Ad woes sour analysts on Mediaset

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ROME -- As Italy's advertising market continues to erode, analysts are downgrading recommendations for shares in Mediaset, Italy's largest broadcaster, or adjusting its earnings estimates downward.

At least 12 investment banks have downgraded their recommendations on shares of the broadcast giant controlled by former Prime Minister Silvio Berlusconi while many have adjusted earnings estimates downward since the company reported a drop in earnings on May 8.

Television ad prices are reportedly about 7% lower in the first four months of 2007 than the year-ago period, and prospects point to even lower prices moving forward. Mediaset owns three national television networks and controls more than half of Italy's television ad market.

"This is just not a good time for Mediaset's domestic operations," Javier Noriega, chief economist with investment bankers Hildebrandt and Ferrar, said in an interview.

The company is expanding outside Italy as a way to diversify risks at home. Mediaset already owns Spanish broadcaster Telecinco and, earlier this month, headed a consortium that acquired control of Dutch reality television producer Endemol.

Mediaset shares closed flat in light trading Tuesday, but the shares have fallen dramatically in the previous six sessions, from a high of €8.46 ($11.42) to €7.91 ($10.68), where it closed both Monday and Tuesday.
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