The court, which began hearing the case in 2006, also said Berlusconi could not hold public office for five years or manage any company for three years, penalties that would take force only if the conviction is upheld on two levels of appeal.
In a statement, Berlusconi's lawyers condemned the verdict as ''absolutely incredible," and said they would appeal. Berlusconi is expected to remain free while two levels of appeal are exhausted.
However, a corruption bill drafted by the technical government headed by Premier Mario Monti, who replaced Berlusconi, would bar anyone convicted at the trial level from seeking office.
Berlusconi denounced the conviction as ''unreal" and the case as politically motivated as he has the numerous charges against him mostly for business dealings since entering political life in 1994. Berlusconi stayed away from the Milan tribunal, where his lawyers on Friday were defending him in a separate courtroom on charges of having paid for sex with an underage Moroccan teen and trying to cover it up.
"It is a political conviction that I can define perfectly well as incredible and intolerable," Berlusconi said in a phone call to his Italia 1 private network Friday evening.
He denied that there was any connection between his decision to step aside and allow another center-right candidate to seek the premiership in spring elections.
"My lawyers and I never thought that such a conviction would be possible," Berlusconi said.
The court read its reasons for the conviction immediately in court, a rare occurrence given they have 90 days to write them. It was a sign that the judges want to speed the case along to the appellate level before the charges expire, sometime next year or early 2014.
''He has been around this particular block more than a few times," said Alexander Stille, who has written several books on Italy. ''I don't see partly given his advanced age and the nature of power in Italy him doing jail time."
Berlusconi has been convicted in the past at the trial level. But the convictions have always either been overturned on appeal or seen the statute of limitations run out.
Roberto D'Alimonte, a political science professor at Rome's LUISS University, said Italians won't change their minds based on the conviction.
''Foreigners will be surprised, but not Italians," D'Alimonte said.
The real impact will be in whether the provision barring those convicted at the trial level from office will make it through Parliament in the corruption bill. ''It is something to monitor," D'Alimonte said.
Prosecutors allege the defendants were behind a scheme to purchase the rights to broadcast U.S. movies on Berlusconi's private television network and falsely declared the payments to avoid taxes. They said the defendants then inflated the price for the TV rights of some 3,000 films as they relicensed them internally to Berlusconi's networks, pocketing the difference amounting to around $323 million.
A total of 11 people were on trial.
Three were acquitted, including a close associate of Berlusconi, Fedele Confalonieri, chairman of Mediaset.
Berlusconi and three others were convicted, including a Hollywood producer, Frank Agrama, who received a three-year sentence. The four convicted must deposit a total of $13 million into a court-ordered fund while the appeals proceed.
Four defendants were cleared because statute of limitations had run out on their charge.
Berlusconi is not the first former Italian premier to be convicted of criminal charges.
Former Socialist Premier Bettino Craxi eluded an arrest warrant and turned up at his villa in Tunisia in 1994 after a court in Italy charged him in a corruption case. He was tried in absentia, convicted and sentenced to 8 1/2 years in prison, never returned to Italy and died in exile. Craxi was considered Berlusconi's mentor thanks to his opening to private television in Italy from a state monopoly.
Former seven-time Christian Democrat premier, Giulio Andreotti, was convicted of involvement in a Mafia murder. But he was cleared on appeal and never went to jail.