Mediaset Reports First-Quarter Loss on Lower Ad Sales

Mediaset SpA said “poor visibility” makes it difficult to give reliable full-year forecasts after the Italian broadcaster reported a first-quarter loss on weak demand for advertising.

The company controlled by former Prime Minister Silvio Berlusconi had a net loss of 12.5 million euros ($17 million) in the quarter compared with a 9.3 million-euro profit a year earlier, Milan-based Mediaset said in a statement. The shares declined as much as 5.3 percent.

Mediaset, which competes with Rupert Murdoch’s pay-TV provider Sky Italia, is struggling to stabilize earnings following economic contractions in Italy and Spain, the two markets where it operates. The company returned to profit last year after its first ever annual loss in 2012.

“The return to declining ad revenues and to a net loss in the first quarter are reminders that the Italian economy remains weak and that Mediaset is highly dependent on a recovery to return to decent profitability,” Claudio Aspesi, a media analyst at Sanford C. Bernstein in London, said in a phone interview.

Mediaset shares fell 5.1 percent to 3.52 euros at 9:08 a.m. in Milan, paring the advance to 2.2 percent this year and giving the company a market value of about 4.2 billion euros.

Mediaset’s second-quarter advertising sales will be in line with a year earlier or slightly lower, Luigi Colombo, managing director for marketing at the company’s Publitalia advertising agency, said on conference call with analysts.

Italy Outlook

In Italy, the advertising industry isn’t yet benefiting from any clear signals of a recovery in consumer demand, Mediaset said in the statement. The company forecast moderate growth for advertising revenue in the second quarter in Spain, where it said the economic recovery is much clearer.

First-quarter sales fell 1.3 percent to 820.8 million euros, compared with the 825.6 million-euro average of seven analyst estimates compiled by Bloomberg.

Mediaset, which owns a 22 percent stake in Distribuidora de Television Digital SA, or DTS, may match or exceed the $1 billion offer Telefonica SA made last week for Promotora de Informaciones SA’s pay-TV division, two people familiar with the matter said this week.

Through its Spanish unit, the Italian broadcaster has an option with Prisa to match the bid of any buyer, one of the people said. If Mediaset exceeded a bid by even 1 euro, it could rewrite conditions for offers, the people said, declining to be identified because the talks are private. A second option would allow Mediaset to increase its stake to 50 percent and create a joint venture with Telefonica.

“Mediaset is ready to support its Spanish unit regarding DTS but no decisions have been taken since we haven’t yet received any official notifications from Telefonica or Prisa” about the takeover offer, Chief Financial Officer Marco Giordani said on a conference. “After the notification, the company will have almost 20 days to decide.”

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