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Arnoldo Mondadori Editore S.p.A.

Arnoldo Mondadori Editore S.p.A.

Via Mondadori 1
20090 Segrate
Milan
Italy
Telephone: (02) 75421
Fax: (02) 7542 2302
Website: http://www.mondadori.com

Public Company
Incorporated:
1912 as La Sociale di A. Mondadori & C.
Employees: 4,715
Sales: EUR 1.56 billion ($1.43 billion) (2001)
Stock Exchanges: Italian
Ticker Symbol: MNDI
NAIC: 511120 Periodical Publishers; 511130 Book Publishers; 514199 All Other Information Services; 541211 Book Stores; 454110 Electronic Shopping and Mail-Order Houses; 541810 Advertising Agencies; 551112 Offices of Other Holding Companies

Arnoldo Mondadori Editore S.p.A. is the largest publishing company in Italy. Its holdings include books, consumer magazines, advertising agencies, printing activities, direct marketing, bookstore retailing, computer publishing, online ventures, and a host of small publishing companies and imprints. Outside Italy, the company has developed a string of alliances with major publishers, such as the Hearst Corporation, Bertelsmann AG, and Random House. Silvio Berlusconi, who began a second stint as Italian prime minister in May 2001, controls Mondadori through his ownership of the holding company Fininvest S.p.A.

The Early Years

Arnoldo Mondadori was the son of a poor craftsman in the northern Italian city of Ostiglia near Mantua. Before going to work for a small printing company in his town, Mondadori held various jobs, including a stint at the local cinema. In a community with an illiteracy rate of almost 40 percent, one of his responsibilities was reading aloud the titles of silent films for audiences. At the age of 16 he was hired as a pressman at Ostiglias small printing and stationery concern, Fratelli Manzoli. Two years later, in 1907, Arnoldo Mondadori borrowed enough money to take over the company. He changed its name to La Sociale. The new name reflected Mondadoris espousal of humanitarian and socialist reform movements active in Italy at this time, as well as his own ideal view of the press as a diffuser of culture. That same year the company, previously limited to the printing of posters, letterheads, and pamphlets, began publishing Luce!, a magazine subtitled Giornale Popolare Istruttivo.

In 1911 Mondadori bought a new press and published his first two books, Aia Madama and Nullino e Stellina by Tomaso Monicelli, an ex-socialist who had moved toward a nationalist position. Arnoldo Mondadori married Monicellis sister, Andreina, in 1913.

La Sociale di A. Mondadori & C. was incorporated in 1912 as a limited stock partnership with 15 employees. Stock was held almost entirely by the Mondadori family. At that time the press initiated a series of childrens books called La Lampada. The companys capital grew from L 75,000 in 1913 to L 400,000 the following year, and the staff more than doubled. Already Mondadori set about competing actively with the two Milan-based publishers, Sonzogno and Fratelli Treves, that shared a monopoly on book publishing in northern Italy.

The company grew rapidly during World War I. In 1915 the town of Ostiglia granted Mondadori a site measuring 2,000 square meters adjacent to the railway line. New equipment was purchased. The number of employees at the new plant reached 100.

In 1916 the death of Mondadoris former competitor, Emilio Treves, left available a catalog of authors that included many of the most prestigious names in contemporary Italian literature, among them Gabriele DAnnunzio, Luigi Pirandello, and Grazia Deledda. The acquisition in 1917 of the Franchini printing plant in the city of Verona put Mondadori in a position to sign on many of Trevess authors and to attract important new clients, including the Italian military. Mondadori also contracted to produce several illustrated magazines for the Third Army.

In 1921 Mondadori consolidated all printing activities at Verona. The old Franchini plant was replaced by a new press that covered almost 100,000 square feet of land. Employees numbered 250, and Mondadori at this time created a separate magazine department. Fiction magazines were especially popular, and in the early 1920s Mondadori introduced Italys first monthly womens magazine, La Donna, and Le Grazie, a fiction magazine. By this time Mondadori magazines also served the Italian immigrant communities that had developed in North and South America. The biweekly Girogirotondo sold 30,000 copies in Argentina alone. Other popular ventures were film and theatrical magazines.

In 1923 publishing management also was established in Milan. Building on the newly literate readership of common Italians, Mondadori initiated several series and brought out a childrens encyclopedia, the Enciclopedia dei Ragazzi, modeled on English and American counterparts and sold in weekly issues. The first Italian gravure magazine was published by Mondadori in 1925.

The decade of the 1920s was characterized by three major innovations for Mondadori: the company published its first textbook in 1926, its first popular paperback in 1927, and, in 1929, the so-called giallo or detective thriller. The senesi gialli di Mondadori was packaged in a soft yellow jacket; today the word giallo is an Italian genre term for mysteries or thrillers in print, radio, or film.

In 1930, with the Libri Azzurri (Blue Books) series, Mondadori introduced its first Italian translations of foreign authors in accessible paperback formsix years before the appearance of Penguin books in the United Kingdom. Other series of translations in paperback included Biblioteca Romantica a collection of 50 masterpieces of 17th- and ISth-century fictionand i Romanzi della Palma. Mondadoris translators included Cesare Pavese and Eugenio Montale.

Another important foreign acquisition for Mondadoris list was the Walt Disney Companys cartoon character Mickey Mouse, who, endearing himself to Italians under the name Topolino, appeared in a weekly series in 1935. This success was repeated shortly after by Donald Duck (Paperino) in the first Disney story conceived and produced in Italy by agreement with the U.S. company. Grazia, the first mass-circulation womens weekly, was introduced in 1938, and the weekly news magazine Tempo began publishing the following year under the direction of Arnoldo Mondadoris son, Alberto. Alberto Mondadori was eldest of the founders children, who included another son, Giorgio, and two daughters, Laura and Cristina. All were to play an important part in the companys future development.

World War II in Europe had a devastating effect on Mondadori. Mondadori was compelled to transfer its editorial offices to the town of Arona in 1942. When the Fascist government fell and German troops occupied Italy in 1943, the plant at Verona was confiscated and its equipment dismantled and in large part shipped off to Germany. The Milan headquarters later sustained severe bomb damage, and the offices at Arona came under the control of the Fascist party commissars.

From 1943 to 1945 Arnoldo Mondadori and his family went into exile at Lugano, Switzerland, but continued to maintain contact with his editors and authors. With the help of his son, Albertowho spoke English and other languagesthe publisher acquired rights to the work of U.S. authors Ernest Hemingway and William Faulkner, which later helped the company regain its position after the war ended.

Postwar Developments

With funds from the U.S. Marshall Plan, Mondadori launched a postwar recovery and replaced its bomb-damaged Verona plant. The new facility was much larger and included modern equipment capable of newspaper publishing. In 1950 the company published Epoca, a new large-format illustrated newsweekly modeled on Look and Life.

Italys economy began a period of tremendous growth in the postwar years. Mondadori introduced direct marketing with the first Italian mail-order book club, Club degli Editori, launched in 1960. In 1958 Alberto Mondadori founded II Saggiatore, an imprint of Mondadori that specialized in philosophy and intellectual works. The project was initiated with 150 employees and intentions of publishing 100 new titles each year. Il Saggiatore brought out the likes of Jean-Paul Sartre and Claude Levi-Strauss in Italian translations, but the company was plagued with financial problems. In 1967 Alberto Mondadori broke from the parent company, and two years later a bankrupt II Saggiatore was reassumed by Arnoldo Mondadori Editore.

Company Perspectives:

When [a] visitor goes into the South Tower of the Mondadori headquarters in Segrate, he immediately sees a hand-press that was bought by Arnoldo Mondadori in 1926 for printing the works of Gabriele dAnnunzio on high-quality paper. This is a symbol of Italys largest publishing group, the history of which is, as is the case for almost all large industries, closely linked to the life of one man, in this case the boy printer Arnoldo Mondadori who in 1907, when he was still very young, began his career as a publisher in Ostiglia, a small village in the Lombardy countryside. The expansion of Mondadori coincided with the growth of the Italian nation. From the first book series, La Lampada, which was created by Arnoldo Mondadori with the intention of spreading a love for literature among the young people of the rural, illiterate Italy of the turn of the century, to the subsequent Classici Italiani, Classici Contemporanei Italiani, Medusa and Los Specchio, cornerstones of twentieth-century Italian culture, from the successful plans to launch the great illustrated magazines, the first Italian book club and the first newsmagazine to the first low-priced paperback books, Mondadori has developed the idea of a publishing house for all Italians and has continuously expanded the boundaries of literature. It can thus be seen that the main stages in the historical development of Mondadori often coincide with the development of Italian publishing.

The younger son, Giorgio Mondadoriwho in 1944 had joined the company at the age of 27was a more effective manager. After overseeing the rebuilding of the Verona plant, he turned to a program of diversification. This included Mondadoris entrance into industrial activity with the establishment in 1961 of Auguri Mondadori S.p.A., a stationery and greeting card operation with a huge plant at Caselle di Sommacampagna near Verona and the building of Cartiere Ascoli Piceno, a papermaker that opened its plant at Marino del Tronto in 1964. Giorgio Mondadori also directed the building of the companys present headquarters at Segrate, a vast, modem edifice designed by the architect Oscar Niemeyer.

In 1960 the company had annual gross profits of L 16 billion and employed 2,279 workers. During the decade that followed, the company founded by Arnoldo Mondadori profited from his friendship with two captains of the Italian banking industry, Raffaele Mattioli and Enrico Cuccia. Mondadori preferred stock was listed on the Milan stock exchange in 1965. Five years later annual gross sales stood at L 71 billion. The company employed 4,988 people and was ranked first in the Italian publishing industry in gross sales.

Publishing expansion in the 1960s included the founding of the newsmagazine Panorama, which first appeared as a monthly in 1962 and became a weekly in 1967. In 1963 Mondadori initiated its Enciclopedia della Scienza e della Tecnica, a 15-volume work whose authors included several Nobel prize winners. Mondadoris practice of putting inexpensive works of literature on newsstands continued with the introduction of the Oscar series of highly successful fiction paperbacks.

The decade that followed brought difficulties. The family patriarch, Arnoldo Mondadori, died in 1971, leaving the company to his four children. The second son, Giorgio Mondadori, took over as president of the publishing empire in 1968. A few years later Mondadori administration was moved from Milan to the new headquarters at Segrate. During the 1970s expansion of industrial activity continued with the acquisition of two new printing plants in Vicenza, San Donato Milanese, and the establishment of a new plant at Cles. In 1975 yet another was acquired in Toledo, Spain.

Key Dates:

1907:
Arnoldo Mondadori takes over a small printing and stationery concern in Ostiglia, Italy, called Fratelli Manzoli and renames it La Sociale; the company begins publishing a magazine called Luce!
1911:
Mondadori publishes his first two books.
1912:
The company is incorporated as La Sociale di A. Mondadori & C. and begins publishing a series of childrens books called La Lampada.
1921:
Printing activities are consolidated in Verona, and a magazine department is created.
1923:
Publishing management is transferred to Milan.
1927:
The company publishes its first popular paperback.
1930:
Publication of Italian translations of foreign authors in accessible paperback form begins.
1935:
Through an agreement with the Walt Disney Company, Mondadori begins publishing a childrens series based on Disney cartoon characters.
1938:
Mondadori launches the first mass-circulation womens weekly, Grazia.
1942:
The Italian Fascist government forces the relocation of the editorial offices to Arona.
1943:
Arnoldo Mondadori and his family are forced to live in exile in Switzerland until 1945.
1960:
Mondadori launches the first Italian mail-order book club and enters direct marketing.
1962:
Publication of the newsmagazine Panorama begins.
1971:
Arnoldo Mondadori dies; his son Giorgio takes over.
1975:
Through a joint venture with newsweekly LEspresso, Mondadori publishes its first daily newspaper, La Repubblica.
1980:
Mondadori enters the television sector, forming what will eventually be called the Retequattro network (later sold to Fininvest).
1985:
Financially troubled, Mondadori is recapitalized through the creation of a holding company, AME Finanziaria, which remains controlled by the Mondadori family but which has as minority shareholders Carlo De Benedetti (17 percent) and Silvio Berlusconi (9 percent).
1988:
Mondadori acquires Spanish-language publisher Ediciones Grijalbo and a stake in Elemond, which controls the prestigious Einaudi publishing house.
Late 1980s:
Battle for control of Mondadori begins between De Benedetti and Berlusconi.
1991:
Berlusconi gains control of Mondadori through his holding company Fininvest, and Leonardo Mondadori, the founders grandson, becomes chairman; De Benedetti secures control of La Repubblica and other Mondadori newspapers.
1995:
Mondadori acquires book publisher Sperling & Kupfer Editori S.p.A.
1999:
Mondadori becomes the leading school textbook publisher in Italy by acquiring Le Monnier Group and Poseidonia; the company enters into a joint venture with the Hearst Corporation to publish Hearst magazine titles in Italy.
2001:
The company and Random House combine their Spanish-language publishing operations into the joint venture Grupo Editorial Random House Mondadori S.L.

In 1975, spurred on by the purchase of the top-selling Italian daily Corriere della Sera by Mondadoris competitor Rizzoli, the company joined in founding what would be its first daily newspaper, La Repubblica. The newspaper was founded as a joint venture by Mondadori and VEspresso, the top news-weekly competing with Mondadoris Panorama magazine. A holding company, Editoriale LEspresso, was formed, with 50 percent of the capital, L 1 billion, shared by Mondadori and the LEspresso group, which included the new newspapers editors Eugenio Scalfari and Carlo Caracciolo.

Giorgio Mondadori held the chairmanship of Mondadori until 1976, when his sisters, Cristina and Laura Mondadori, joined in forcing their brother Giorgio from the company. He was succeeded as chairman by Mario Formenton, husband of Cristina, the youngest Mondadori daughter.

Meanwhile, La Repubblica was quickly gaining in stature and sales, thanks in part to its outspoken editorial positions on the political events of the decade. The newspaper opposed negotiations with the leftist terrorists who kidnapped and assassinated Italian statesman Aldo Moro in 1978. Competition from the largest Italian daily, Corriere della Sera, was later handicapped by the implication of Corrieres parent, Rizzoli Publishing, in the political scandals of the early 1980s. By virtue of its editorial independence, La Repubblica was widely seen as a bastion of integrity. Already by 1979 La Repubblica was no longer losing money and had begun to command an appreciable market share. Shortly thereafter the new paper began showing increasing profits.

The late 1970s and early 1980s brought a period of decline for the Mondadori group. The economic boom years of the postwar era were drawing to a close in Italy. In 1975 the company suffered from a falloff in its advertising and publicity revenues. The signal event of this period, which set the stage for the acrimonious boardroom battles at the end of the decade, was Mondadoris entrance into the television market, with the creation of the Italian network Retequattro. Guided by Mario Formenton in 1978, Mondadori established Gestione Pubblicitaria Editoriale (Gpe), an advertising agency for 18 local channels. Two years later the company entered directly into broadcasting activity with a second enterprise, Telemond, which bought and resold television programming. In 1982 the companies were reconstituted as the network Retequattro.

The ill-fated venture occurred in an unfamiliar market environment dominated by two major competitors. First was the state-owned radio and television network, which had in 1976 relinquished the monopoly on television programming it held since 1954. The second was media baron Silvio Berlusconis Fininvest Group, which was at the time amassing a vast empire of small local stations. Retequattros managers withheld from such expansion in the mistaken belief that a law would shortly be passed impeding the growth of national monopolies in television. Late in 1982, with the acquisition of the Italian channel Italia 1 by Fininvest, Retequattro found itself in a low position in audience ratings. Retequattro was unable to compete effectively with the maverick Berlusconi.

At the same time, Mondadori was involved in a program of expansion in its other sectors. Daily newspaper activity increased with the introduction of four provincial papers published by a subsidiary, Editoriale Le Gazzette. In addition, the Mondadori group reached an agreement with the Canadian Harlequin group in 1981 for the publication in Italy of its romance novels and in 1983 acquired another papermaking concern, Cartiera F.A. Marsoni of Treviso.

Internal Conflicts During the 1980s

At the end of 1983 Mario Formenton turned the failing Retequattro over to Leonardo Forneron Mondadori, the son of Laura Mondadori, who had legally been given his grandfathers family name. Leonardo Mondadori had worked in the company since 1972 and had successfully directed the book publishing activity. Initially the younger manager improved the network, but the losses had already become too great, and in late 1984 Mario Formenton sought a buyer for Retequattro.

The situation in 1984 was one of near emergency for Mondadori, with Retequattro losing L 10 billion each month. The network was eventually sold to Fininvest, but the losses had been too great. The consolidated balance of the company in 1984 showed losses of L 10.7 billion. Salvaging the company required a recapitalization of the order of at least L 50 billion.

With help from associates in the financial world, Mario Formenton and Leonardo Mondadori created a holding company, AME Finanziaria (AMEF), in 1985. To create the new company, the two families contributed slightly more than 50 percent in Mondadori shares, while the other partners contributed capital. Since the Mondadori shares constituted a majority in the holding company, the family remained in control of both AMEF and the recapitalization of Mondadori, the ailing publishing empire. AMEFs partners included Carlo De Benedetti, who had been in contact with Mondadori as a shareholder of the Editoriale LEspresso group that founded the daily La Repubblica. De Benedetti held approximately 17 percent of AMEF. Silvio Berlusconi held 9 percent.

At Arnoldo Mondadori Editore, Mario Formenton was still president, and his nephew Leonardo Mondadori was promoted to vice-president. As managing director, Franco Tatò guided the restructuring of the company. In 1985 profits rose to L 25 billion as opposed to L 10 billion in 1984; in 1986 profits tripled to L 75 billion. When, in 1987, Mondadori reported profits of L 100 billion, it was evident that the company was out of danger and that the rescue program, with the recapitalization from AMEF, had been a success. It also proved that, despite the losses of the Retequattro venture, Mondadori was a basically healthy company. In 1987, however, Mario Formenton died prematurely. Former Managing Director and Vice-President Sergio Polillo was brought in to fill his place but only after a bitter struggle over the succession, which placed Leonardo Mondadori in opposition to his aunt, Cristina, and her son, Luca Formenton.

The loss of Mario Formenton triggered a series of events that eventually catapulted the company into national news. With the two branches of the family in conflict, the shareholder Carlo De Benedetti achieved a position of considerable influence. During this period the skilled financier struck a deal with the Formenton family by which he retained right of first refusal if they ever decided to sell their shares. Then, aligned with the Formentons at the Mondadori 1988 shareholders assembly, De Benedetti successfully exploited a technicality in the relationship between the publishing group and the AMEF holding company to emerge in a majority position. Together the Formentons and De Benedetti voted to exclude the founders grandson from the board of Mondadori. Embittered, Leonardo left the family business to found his own publishing house, Leonardo Editore.

Under De Benedettis guidance, the Mondadori group continued to thrive. In 1988 the group acquired Ediciones Grijalbo, a Spanish-language publisher that was a major force in Spanish and Latin markets. That same year, Mondadori acquired a stake in Elemond, which controlled the prestigious Einaudi publishing house, and began publishing computer periodicals through a newly formed subsidiary called Mondadori Informatica S.p.A. In April 1989 De Benedetti arranged an important agreement whereby La Repubblica shareholders Eugenio Scalfari and Carlo Caracciolo sold their 51.85 percent share in Editoriale LEspresso to Mondadori for L 407 billion. As part of the deal, Caracciolo was nominated president of Mondadori, and Scalfari became a member of the board of directors. With La Repubblica and Editoriale LEspresso added to its interests, Mondadori was now worth L 2.3 trillion and was by far the largest publishing company in Italy.

Conflict developed again in 1989, the 100th anniversary of Arnoldo Mondadoris birth. Silvio Berlusconi had acquired more shares of AMEF and sided with Leonardo Mondadori to wield majority power in the decision making. Berlusconis interest in Mondadori emerged when he blocked a move by Carlo De Benedetti to merge his holding company Compagnie Industriali Riunite S.p.A. (CIR) and AMEF.

By December 1989, fearful of their loss of influence on the board of Mondadori, the Formentons struck a deal to sell their AMEF shares to Berlusconi, effectively reuniting with their cousin Leonardo Mondadori. The move immediately set off a furor in the financial world and in the media, where the contestants carried out a bruising and highly publicized battle for control. On one side was Berlusconi, allied with the two families of Mondadori and in control of AMEF and, therefore, of the ordinary capital of Mondadori. On the other side was Carlo De Benedetti, joined by the La Repubblica editors Scalfari and Caracciolo, with 51 percent of the privileged capital of Mondadori. By the end of the year, the contest was transformed into a complicated legal struggle that turned on the validity of De Benedettis agreement with the Formentons, which granted him first option on the Formentons shares should they ever decide to sell.

For 156 days Silvio Berlusconi claimed control of Mondadori. The 1989 annual report listed Berlusconi as president and Luca Formenton as vice-president. The report described recent developments, including an agreement reached with Fortune for publication of an Italian edition and the divestment of Mondadoris papermaking activities. But the victory was short-lived.

The deal between Berlusconi and the Formentons was contested in the courts and, in June 1990, arbitrators ruled in favor of De Benedetti. Judges assigned Giacinto Spizzico, an 81-year-old business lawyer, to the post of president. The office of vice-president was shared by Fedele Confaloniere, formerly managing director of Fininvest, and Luigi Vita Samory, a lawyer appointed by the courts. Two men also filled the post of managing director: Carlo Caracciolo and the court-appointed Antonio Coppi, a former executive of the Rizzoli publishing house. The new general director was a former executive of Carlo De Benedettis CIR holding company, Corrado Passera.

In January 1991 this ruling was nullified in the Rome Court of Appeals without, however, significantly altering the balance of power between De Benedetti and Berlusconi. De Benedettis original agreement with the Formentons was found to be in violation of the AMEF charter. A negotiated settlement was reached in May 1991 whereby Berlusconi and the Mondadori-Formenton families retained control of Mondadoris advertising agency and book and magazine publishing interests, with Leonardo Mondadori becoming chairman of the company. De Benedetti controlled the Repubblica-Espresso group plus 15 local newspapers.

Meanwhile, events between 1989 and 1991 were traumatic for Mondadori. In spite of the contest for power already underway, 1988 was a strong year for the company, which reported a net profit of L 103 billion. In 1989 this figure was reduced by half, partly owing to losses in advertising.

Early to Mid-1990s: Stagnant Economic Growth and Increased Market Share

Although the early and mid-1990s were slow Economic years for Italy, Mondadori managed to retain and broaden its role as market leader. While cost-cutting efforts were aimed at increasing the Mondadori profit margin, strategie acquisitions garnered the company a consistent gain in market share, from a leading 20 percent in 1990 to a dominating 29.3 percent in 1995. Leonardo Mondadori summed up the companys ability to succeed during Economic stagnation: Were never satisfied with where we are. Were always looking for something new. And even if we dont grow, others are declining, so we appear bigger.

In 1990 Mondadori formed a joint venture with Gruner + Jahr AG & Co., a subsidiary of German publishing giant Bertelsmann. The venture went on to publish several successful monthly periodicals in Italy, such as Focus, a science magazine. During 1994, 53 percent of the capital stock of Mondadori was sold on the Milan Stock Exchange. This left Berlusconi still firmly in control with a stake of about 48 percent.

In 1995, in an effort to cut costs and increase efficiency, Mondadori reduced the number of its printing plants, and in 1996 it completed its new central book warehouse in Verona. The new warehouse was expected to increase distribution capacity from 23 million to 40 million copies, which represented an increase in the number of titles that could be warehoused from 4,000 to 30,000. Also in 1995 Mondadori expanded its book publishing operations by acquiring Sperling & Kupfer Editori S.p.A., which also included an imprint called Edizioni Frassinelli.

Pope John Paul II astonished the religious publishing community in 1994 by choosing a lay publisher, Mondadori, as the worldwide publisher of his book Crossing the Threshold of Hope. Mondadori transferred these rights to various publishers around the world, and the book was published in more than 20 languages. More than one million copies were sold in 1994 in Italy alone (compared with Mondadoris second bestseller, Gabriel Garcia Marquezs Of Love and Other Demons, which sold 200,000 Italian copies in 1994).

In 1996 Mondadori book titles were put on a computer network that provided statistical sales data from Italian bookshops. This network allowed for better planning of distribution and reprinting of their books. Also in 1996 Mondadori launched Pagine Utili Mondadori, a directory meant to challenge the Italian Yellow Pages (Pagine Gialle), which had previously enjoyed a market monopoly. Pagine Utili was to take advantage of Pagine Gialles weaknesses, mainly a low 17 percent market penetration, a difficult-to-use product, and a monopolistic pricing policy. Although its strategy of lower pricing and more targeted listings seemed well developed, Pagine Utils initial advertising volume was lower than estimated. This was partly the result of the competitions privatization and its adoption of more aggressive and competitive policies aimed at thwarting the Mondadori entry.

Although Mondadori made the creation of new media (such as CD-ROMs and online magazines) one of its primary goals, growth in the Italian computer software market was relatively slow. Still, sales of Mondadoris new media offerings were L 6 billion in 1996. One of the most remarkable areas of growth in 1996 was that of advertisement, which had been previously stagnant. Thanks to a growth of 9.2 percent in advertising sales in daily newspapers, Mondadori showed an overall advertising sales growth of 7.7 percent in 1996.

Late 1990s and Beyond: New Emphasis on Alliances

In July 1996 the highly regarded Tatò, who had helped guide Mondadori through its mid-1980s restructuring as well as through the turbulent years of the late 1980s and early 1990s, resigned from his post as managing director to take the same position with ENEL, the state electricity utility. Succeeding Tatò, was Paolo Forlin, who had previously been head of European operations for Kimberly-Clark Corporation, the U.S. paper firm. At the time of Forlins appointment in July 1996, Mondadori formed an executive committee and granted it administrative authority over the company. This included authorization to make investments and disposals, as well as the power to approve strategic policy and development programs. The initial members of the executive committee were Forlin, Leonardo Mondadori, Marina Berlusconi, Fedele Confalonieri, and Ubaldo Livolsi.

In February 1997, however, Forlin resigned suddenly, and Maurizio Costa was named managing director and gained a seat on the executive committee. Costa had previously led the Elemond publishing division. Under the new leader, Mondadori underwent a thorough restructuring over the next year. The company focused more keenly on its core publishing activities and reorganized its operations into six main business units, the units focusing on books, magazines, printing, direct marketing, computer publishing and new media, and the Internet. Next, Mondadori announced in early 1998 that it had launched the first three-year development plan in company history. Having already entered into alliances with foreign publishers, the company said that it would seek to develop a network of international partnerships and joint ventures to increase its international activities.

During 1998 several additional alliances were in fact formed. In June the company entered into a joint venture with the U.S. media and marketing firm Ziff-Davis Inc. to publish information technology magazine titles in Italy and to further develop Mondadoris Internet presence. In November, Mondadori and Bertelsmann entered into an agreement to create a joint venture called Mondolibri S.p.A., which would take control of the two companies Italian book clubs, Club degli Editori and Euroclub, respectively. Other developments at Mondadori in 1998 included the successful launch of two new magazines, Panorama Travel and Top Girl (the latter through the joint venture with Gruner + Jahr); and the acquisition of Mursia Scuola, an educational publisher. On the retail side, Mondadori opened the first media megastore in Italy, an outlet located in Milan called Mondadori Informatica Multicenter. The company also became a franchiser of bookstores by acquiring the 60-unit Gulliver chain from Opportunity Books.

There was a similar array of expansionary developments in 1999. Following its acquisition of Mursia the previous year, Mondadori became the market leader in the Italian school textbook sector by buying two more companies, Le Monnier Group and Poseidonia. In magazines, the company launched Y&S and Tu late in the year, with Tu, a mass-market weekly womens title, quickly attaining circulation figures of more than 600,000. Mondadori also set up a joint venture with the Hearst Corporation to publish Hearst magazine titles in Italy. The first such title, an Italian version of Cosmopolitan, hit the newsstands in March 2000. In July 1999 the bulk of Mondadoris printing activitiesincluding five printing plants in Italy and one in Spainwere combined within a new wholly owned but independent subsidiary called Mondadori Printing S.p.A. The new company was expected to have more flexibility to enter into strategic alliances and mergers, and Mondadori would now be able to turn it into a publicly traded firm, although there were no immediate plans to do so.

During 2000 the groups educational publishing activities were reorganized under a new wholly owned subsidiary called Edumond S.p.A. (later renamed Edumond Le Monnier S.p.A.). Mondadori also entered into two important new alliances during the year. The company set up a joint venture with U.S. publisher Rodale Press, Inc. to publish a series of health-oriented magazines in Italy. The first, an Italian version of Mens Health, premiered in March 2000. Late in 2000 the company joined with Bertelsmann to launch the online bookstore BOL Italia.

The most significant event of 2001 was the creation of Grupo Editorial Random House Mondadori S.L. This was a 5050 joint venture of Mondadori and Random House, the book publishing division of Bertelsmann, that encompassed the publishing activities in Spain and Latin America of both the Mondadori and Bertelsmann groups. Mondadoris contribution to the venture was the Grijalbo Group. With expected annual revenues of US$100 million, the joint venture immediately became the second largest Spanish-language book publisher, trailing only Grupo Planeta. Created to take advantage of the rapidly growing market for Spanish-language booksa market that was predicted to become the second largest after the English-language marketthe venture was set up into three autonomous regional publishing divisions based in Barcelona, Buenos Aires, and Mexico City. Grupo Editorial was expected to expand through acquisition, and its first purchase was completed in September 2001, when the Barcelona-based childrens imprint Beascoa was acquired.

In May 2001 Berlusconi became prime minister of Italy for a second time, after his conservative coalition secured a majority in parliamentary elections. Berlusconi had been acquitted of bribery charges only 11 months earlier in connection with allegations arising out of the lengthy legal battle with De Benedetti for control of Mondadori. The accusationpart of what became known as the Lodo Mondadori affairwas that Berlusconi had paid a bribe of L 400 million to the Italian appeals court judges who had ruled in his favor in early 1991. In June 2001 an Italian appeals court upheld the acquittal; the court also said that a case existed against Berlusconi for simple corruption but that the statute of limitations for that crime had expired. Once he regained the prime ministry, Berlusconi engendered further controversy for maintaining his holdings in Fininvest, Mondadori, and his other businesses. These holdings tended to raise concerns about conflicts of interest between his public and private roles.

Principal Subsidiaries

Athena Finanziaria S.r.l.; Cemit Interactive Media S.p.A.; Edizioni Frassinelli S.r.l.; Edumond Le Monnier S.p.A.; Mondadori Electa S.p.A.; Electa Napoli S.r.l. (60%); Mondadori Retail S.r.l.; Fied S.p.A.; Giulio Einaudi Editore S.p.A.; Mondadori.com S.p.A.; Mondadori Informatica S.p.A.; Mondadori Printing S.p.A.; Mondadori Pubblicità S.p.A.; Mondadori Franchising S.p.A.; Riccardo Ricciardi Editore S.p.A.; Sperling & Kupfer Editori S.p.A.; Arnoweb S.A. (Luxembourg); Artes Graficas Toledo S.A. (Spain); Mondadori International S.A. (Luxembourg).

Principal Divisions

Book Division; Magazine Division; Printing Division; Direct Marketing Division.

Principal Competitors

Holding di Partecipazioni Industriali S.p.A.; Hachette Filipacchi Médias; Gruppo Editoriale LEspresso S.p.A.; Bertelsmann AG; Monrif S.p.A.; Poligrafici Editoriale S.p.A.; Longanesi & C. S.p.A.; Class Editori S.p.A.; Grupo Planeta.

Further Reading

Bechis, Franco, and Sergio Rizzo, In nome della rosa, Rome: Newton Compton, 1991.

Bergmeijer, Michael C., Mondadori Pins Profit Hopes on Its TV-Publishing Links, Wall Street Journal Europe, May 6, 1991, p. 9.

, Mondadoris Tatò, Describes New Strategy As a Success, Wall Street Journal Europe, June 1, 1992, p. 5.

Betts, Paul, Mondadori to Launch Three-Year Plan, Financial Times, February 2, 1998, p. 21.

Collins, Guy, Mondadori Pact Will Free Benedetti, Berlusconi to Focus on Other Ventures, Wall Street Journal, May 3, 1991.

Decleva, Enrico, Arnoldo Mondadori, Turin, Italy: UTET, 1993.

A Firestorm Scorches De Benedettis Media Empire, Business Week, December 25, 1989, p. 68.

Hill, Andrew, Mondadori Sale Set to Raise £990bn, Financial Times, June 15, 1994, p. 28.

How Mondadori Keeps Its Italian Market Leadership, Publishers Weekly, August 21, 1995, p. 12.

Kinnicutt, Michael T., A Big Italian Publishing House Attracts Interest from Outside Founding Family, Wall Street Journal, January 5, 1988.

Kline, Maureen, Mondadoris Equity Issue Is Expected to Be a Success, Wall Street Journal Europe, June 15, 1994, p. 9.

, Mondadori Shifts Executives Ahead of Its Share Offering, Wall Street Journal Europe, May 31, 1994, p. 10.

Lottman, Herbert R., Gala Italian Launch for Popes Book, Publishers Weekly, October 24, 1994, p. 12.

, Italys Berlusconi Extends Media Grasp, Publishers Weekly, November 21, 1994, p. 22.

, Mondadori Up, Rizzoli Down, in 94 Results, Publishers Weekly, April 17, 1995, p. 17.

Milliot, Jim, Grupo Editorial Random House Mondadori Launched, Publishers Weekly, July 23, 2001, p. 12.

, RH, Mondadori Unite Spanish Units, Publishers Weekly, March 26, 2001, p. 9.

Mondadori: Lets Both Declare Victory, Economist, May 4, 1991, p. 66.

Mondadori, Mimma, Tipografia in Paradiso, Milan: Mondadori, 1984.

Ottone, Piero, La guerra della rosa, Milan: Longanesi, 1990.

Pansa, Giampaolo, LIntrigo, Milan: Sperling & Kupfer, 1990.

Patuzzi, Claudia, Mondadori, Naples, Italy: Liguori, 1978.

Revzin, Philip, Tiff of Titans: Italian Tycoons Push European Unity, Then War Over Home Turf, Wall Street Journal, April 3, 1990, p. Al.

Simonian, Haig, Berlusconi Borrows to Build a Dream, Financial Times, August 1, 1991, p. 17.

, Rivals Celebrate a Partial Victory, Financial Times, May 1, 1991, p. 25.

Sturani, Maria, and Kimberley A. Strassel, Bertelsmann, Mondadori to Form Two Book Ventures, Wall Street Journal Europe, November 12, 1998, p. 4.

Turnai, Giuseppe, and Delfina Rattazi, Mondadori: la grande sfida, Milan: RCS Rizzoli, 1990.

Wyles, John, Duel for Soul of La Repubblica, Financial Times, December 8, 1989, p. 25.

, A Man of His Word, and That of La Repubblica, Financial Times, April 12, 1989, p. 25.

Paul Conrad

updates: Terry Bain, David E. Salamie

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Arnoldo Mondadori Editore S.p.A.

Arnoldo Mondadori Editore S.p.A.

Via Arnoldo Mondadori 1 20090 Segrate Milan Italy
(02) 7542 2044
Fax: (02) 7542 2748
Web site: http://www.mondadori.com

Public Company
Incorporated:
1912 as La Sociale di A. Mondadori & C.
Employees: 5,235
Sales: L 2,194.7 billion (1996)
Stock Exchanges: Milan Rome Turin Trieste Florence Genoa
SICs: 2721 Periodicals: Publishing, or Publishing and Printing; 2731 Books: Publishing, or Publishing and Printing; 2741 Miscellaneous Publishing; 7311 Advertising

Arnoldo Mondadori Editore S.p.A. is one of the largest publishing companies in Italy. Its holdings include books, magazines, advertising agencies, printing activities, direct marketing, stationery, school supplies, and a host of small publishing companies and imprints.

The Early Years

Arnoldo Mondadori was the son of a poor craftsman in the northern Italian city of Ostiglia near Mantua. Before going to work for a small printing company in his town, Mondadori held various jobs, including a stint at the local cinema. In a community with an illiteracy rate of almost 40 percent, one of his responsibilities was reading aloud the titles of silent films for audiences. At the age of 16 he was hired as a pressman at Ostiglias small printing and stationery concern, Fratelli Manzoli. Two years later, in 1907, Arnoldo Mondadori borrowed enough money to take over the company. He changed its name to La Sociale. The new name reflected Mondadoris espousal of humanitarian and socialist reform movements active in Italy at this time, as well as his own ideal view of the press as a diffuser of culture. That same year the company, previously limited to the printing of posters, letterheads, and pamphlets, began publishing Luce!, a magazine subtitled Giornale Popolare Istruttivo.

In 1911 Mondadori bought a new press and published his first two books, Aia Madama and Nullino e Stellina by Tomaso Monicelli, an ex-socialist who had moved toward a nationalist position. Arnoldo Mondadori married Monicellis sister, Andreina, in 1913.

La Sociale di A. Mondadori & C. was incorporated in 1912 as a limited stock partnership with 15 employees. Stock was held almost entirely by the Mondadori family. At that time the press initiated a series of childrens books called La Lampada. The companys capital grew from L 75,000 in 1913 to L 400,000 the following year, and the staff more than doubled. Already Mondadori set about competing actively with the two Milan-based publishers, Sonzogno and Fratelli Treves, that shared a monopoly on book publishing in northern Italy.

The company grew rapidly during World War I. In 1915 the town of Ostiglia granted Mondadori a site measuring 2,000 square meters adjacent to the railway line. New equipment was purchased. The number of employees at the new plant reached 100.

In 1916 the death of Mondadoris former competitor, Emilio Treves, left available a catalog of authors that included many of the most prestigious names in contemporary Italian literature, among them Gabriele DAnnunzio, Luigi Pirandello, and Grazia Deledda. The acquisition in 1917 of the Franchini printing plant in the city of Verona put Mondadori in a position to sign on many of Trevess authors and to attract important new clients, including the Italian military. Mondadori also contracted to produce several illustrated magazines for the Third Army.

In 1921 Mondadori consolidated all printing activities at Verona. The old Franchini plant was replaced by a new press that covered almost 100,000 square feet of land. Employees numbered 250, and Mondadori at this time created a separate magazine department. Fiction magazines were especially popular, and in the early 1920s Mondadori introduced Italys first monthly womens magazine, La Donna, and Le Grazie, a fiction magazine. By this time Mondadori magazines also served the Italian immigrant communities that had developed in North and South America. The bi-weekly Girogirotondo sold 30,000 copies in Argentina alone. Other popular ventures were film and theatrical magazines.

In 1923 publishing management was also established in Milan. Building on the newly literate readership of common Italians, Mondadori initiated several series and brought out a childrens encyclopedia, the Enciclopedia dei Ragazzi, modeled on English and American counterparts and sold in weekly issues. The first Italian gravure magazine was published by Mondadori in 1925.

The decade of the 1920s was characterized by three major innovations for Mondadori: the company published its first textbook in 1926, its first popular paperback in 1927, and, in 1929, the so-called giallo or detective thriller. The series I gialli di Mondadori was packaged in a soft yellow jacket; today the word giallo is an Italian genre term for mysteries or thrillers in print, radio, or film.

In 1930, with the Libri Azzurri (Blue Books) series, Mondadori introduced its first Italian translations of foreign authors in accessible paperback formsix years before the appearance of Penguin books in the United Kingdom. Other series of translations in paperback included Biblioteca Romantica a collection of 50 masterpieces of 17th- and 18th-century fictionand i Romanzi della Palma Mondadoris translators included Cesare Pavese and Eugenio Montale.

Another important foreign acquisition for Mondadoris list was the Walt Disney Companys cartoon character Mickey Mouse, who, endearing himself to Italians under the name Topolino, appeared in a weekly series in 1935. This success was repeated shortly after by Donald Duck (Paperino) in the first Disney story conceived and produced in Italy by agreement with the U.S. company. Grazia, the first mass-circulation womens weekly, was introduced in the late 1930s, and the weekly news magazine Tempo began publishing under the direction of Arnoldo Mondadoris son, Alberto. Alberto Mondadori was eldest of the founders children, who included another son, Giorgio, and two daughters, Laura and Cristina. All were to play an important part in the companys future development.

World War II in Europe had a devastating effect on Mondadori. Mondadori was compelled to transfer its editorial offices to the town of Arona in 1942. When the Fascist government fell and German troops occupied Italy in 1943, the plant at Verona was confiscated and its equipment dismantled and in large part shipped off to Germany. The Milan headquarters later sustained severe bomb damage, and the offices at Arona came under the control of the Fascist party commissars.

From 1943 to 1945 Arnoldo Mondadori went into exile at Lugano, Switzerland, but continued to maintain contact with his editors and authors. With the help of his son, Albertowho spoke English and other languagesthe publisher acquired rights to the work of U.S. authors Ernest Hemingway and William Faulkner, which later helped the company regain its position after the war ended.

Postwar Developments

With funds from the U.S. Marshall Plan, Mondadori launched a postwar recovery and replaced its bomb-damaged Verona plant. The new facility was much larger and included modern equipment capable of newspaper publishing. In 1950 the company published Epoca, a new large-format illustrated news weekly modeled on Time and Life.

Italys economy began a period of tremendous growth in the postwar years. Mondadori introduced direct marketing with the first Italian book club, Club degli Editori. In 1958 Alberto Mondadori founded II Saggiatore, an imprint of Mondadori that specialized in philosophy and intellectual works. The project was initiated with 150 employees and intentions of publishing 100 new titles each year. II Saggiatore brought out the likes of Jean-Paul Sartre and Claude Levi-Strauss in Italian translations, but the company was plagued with financial problems. In 1967 Alberto Mondadori broke from the parent company, and two years later a bankrupt II Saggiatore was reassumed by Arnoldo Mondadori Editore.

The younger son, Giorgio Mondadoriwho in 1944 had joined the company at the age of 27was a more effective manager. After overseeing the rebuilding of the Verona plant, he turned to a program of diversification. This included Mondadoris entrance into industrial activity with the establishment in 1961 of Auguri Mondadori S.p.A., a stationery and greeting card operation with a huge plant at Caselle di Sommacampagna near Verona and the building of Cartiere Ascoli Piceno, a papermaker that opened its plant at Marino del Tronto in 1964. Giorgio Mondadori also directed the building of the companys present headquarters at Segrate, a vast, modern edifice designed by the architect Oscar Niemeyer.

Company Perspectives:

The original nucleus of the Mondadori Group is Arnoldo Mondadori Editore, which has played a leading role in the cultural development of Italy since its foundation to the present day. The Mondadori Group s objective is to remain Italys leading publisher by increasing market share, introducing new technologies, and consistently offering the highest-quality products to its customers in the groups five main business categories: books, magazines, advertising, printing, and direct marketing.

In 1960 the company had annual gross profits of L 16 billion and employed 2,279 workers. During the decade that followed, the company founded by Arnoldo Mondadori profited from his friendship with two captains of the Italian banking industry, Raffaele Mattioli and Enrico Cuccia. Mondadori preferred stock was listed on the Milan stock exchange in 1965. Five years later annual gross sales stood at L 71 billion. The company employed 4,988 people and was ranked first in the Italian publishing industry in gross sales.

Publishing expansion in the 1960s included the founding of Panorama, which first appeared as a monthly in 1962 and became a weekly in 1967. In 1963 Mondadori initiated its Enciclopedia della Scienza e della Tecnica, a 15-volume work whose authors included several Nobel prize winners. Mondadoris practice of putting inexpensive works of literature on newsstands continued with the introduction of the Oscar series of highly successful fiction paperbacks.

The decade that followed brought difficulties. The family patriarch, Arnoldo Mondadori, died in 1971, leaving the company to his four children. The second son, Giorgio Mondadori, took over as president of the publishing empire in 1968. A few years later Mondadori administration was moved from Milan to the new headquarters at Segrate. During the 1970s expansion of industrial activity continued with the acquisition of two new printing plants in Vicenza, San Donato Milanese, and the establishment of a new plant at Cles. In 1975 yet another was acquired in Toledo, Spain.

In 1975, spurred on by the purchase of the top-selling Italian daily Corriere della Sera by Mondadoris competitor Rizzoli, the company joined in founding what would be its first daily newspaper, la Repubblica. The newspaper was founded as a joint venture by Mondadori and LEspresso, the top news weekly competing with Mondadoris Panorama magazine. A holding company, Editoriale LEspresso, was formed, with 50 percent of the capital, L 1 billion, shared by Mondadori and the L Espresso group, which included the new newspapers editors Eugenio Scalfari and Carlo Caracciolo.

Giorgio Mondadori held the chairmanship of Mondadori until 1976, when his sisters, Cristina and Laura Mondadori, joined in forcing their brother Giorgio from the company. He was succeeded as chairman by Mario Formenton, husband of Cristina, the youngest Mondadori daughter.

Meanwhile, la Repubblica was quickly gaining in stature and sales, thanks in part to its outspoken editorial positions on the political events of the decade. The newspaper opposed negotiations with the leftist terrorists who kidnapped and assassinated Italian statesman Aldo Moro in 1978. Competition from the largest Italian daily, Corriere della Sera, was later handicapped by the implication of Corrieres parent, Rizzoli Publishing, in the political scandals of the early 1980s. By virtue of its editorial independence, la Repubblica was widely seen as a bastion of integrity. Already by 1979 la Repubblica was no longer losing money and had begun to command an appreciable market share. Shortly thereafter the new paper began showing increasing profits.

The late 1970s and early 1980s brought a period of decline for the Mondadori group. The economic boom years of the postwar era were drawing to a close in Italy. In 1975 the company suffered from a falloff in its advertising and publicity revenues. The signal event of this period, which set the stage for the acrimonious boardroom battles at the end of the decade, was Mondadoris entrance into the television market, with the creation of the Italian network Retequattro. Guided by Mario Formenton in 1978, Mondadori established Gestione Pubblicitaria Editoriale (Gpe), an advertising agency for 18 local channels. Two years later the company entered directly into broadcasting activity with a second enterprise, Telemond, which bought and resold television programming. In 1982 the companies were reconstituted as the network Retequattro.

The ill-fated venture occurred in an unfamiliar market environment dominated by two major competitors. First was the state-owned radio and television network, which had in 1976 relinquished the monopoly on television programming it held since 1954. The second was media baron Silvio Berlusconis Fininvest Group, which was at the time amassing a vast empire of small local stations. Retequattros managers withheld from such expansion in the mistaken belief that a law would shortly be passed impeding the growth of national monopolies in television. Late in 1982, with the acquisition of the Italian channel Italia 1 by Fininvest, Retequattro found itself in a low position in audience ratings. Retequattro was unable to compete effectively with the maverick Berlusconi.

At the same time, Mondadori was involved in a program of expansion in its other sectors. Daily newspaper activity increased with the introduction of four provincial papers published by a subsidiary, Editoriale Le Gazzette. In addition, the Mondadori group reached an agreement with the Canadian Harlequin group in 1981 for the publication in Italy of its romance novels and in 1983 acquired another papermaking concern, Cartiera F.A. Marsoni of Treviso.

Internal Conflicts during the 1980s

At the end of 1983 Mario Formenton turned the failing Retequattro over to Leonardo Forneron Mondadori, the son of Laura Mondadori, who had legally been given his grandfathers family name. Leonardo Mondadori had worked in the company since 1972 and had successfully directed the book publishing activity. Initially the younger manager improved the network, but the losses had already become too great, and in late 1984 Mario Formenton sought a buyer for Retequattro.

The situation in 1984 was one of near emergency for Mondadori, with Retequattro losing L 10 billion each month. The network was eventually sold to Fininvest, but the losses had been too great. The consolidated balance of the company in 1984 showed losses of L 10.7 billion. Salvaging the company required a recapitalization of the order of at least L 50 billion.

With help from associates in the financial world, Mario Formenton and Leonardo Mondadori created a holding company, AME Finanziaria (AMEF), in 1985. To create the new company, the two families contributed just over 50 percent in Mondadori shares, while the other partners contributed capital. Since the Mondadori shares constituted a majority in the holding company, the family remained in control of both AMEF and the recapitalization of Mondadori, the ailing publishing empire. AMEFs partners included Carlo De Benedetti, who had been in contact with Mondadori as a shareholder of the Editoriale lEspresso group that founded the daily la Repubblica. De Benedetti held approximately 17 percent of AMEF. Silvio Berlusconi held 9 percent.

At Arnoldo Mondadori Editore, Mario Formenton was still president, and his nephew Leonardo Mondadori was promoted to vice-president. As managing director, Franco Tato guided the restructuring of the company. In 1985 profits rose to L 25 billion as opposed to L 10 billion in 1984; in 1986 profits tripled to L 75 billion. When, in 1987, Mondadori reported profits of L 100 billion, it was evident that the company was out of danger and that the rescue program, with the recapitalization from AMEF, had been a success. It also proved that, despite the losses of the Retequattro venture, Mondadori was a basically healthy company. In 1987, however, Mario Formenton died prematurely. Former managing director and vice-president Sergio Polillo was brought in to fill his place but only after a bitter struggle over the succession, which opposed Leonardo Mondadori to his aunt, Cristina, and her son, Luca Formenton.

The loss of Mario Formenton triggered a series of events that eventually catapulted the company into national news. With the two branches of the family in conflict, the shareholder Carlo De Benedetti achieved a position of considerable influence. During this period the skilled financier struck a deal with the Formenton family by which he retained right of first refusal if they ever decided to sell their shares. Then, aligned with the Formentons at the Mondadori 1988 shareholders assembly, De Benedetti successfully exploited a technicality in the relationship between the publishing group and the AMEF holding company to emerge in a majority position. Together the Formentons and De Benedetti voted to exclude the founders grandson from the board of Mondadori. Embittered, Leonardo left the family business to found his own publishing house, Leonardo Editore.

Under De Benedettis guidance, the Mondadori group continued to thrive. The group acquired a stake in Elemond, which controlled the prestigious Einaudi publishing house. In April 1989 De Benedetti arranged an important agreement whereby la Repubblica shareholders Eugenio Scalfari and Carlo Caracciolo sold their 51.85 percent share in Editoriale LEspresso to Mondadori for L 407 billion. As part of the deal, Caracciolo was nominated president of Mondadori, and Scalfari became a member of the board of directors. With la Repubblica and Editoriale LEspresso added to its interests, Mondadori was now worth L 2.3 trillion and was by far the largest publishing company in Italy.

Conflict developed again in 1989, the 100th anniversary of Arnoldo Mondadoris birth. Silvio Berlusconi had acquired more shares of AMEF and sided with Leonardo Mondadori to wield majority power in the decision making. Berlusconis interest in Mondadori emerged when he blocked a move by Carlo De Benedetti to merge his holding company Compagnie Industriali Riunite S.p.A. (CIR) and AMEF.

By December 1989, fearful of their loss of influence on the board of Mondadori, the Formentons struck a deal to sell their AMEF shares to Berlusconi, effectively reuniting with their cousin Leonardo Mondadori. The move immediately set off a furor in the financial world and in the media, where the contestants carried out a bruising and highly publicized battle for control. On one side was Berlusconi, allied with the two families of Mondadori and in control of AMEF and therefore of the ordinary capital of Mondadori. On the other side was Carlo De Benedetti, joined by the la Repubblica editors Scalfari and Caracciolo, with 51 percent of the privileged capital of Mondadori. By the end of the year, the contest was transformed into a complicated legal struggle that turned on the validity of De Benedettis agreement with the Formentons, which granted him first option on the Formentons shares should they ever decide to sell.

For 156 days Silvio Berlusconi claimed control of Mondadori. The 1989 annual report listed Berlusconi as president and Luca Formenton as vice-president. The report described recent developments: a new division called business and information comprising business publishing and a computer software company, Mondadori Informatica; an agreement reached with Fortune for publication of an Italian edition; and the divestment of Mondadoris papermaking activities. But the victory was short-lived.

The deal between Berlusconi and the Formentons was con-tested in the courts and, in June 1990, arbitrators ruled in favor of De Benedetti. Judges assigned Giacinto Spizzico, an 81-year-old business lawyer, to the post of president. The office of vice-president was shared by Fedele Confaloniere, formerly managing director of Fininvest, and Luigi Vita Samory, a lawyer appointed by the courts. Two men also filled the post of managing director: Carlo Caracciolo and the court-appointed Antonio Coppi, a former executive of the Rizzoli publishing house. The new general director was a former executive of Carlo De Benedettis CIR holding company, Corrado Passera.

In January 1991 this ruling was nullified in the Rome Court of Appeals without, however, significantly altering the balance of power between De Benedetti and Berlusconi. De Benedettis original agreement with the Formentons was found to be in violation of the AMEF charter. A negotiated settlement was reached in May 1991 whereby Berlusconi and the MondadoriFormenton families retained control of Mondadoris advertising agency and book and magazine publishing interests. De Benedetti controlled the Repubblica-Espresso group plus 15 local newspapers.

Meanwhile, events between 1989 and 1991 were traumatic for Mondadori. In spite of the contest for power already under way, 1988 was a strong year for the company, which reported a net profit of L 103 billion. In 1989 this figure was reduced by half, partly owing to losses in advertising.

The 1990s: Stagnant Economic Growth and Increased Market Share

Though the early and mid-1990s were slow economic years for Italy, Mondadori managed to retain and broaden its role as market leader. While cost-cutting efforts were aimed at increasing the Modadori profit margin, strategic acquisitions garnered the company a consistent gain in market share, from a leading 20 percent in 1990 to a dominating 29.3 percent in 1995. Leonardo Mondadori summed up the companys ability to succeed during economic stagnation: Were never satisfied with where we are. Were always looking for something new. And even if we dont grow, others are declining, so we appear bigger.

In 1995, in an effort to cut costs and increase efficiency, Mondadori reduced the number of its printing plants, and in 1996 it completed its new central book warehouse in Verona. The new warehouse was expected to increase distribution capacity from 23 million to 40 million copies, which represented an increase in the number of titles that could be warehoused from 4,000 to 30,000.

Pope John Paul II astonished the religious publishing community in 1994 by choosing a lay publisher, Mondadori, as the worldwide publisher of his book Crossing the Threshold of Hope. Mondadori transferred these rights to various publishers around the world, and the book was published in more than 20 languages. More than one million copies were sold in 1994 in Italy alone (compared with Mondadoris second best-seller, Gabriel Garcia Marquezs Of Love and Other Demons, which sold 200,000 Italian copies in 1994).

In 1996 Mondadori book titles were put on a computer network that provided statistical sales data from Italian book-shops. This network allowed for better planning of distribution and reprinting of their books. Also in 1996 Mondadori launched Pagine Utili Mondadori, a directory meant to challenge the Italian Yellow Pages (Pagine Gialle ), which had previously enjoyed a market monopoly. Pagine Utili was to take advantage of Pagine Gialles weaknesses, mainly a low 17 percent market penetration, a difficult-to-use product, and a monopolistic pricing policy. Though its strategy of lower pricing and more targeted listings seemed well developed, Pagine Utilis initial advertising volume was lower than estimated. This was partly the result of the competitions privatization and its adoption of more aggressive and competitive policies aimed at thwarting the Mondadori entry.

Though Mondadori has made the creation of New Media (such as CD-ROMs and on-line magazines) one of its primary goals, growth in the Italian computer software market was relatively slow. Still, sales of Mondadoris New Media were L 6 billion in 1996. One of the most remarkable areas of growth in 1996 was that of advertisement, which had been previously stagnant. Thanks to a growth of 9.2 percent in advertising sales in daily newspapers, Mondadori showed an overall advertising sales growth of 7.7 percent in 1996.

In looking toward the future, Mondadori formed an executive committee on July 18, 1996, and granted it administrative authority over the company. This included authorization to make investments and disposals, as well as the power to approve strategic policy and development programs. Following the resignation of Paolo Forlin as vice-chairman and managing director of Arnoldo Mondadori Editore S.p.A., the members of the executive committee consisted of Leonardo Mondadori (chairman), Marina Berlusconi, Fedele Confalonieri, and Ubaldo Livolsi.

Principal Subsidiaries

Auguri di Mondadori S.r.L; Artes Graficas Toledo S.A. (Spain); Club degli Editori S.p.A.; Editiones Grijalbo S.A. (Spain); Elemonde S.p.A.; Giulio Einaudi Editore S.p.A; Monadori Espuna S.A. (Spain); Mondadori Business Information S.p.A.; Mondadori Informatica S.p.A.; Mondadori Pubblicita S.p.A.; Mondadori Video S.p.A.; Riccardo Ricciardi Editore S.p.A.; Sperling & Kupfer Editori S.p.A.; Stock Libri S.p.A.; Verkerke Reproduletres N.V. (Netherlands).

Further Reading

Arnoldo Mondadori Editore, Arnoldo Mondadori Editore S.p.A.: Facts and Images 1987, Segrate: Mondadori, 1988.

, Arnoldo Mondadori Editore S.p.A.: Facts and Images 1988, Segrate: Mondadori, 1989.

How Mondadori Keeps Its Italian Market Leadership, Publishers Weekly, August 21, 1995, p. 12.

Lottman, Herbert R., Gala Italian Launch for Popes Book, Publishers Weekly, October 24, 1994, p. 12.

, Mondadori Up, Rizzoli Down, in 94 Results, Publishers Weekly, April 17, 1995, p. 17.

Mondadori, Mimma, Tipografia in Paradiso, Milan: Mondadori, 1984. Pansa, Giampaolo, LIntrigo, Milan: Sperling & Kupfer, 1990.

Turnai, Giuseppe, and Delfina Rattazi, Mondadori: la grande sfida, Milan: RCS Rizzoli, 1990.

Paul Conrad updated by Terry Bain

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"Arnoldo Mondadori Editore S.p.A.." International Directory of Company Histories. . Encyclopedia.com. 18 Aug. 2017 <http://www.encyclopedia.com>.

"Arnoldo Mondadori Editore S.p.A.." International Directory of Company Histories. . Encyclopedia.com. (August 18, 2017). http://www.encyclopedia.com/books/politics-and-business-magazines/arnoldo-mondadori-editore-spa

"Arnoldo Mondadori Editore S.p.A.." International Directory of Company Histories. . Retrieved August 18, 2017 from Encyclopedia.com: http://www.encyclopedia.com/books/politics-and-business-magazines/arnoldo-mondadori-editore-spa