Mediaset Loss Narrows as Broadcaster Sees Full-Year Profit

Mediaset SpA, the broadcaster owned by former Prime Minister Silvio Berlusconi, posted a smaller-than-expected loss after cutting costs as Italy’s economic recovery failed to boost demand for advertising.

The third-quarter net loss was 26.3 million euros ($32.8 million), compared with a loss of 57.3 million euros a year earlier and the average analyst estimate of a deficit of 54.1 million euros. Mediaset forecasts a return to full-year profit for 2014, the company said yesterday in a statement. The shares rose as much as 10 percent today, the steepest intraday advance in 11 months.

“In the short term, these figures are for sure a breath of fresh air,” Claudio Aspesi, a media analyst at Sanford C. Bernstein in London, said in an e-mail. “The question is if investors in the long term will be satisfied with a company able to beat estimates thanks only to cost-cutting.”

The group is focused on costs reductions and finding a partnership for its pay-TV unit Premium. French media company Vivendi SA is interested in acquiring Telefonica SA’s 11 percent holding in Mediaset Premium, people familiar with the matter said in September. Al Jazeera is also among the potential partners for Premium, a person familiar with the matter has said. Mediaset controls the business, which had an equity value of 900 million euros as of July.

Mediaset Premium will start operating as a separate company in early December, Chief Financial Officer Marco Giordani said in a conference with analysts. “Industrial partners for Premium are welcome and in Europe we are talking not only with Vivendi and Al Jazeera,” Giordani added. He wouldn’t identify the other potential partners.

Broadband Partnership

The Italian company, which competes with Rupert Murdoch’s Sky Italia, may also consider a partnership with Telecom Italia SpA to broadcast its programs via Italy’s largest phone carrier’s ultra-broadband networks, people familiar with the plans have said.

Sales rose 1.5 percent to 662.8 million euros ($827 million) in the third quarter, after revenue was little changed in the first half. That compared with analysts’ 661.8 million-euro average estimate compiled by Bloomberg.

“The good surprise came, once again, from tight cost control, which helped to ease the operating loss of the Italian integrated activities,” Charles Bedouelle, an analyst at Exane BNP Paribas SA, said in a note to clients.

Mediaset shares rose 7.5 percent to 2.91 euros as of 9:30 a.m. in Milan, giving the company a market value of 3.44 billion euros.

“Given the persistent lack of visibility concerning revenue, the group remains focused on operational efficiency, cash generation and medium-term profitability,” Mediaset said. October advertising sales in Italy remained in line with those of the first nine months of the year.

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