Italy's Mediaset Unveils Growth Strategy After Failed Vivendi Deal

Mediaset

The Italian media giant claims a new focus on online and exclusive content will increase earnings multiple times — to half a billion dollars by 2020.

After a rough year, Italy's Mediaset is looking to turn itself around.

The Italian media giant spent much of 2016 trying to put together an ambitious partnership with French conglomerate Vivendi, an agreement that would have seen the two companies exchange 3.5 percent equity stakes and Vivendi buy up Mediaset's Italian pay TV division Mediaset Premium.

When the deal fell through, Mediaset stock tanked. In December, Vivendi starting buying up devalued shares in the Italian group, increasing its stake to 20 percent and then 30 percent. Mediaset cried foul and on Dec. 21 Italian regulators opened an investigation into the Vivendi-Mediaset deal and Vivendi's aggressive action that followed in its wake. The investigation is still ongoing.

But Mediaset is looking to start 2017 on a high note. On the company's board of directors, led by chairman Fedele Confalonieri, presented their new strategy to financial analysts in London on Wednesday, which promises to grow Mediaset's TV business and send earnings soaring.

The strategy is multi-pronged, aimed at creating more exclusive programming, both local and international, including "online-first" content, and at expanding innovative international partnerships, such as the recent investment in ProSiebenSat.1's multi-channel network Studio71.

The media company also plans to make its exclusive Mediaset Premium content, which includes pricey broadcast rights to Italian and international soccer, available to other operators. Currently Mediaset Premium content can only be accessed by its 2 million subscribers in Italy.

In an effort to rival the likes of Netflix and Sky, the Italian TV giant is expected to expand on co-production opportunities with Mediaset Spain and other European partners. Plus, Mediaset plans on refocusing on its bread-and-butter by expanding its participation in auctions for soccer rights and the business opportunities the matches can bring to the network. 

Taken together, the company said it expects its new strategy to sharply increase EBIT, or earnings before interest and taxes, for its Italian outfit to reach $500 million (€468 million) by 2020. It also forecasts it can raise its advertising market share to 39.0 percent from 37.4 percent. 

That's a far cry from the $28.6 million (€26.8 million) earned in 2015 and its 2014 earnings of $111 million (€104 million). 

Observers point out that things may already be looking up for the company. Among some positive news, Mediaset advertising revenue increased 4 percent in 2016 across TV, internet and radio. 

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