The vice-president says the former Manchester City striker understands his comments were not meant in a negative manner, and says the issue has been stirred up by the mediaAC Milan vice-president Paolo Berlusconi says that Mario Balotelli was not offended by his recent racist remark.
Berlusconi, who is the brother of Rossoneri president Silvio, was filmed using offensive language in reference to the striker.
The vice-president was heard saying before Sunday's clash with Udinese, "Let's go and watch our household's little n*****."
But Berlusconi, who was pictured smiling with the striker at the club's training ground, said the former Manchester City striker understood how the comment had been intended.
"I spoke to Balotelli, though in reality there was no need, seeing as he is an intelligent lad," Berlusconi told Milan Channel.
"He had already understood my phrase was an affectionate one that was turned into a stupid media circus. Let us close this story, as Mario told me there was no need to say anything else."
Milan have declined to comment on the incident which went viral this week, but on Thursday the club's official website released a picture of the two together before the friendly against Sant’Angelo Lodigiano.
Paolo Berlusconi has insisted that the phrase used to reference the ex-Manchester City player was a term of endearment towards Balotelli, and that his comments are not to be mistaken for a racial slur.
The issue comes just weeks after Rossoneri star Kevin-Prince Boateng received worldwide praise for walking off the pitch during a friendly match against Pro Patria after he and other players had been subjected to racist abuse.