. He decided to look for sectors where big changes were imminent, such as healthcare and non-performing loans.
But his biggest success dates to a decade ago when he looked at the energy sector, which was about to be liberalised. He hired a manager from a local utility and partnered with Verbund, an Austrian power group. Sorgenia, the company that resulted, is now the fifth-largest power company in Italy and CIR’s equity investment of €73m is worth €2.1bn.
All this is done with just a dozen professionals who work at CIR. Mr De Benedetti says they have built a system that they can roll out to any industry. “But we can kill things,” he adds. An example was an infrastructure fund in which CIR invested 18 months of work about five years ago. When he realised the returns weren’t going to be sufficient, he pulled the plug.
That all hints at the disciplined approach with which he runs CIR. It also reflects his views on Mr Berlusconi.
“I love my country. I hate when my country is criticised. I think those situations are embarrassing,” he says.
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