Italian Prime Minister Silvio Berlusconi’s political woes are hurting the shares of his companies, Mediaset SpA, Arnoldo Mondadori Editore SpA and Molecular Medicine SpA.
Broadcaster Mediaset, 38 percent owned by Berlusconi’s holding company Fininvest SpA, has dropped 13 percent since Nov. 10, wiping almost 900 million euros ($1.22 billion) from its market value. Mondadori, Italy’s largest book and magazine publisher, about 50 percent owned by Fininvest, has slipped 6 percent in the period, while Molecular Medicine SpA, a Berlusconi-controlled biotechnology company, has fallen 12 percent.
“Companies linked to the premier are feeling the impact of the political situation more than others,” said Emanuele Vizzini, who helps manage about $1 billion at Investitori SGR in Milan. He owns shares in Mediaset and Mediolanum SpA, a financial-services company partly owned by Berlusconi. Mediolanum has fallen 4.7 percent since Nov. 10.
Berlusconi will face a confidence vote in parliament next month, President Giorgio Napolitano said in a statement on his website last night after meeting with the heads of the two houses of parliament. A no-confidence vote could topple the government and lead to early elections.
Berlusconi’s grip on power has been slipping since Gianfranco Fini, co-founder of the ruling People of Liberty party, broke with him in July. Four members of Fini’s Future and Liberty for Italy party quit on Nov. 15.
Fini called for the premier’s resignation after media reports that Berlusconi helped secure the release from police custody of a 17-year-old nightclub dancer.
Berlusconi’s political decline is adding to his companies’ weakening operations, some analysts said. Mediaset, Italy’s biggest commercial broadcaster, on Nov. 9 posted a bigger third-quarter net loss than analysts had predicted on charges related to investments.
“Incumbents such as Mediaset are worst placed as they face the highest risk of audience fragmentation and they suffer most from pay TV competition,” Giasone Salati, an analyst at Execution Noble, wrote in a note.
Rupert Murdoch’s Sky Italia, which competes with Mediaset, has complained about a 2008 government decision to double sales tax on pay-TV subscriptions to 20 percent. Sky Italia responded to the decision with commercials urging customers to protest the increase, pointing to a conflict of interest for Berlusconi as prime minister and owner of Mediaset.
“We believe investors’ confidence has been dented,” Giovanni Montalti, an analyst at Chevreux, wrote in a note today. “Given the structural threats and evidence of upward pressure on costs, we are disappointed by Mediaset’s reluctance to undertake restructuring.”
Chevreux removed the stock from its sector and country Best Picks list and cut its rating to “underperform.”
Yesterday, Mediaset sought to calm investor concerns about its future.
“Mediaset and its investors mustn’t fear political change,” Vice Chairman Pier Silvio Berlusconi said in comments confirmed by a company spokeswoman. “We have about 6,000 employees and are a healthy company. It would be short-sighted not to consider this.”