Italian President Carlo Azeglio Ciampi Monday rejected a controversial media bill that critics say was tailor-made for Prime Minister Silvio Berlusconi's media empire.

Ciampi said in a statement he was sending the bill, which relaxes limits on media ownership, back to parliament for further work. It was the first time Ciampi had refused to sign a bill into law for anything other than budget reasons.

Critics said it favors the Berlusconi family's holding company Fininvest, which controls Italy's largest media empire, including Mediaset broadcaster, and would enable it to extend its already considerable reach.

The bill eases limits on media ownership and advertising revenues and paves the way for the partial privatization of state broadcaster RAI.

In five pages of observations sent to parliament where they were read aloud, Ciampi said the bill failed to guarantee greater plurality in the media and could lead to the formation of dominant positions, especially in the area of advertising.

"For these reasons, I ask the lower house...for new deliberation," the document said.

Ciampi's decision could poison Italy's already fetid political waters, although Berlusconi shrugged off the pending controversy earlier Monday.

"I will take into account what the head of the state says. And of the eventual changes he might propose," he told reporters after a meeting with Ciampi. "If the changes were intelligent, parliament would take that into account."

CONFLICT OF INTEREST?

Opposition groups had hoped Ciampi would reject the bill, which won final approval earlier this month in parliament where Berlusconi's center-right coalition has a strong majority.

"Sending the bill back to parliament...justifies 15 months of battle against an unconstitutional law, which is the child of a conflict of interest," Paolo Gentiloni of the opposition Margherita party said.

Berlusconi, through his political office and his business interests, has direct and indirect influence over an estimated 95 percent of Italian TV.

Government supporters say the law breathes fresh life into the rigid media market, allowing the largely protected industry to deal with foreign competition and setting a frame for the roll-out of digital television.

Critics say it will allow the Berlusconi family holding to buy into radio and newspapers from 2009.

Mediaset has said the law would give it access to extra revenues of 750 million euros ($917 million).

The head of press freedom at Europe's largest security and human rights watchdog attacked the law last week, saying it would strengthen Berlusconi's grip on the media.

Parliament can now amend the bill based on Ciampi's observations or vote on the law again without making any changes. If it passes a second time, Ciampi would be obliged to sign the bill into law.

($1=.8182 Euro)

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