Mediaset sees '06 earnings slip

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ROME -- Preliminary consolidated earnings for Italian broadcast giant Mediaset show 2006 profits down by nearly a sixth thanks to reduced advertising income, though overall revenue increased slightly, according to information released by the company's board of directors Thursday.

Profits last year were estimated at €505 million ($667 million), down from €603 million ($796 million) the previous year.

Mediaset's domestic ad revenues slipped to €2.85 billion ($3.76 billion) last year compared with €2.96 billion ($3.91 billion) in the comparison period. That loss was partially offset by increases in revenue from the company's Publiespana and Telecino subsidiaries in Spain.

Combining all units, Mediaset enjoyed a slight increase in revenue to €3.75 billion ($4.95 billion) last year, despite the dip in domestic advertising revenue. The broadcaster, which is controlled by former Prime Minister Silvio Berlusconi, earned €3.68 billion ($4.86 billion) in 2005.

According to a statement, the company said that definitive 2006 figures will be released following a March 13 board meeting. But in the past, preliminary estimates have been very close to the final figures.

According to Javier Noriega, chief economist with investment bankers Hildebrandt and Ferrar, the preliminary figures -- released after the market closed Thursday -- will likely be a good sign for Mediaset shares when they open for trading Friday.

"There's not a lot of mystery related to these results, but the consensus may have been that the dip in advertising could have been more severe than it seems to be here," Noriega said.

Italy's overall television ad market has steadily eroded in recent years, but Mediaset's share of the total market also has suffered from Berlusconi's ouster from power last year. Since then, much government advertising has been diverted from Mediaset to other companies.

Mediaset's shares were flat in a weak market Thursday, but they have performed well over the last week amid a government crisis that has sparked speculation that a proposed media reform package that could cost Mediaset €1 billion ($1.32 billion) could be weakened or abandoned.

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