Mediaset sustains big drop in profits
EmptyROME -- Mediaset, Italy's largest private broadcaster, reported Tuesday that profits fell by more than a fifth over the first three quarters of 2006, totaling €369.1 million ($468.8 million), as operating costs rose and revenue was mostly flat.
The drop stemmed from Italian operations, which account for about two-thirds of Mediaset's revenue. Overseas revenue and profits increased slightly compared to the year-ago period.
Mediaset is controlled by former Prime Minister Silvio Berlusconi, Europe's wealthiest media tycoon. Together with state broadcaster RAI, Mediaset controls more than 90% of Italian TV viewer hours.
The company's stock fell nearly 1% in trading on the Italian Stock exchange Tuesday in anticipation of the results, which were released after the market closed. Shares were flat amid unusually high volume in after-hours trading, brokers said.
In addition to the financial results, speculation about a possible Mediaset bid for German broadcaster ProSiebenSat.1, the Italian government's plan to introduce more competition into the sector, rumors of a company-wide reorganization and new legal woes for Berlusconi have all weighed on the company's share price recently. The shares are down 18% since June.
Still, Tuesday's report contained some good news.
Mediaset continued to perform better than RAI among 15-to-64-year-olds, which it considers its prime demographic, even when RAI's strong viewership numbers for the World Cup are figured in. But the lead slimmed slightly during primetime compared to the same period in 2005.
Advertising revenue declined by about 1% compared to the first nine months of 2005, reaching €2.1 billion ($2.7 billion). But the drop was smaller than the one revealed over the first six months of the year, indicating that the company is starting to recover some of the government-sponsored ad revenue it lost when Berlusconi was ousted from power in April.