Berlusconi’s Mediaset Predicts TV Ad Sales Growth This YearDaniele Lepido
Mediaset SpA, the broadcaster controlled by former Italian Prime Minister Silvio Berlusconi, forecast a return to growth in TV advertising revenue in 2015, a sign of optimism for a market that’s been through a four-year slump.
Full-year ad revenue may increase by a range of 2 percent to 4 percent, Chief Financial Officer Marco Giordani said in Milan. In the first nine months of 2014, Milan-based Mediaset’s sales fell 0.1 percent to 2.39 billion euros ($2.7 billion).
“Visibility remains short but we already have seen some positive signals for February sales and we are cautiously optimistic for the next months,” Giordani said. Companies traditionally spend more on ads between February and Easter, as well as in May and June, he said.
Mediaset rose as much as 2.1 percent in Milan to 4.09 euros, trading near the highest level in 10 months and giving the company a market value of 4.8 billion euros. It’s the best-performing stock on Wednesday in the STOXX Europe 600 Media Price index.
“Mediaset is very operationally leveraged to the advertising market, so if revenues are stronger than expected, the market will likely anticipate substantial upgrades,” Sarah Simon, an analyst at Berenberg, said in an interview. She reiterated a “buy” rating on the stock.
As Italy struggled to emerge from the deepest recession since World War II, TV ad spending fell 0.1 percent to 3.2 billion euros in the first 11 months of 2014, according to researcher Nielsen. In the same period the entire Italian ad market -- including newspapers, radio, magazines, cinema -- declined 2.6 percent to 5.63 billion euros.
Mediaset, which competes with Rupert Murdoch’s pay-TV provider Sky Italia, is cutting operating costs while boosting program spending to lure new customers to its pay-TV offering, Mediaset Premium. As part of its strategy to gain exclusive content, Mediaset a year ago beat out Sky Italia by bidding about 700 million euros for the rights to broadcast soccer’s UEFA Champions League for the 2015-2018 period.
Sky Italia, part of Sky Plc, today reported ad sales of 76 million pounds ($115 million) for the six months through December, an increase of 13 percent from a year earlier.
Europe’s biggest broadcasters, from the British Broadcasting Corp to Sky, are ramping up investment in TV programming and content to lure viewers and re-sell valuable international rights to the U.S. and other territories. The battle for sports rights among players like Sky and BT Group Plc is also greater than ever to lure and retain lucrative pay-TV subscribers.
GroupM, the media-buying arm of the world’s largest advertising company, WPP Plc, in December lowered its global forecast for 2014 advertising to 3.9 percent growth, from a earlier projection of 4.5 percent growth. Advertising is now expected to have totaled $513 billion last year, according to GroupM.
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