Mediaset Swings to Quarterly Loss on Slump in Italian TV Ads

Mediaset SpA (MS), the broadcaster controlled by former Italian Prime Minister Silvio Berlusconi, reported a second-quarter loss as a slowdown in southern Europe cut demand for advertising.

The net loss was 8.1 million euros ($10.9 million) compared with a 20.8 million-euro profit a year earlier, the Milan-based company said yesterday. Sales were little changed at 904 million euros. That compared with the average analyst estimate for a 12.5 million-euro net loss and revenue of 907.8 million euros, according to a Bloomberg survey.

The shares fell 2 percent to 3.09 euros at 9:14 a.m. in Milan. They have fallen 11 percent this year, giving the company a market value of 3.6 billion euros.

Mediaset is working to improve profit by cutting spending and selling stakes in businesses following declines in its southern European markets. The company, which competes with Rupert Murdoch’s Sky Italia, is also investing in sports rights and content to lure higher-paying customers. It may face stronger competition after British Sky Broadcasting Group Plc agreed to buy Sky Italia and Sky Deutschland AG stakes last week from Murdoch’s 21st Century Fox Inc.

Mediaset is considering a content partnership with Spain’s Telefonica (TEF) SA in Italy and elsewhere, Chief Financial Officer Marco Giordani said on a conference call. He confirmed a full-year sales target of 550 million euros for pay-TV unit Premium.

Second-quarter earnings before interest and taxes dropped to 79.9 million euros from 80.2 million euros a year earlier, Mediaset said.

Premium Partner

Telefonica agreed this month to buy an 11 percent stake in Premium for 100 million euros. The company also bought Mediaset’s 22 percent holding in Spanish TV operator Distribuidora de Television Digital for 295 million euros.

Mediaset is also looking for another partner to buy a stake in Premium. Al Jazeera and Vivendi SA (VIV) are among the potential bidders, a person familiar with the matter has said. Deputy Chairman Pier Silvio Berlusconi met Vivendi Chairman Vincent Bollore last week in Milan to discuss a possible investment in the Italian pay-TV service, news agency Radiocor reported.

As part of its strategy to gain exclusive content, in February, Mediaset won UEFA Champions League TV rights during the 2015-2018 period, bidding about 700 million euros for the soccer matches. In June, it won the right to show 248 matches of eight top-division Italian soccer league teams with an offer of 373 million euros.

BSkyB’s deal with Fox is valued at more than $9 billion, including BSkyB’s 21 percent stake in National Geographic Channel as part of the payment for Sky Italia, and will create a pan-European pay-TV business with 20 million customers in five countries.

To contact the reporter on this story: Daniele Lepido in Milan at dlepido1@bloomberg.net

To contact the editors responsible for this story: Kenneth Wong at kwong11@bloomberg.net Amy Thomson, Robert Valpuesta

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