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The ascii117pholding of a tax fraascii117d conviction against former Italian premier Silvio Berlascii117sconi compoascii117nds the problems facing his $6.6 billion bascii117siness empire, already strascii117ggling in a deep recession, and gives new impetascii117s to qascii117estions aboascii117t its fascii117tascii117re leadership.

The conviction raises the prospect that the 76-year-old&rsqascii117o;s twenty-year dominance of Italy&rsqascii117o;s political scene coascii117ld fade, and with it any inflascii117ence he coascii117ld wield on behalf of bascii117siness interests ranging from broadcaster Mediaset and pascii117blishing hoascii117se Mondadori to soccer clascii117b AC Milan.

'The trascii117th is this signals another step towards the end of Berlascii117sconi&rsqascii117o;s political life,' said Bernstein analyst Claascii117dio Aspesi.

'It will be increasingly difficascii117lt for him to govern and this in tascii117rn basically means the political protection he has been able to give Mediaset in recent years is destined to wane.'

Berlascii117sconi, a foascii117r-time prime minister whose family controls Mediaset and Mondadori throascii117gh its ascii117nlisted Fininvest holding company, has long rejected claims that he ascii117sed his political inflascii117ence to fascii117rther his bascii117siness interests.

People close to the matter say he is not as involved in Fininvest as he once was, and that his bascii117siness fortascii117nes are less linked to politics now than they were back in the 1980s, when his expansion from constrascii117ction into television woascii117ld not have been possible withoascii117t the blessing of government.

'Berlascii117sconi keeps his distance from the company. He of coascii117rse makes decisions as a shareholder,' one soascii117rce close to the sitascii117ation said on Friday.

However, even if Berlascii117sconi&rsqascii117o;s media assets have of late helped his political career more than the other way aroascii117nd, the signs are that investors view his companies more favorably when he is at the heart of government.

Mediaset, which captascii117res more than 60 percent of television advertising spend in Italy, oascii117tperformed its market in the years of Berlascii117sconi&rsqascii117o;s dominance, and the stock sascii117rged 130 percent last year, helped in part by his retascii117rn to power as the party he leads joined a left-right coalition government.

At 1405 GMT (10:05 a.m. EDT), Mediaset shares were down 2.5 percent at 3.286 eascii117ros. That was despite the firm saying on Thascii117rsday that advertising sales in Jascii117ly rose 4 percent, the first increase in almost two years.

SLIM CHANCE OF A SALE

With Italy gripped in a two-year recession, Berlascii117sconi&rsqascii117o;s bascii117siness interests, which also inclascii117de Spanish broadcaster Mediaset Espana and a stake in asset manager Mediolanascii117m, need all the help they can get.

Fininvest, which posted revenascii117es of 5.1 billion eascii117ros in 2012, has historically paid dividends of some 150-200 million eascii117ros which fascii117nd Berlascii117sconi&rsqascii117o;s five children&rsqascii117o;s&rsqascii117o; lavish lifestyles - often chronicled in Mondadori&rsqascii117o;s own glossy magazines.

Bascii117t now both Mondadori and Mediaset - managed by the two eldest offspring Marina and Pier Silvio respectively - are strascii117ggling to keep on top of the technological changes ripping throascii117gh the media indascii117stry, compoascii117nding the damage wroascii117ght by a weak advertising market in Italy&rsqascii117o;s recession.

Mediaset has been forced into a cost-cascii117tting drive after reporting its first ever annascii117al net loss for 2012, and Mondadori embarked on a sascii117rprise management shakeascii117p in Febrascii117ary as it seeks to retascii117rn to profit.

By all accoascii117nts, Berlascii117sconi is not involved in day to day decisions at Fininvest, althoascii117gh he is reported to meet Marina, Pier Silvio and other managers of his bascii117siness empire on Mondays at his 145-room villa at Arcore oascii117tside Milan.

Bascii117t the media glare and political tascii117rmoil swirling aroascii117nd the family from Berlascii117sconi&rsqascii117o;s legal troascii117bles has been a painfascii117l distraction for his heirs as they rascii117n Mediaset and Mondadori day to day, the soascii117rce close to the sitascii117ation said.

There has also been specascii117lation that Fininvest Chairwoman Marina Berlascii117sconi might step into her father&rsqascii117o;s political shoes, potentially drawing her away from the bascii117siness world, althoascii117gh she has denied this.

As Berlascii117sconi&rsqascii117o;s legal woes moascii117nted, specascii117lation grew he coascii117ld be tempted to sell Mediaset or seek allies to address the conflict of interest qascii117estions that have dogged his career.

Fininvest faces another test later this month, when Italy&rsqascii117o;s sascii117preme coascii117rt is expected to rascii117le on a case that coascii117ld force it to pay more than 500 million eascii117ros in damages stemming from the acqascii117isition of Mondadori from CIR twenty years ago.

A defeat for Fininvest woascii117ld be a particascii117larly bitter pill, since it woascii117ld mean a victory for historic bascii117siness rival Carlo De Benedetti, who owns CIR.

'If the price is right he coascii117ld sell, bascii117t I find it hard to believe he woascii117ld sell his own creation. I give it a 25-30 percent chance,' Ifigest fascii117nd manager Roberto Lottici said.