Mediaset's ad increase adds to Q3

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ROME -- Advertising sales for Italian broadcaster Mediaset are on the rise, resulting in a 5.4% increase in revenue and a slight uptick in profit during the first nine months of the year compared with the same frame a year ago, the company said Tuesday.

But the profit levels disappointed analysts, who expected greater cost-cutting and more robust ad sales.

In a conference call with reporters and analysts, Luigi Colombo, the head of Publitalia, Mediaset's advertising subsidiary, said that ad sales began increasing around midyear and that the robust pace of sales has continued into the fourth quarter.

"October was strong, November is already showing improvement compared to the same month in 2006, and we believe December will also bring good news," Colombo said. He added that he expected Mediaset's ad sales for 2007 to surpass 2006 levels despite a slow start to the year. As of the end of September, ad sales remained 0.4% behind the 2006 pace.

In early 2006, ad sales received a boost from spending ahead of the soccer World Cup.

On the back of improving ad sales and a 1.1% decrease in spending, Mediaset increased revenue for the first nine months of the year to 2.8 billion Euros ($4.1 billion), compared with 2.67 billion Euros a year ago. Profit rose, but less significantly, hitting 372.3 million Euros ($539.8 million), compared with 369.1 million Euros during the same period in 2006.

For the first time in three years, the company's growth rate in Italy is keeping pace with the rate in Spain, where Mediaset owns the Telecinco network.

The results and the conference call took place after the close of trading on the Italian Stock Exchange in Milan, but the results were at the lower end of the estimates from analysts quoted Tuesday in the financial daily Il Sole/24 Ore. Predictions ranged from 361 million Euros ($523.5 million)-405 million Euros ($587.3 million).

Mediaset shares edged up 0.1% in heavy trading Tuesday, ending the day at 7.02 Euros ($10.18) ahead of the report. But most analysts predicted the shares would dip today as investors digested the new information.
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