Mediaset Rises as Sales Top Estimates, Savings Ahead of Plan

Mediaset SpA shares rose the most in a month after the broadcaster controlled by former Italian Prime Minister Silvio Berlusconi reported sales that beat analysts’ estimates and said it was ahead of cost-cut targets.

Revenue fell 12 percent to 3.72 billion euros ($4.8 billion) in 2012, beating analysts’ average estimate of 3.59 billion euros, according to data compiled by Bloomberg. Mediaset, based in Milan, said 2012 savings reached 307.2 million euros, exceeding its 250 million-euro goal.

The company, which has a plan to cut costs by 450 million euros a year within three years, is also selling non-core assets as advertising revenue in Italy has fallen. It reduced net debt by 177.9 million euros to 1.71 billion euros in 2012.

“Mediaset has been able to reach and quickly beat its cost-savings target, and debt reduction is a clear signal of the company’s skill in generating cash,” Giasone Salati, an analyst at Espirito Santo Investment Bank, said by phone. “I am also positive about the recovery of Italy’s advertising market.”

Mediaset rose as much as 10 percent to 1.71 euros, the biggest intraday increase since Feb. 25. The stock climbed 7.4 percent to 1.66 euros at 11:05 a.m. in Milan, taking its advance to 6.9 percent this year.

The broadcaster had a net loss of 287.1 million euros in 2012, compared with a profit of 225 million euros a year earlier. Mediaset had impairments and provisions, including on the value of sports rights, of 307.8 million euros. The company won’t pay a dividend for the first time in its history, Chief Financial Officer Marco Giordani said on a conference call.

Advertising Slump

“Since the start of economic crisis Mediaset’s management has moved quickly on cost cuts,” Claudio Aspesi, an analyst at Sanford C. Bernstein, said in a phone interview. “But the problem of revenue growth remains unresolved because the traditional advertising market continues to slump and the company probably should diversify more on digital advertising.”

Mediaset’s total gross Italian ad sales, including domestic unit Publitalia and Digitalia, fell 16 percent to 2.33 billion euros in 2012.

Revenue at pay-TV offering Premium was in line with a year earlier at 518 million euros.

The Italian advertising market plunged more than 16 percent in January to 271.2 million euros, while Internet ads climbed 9.3 percent to 31 million euros, according to Nielsen.

Mediaset received bids for Italy’s Space Cinema chain of theaters, jointly owned with an investment company linked to Benetton Group SpA, people familiar with the matter said in February. The asset is valued at 120 million euros to 140 million euros, one of the people said.

Before it's here, it's on the Bloomberg Terminal.