Silvio Berlusconi's Mediaset Boosts Stake in Germany's ProSiebenSat.1

Silvio Berlusconi - H 2013
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The Italian media giant increases its hold over the German commercial TV giant.

Mediaset, the Italian media group controlled by controversial mogul and former Italian Prime Minister Silvio Berlusconi, has increased its stake in Munich-based ProSiebenSat.1, giving Berlusconi sufficient control to block major corporate decisions by the German broadcaster.

Mediaset purchased an additional 3.4 percent in ProSiebenSat.1 late in the week, bringing its direct stake in the German group — which owns national networks ProSieben, Sat.1, and Kabel 1 as well as global production outfit Red Arrow (Love is Blind) — to 12.38 percent.

That in itself is not sufficient to sway decisions at ProSiebenSat.1. But Mediaset also holds derivatives that effectively boost its share of ProSiebenSat.1's voting rights, giving the Italian group a de facto blocking majority in the German company.

Mediaset is Italy's largest commercial broadcaster and controls Mediaset Espana, Spain's top commercial TV group. There has been speculation that Berlusconi's grand plan was to combine Mediaset's Italian, Spanish and German units into a pan-European group called MediaForEurope (MFE), headquartered out of Amsterdam. But those plans were blocked by French media giant Vivendi, Mediaset's largest minority shareholder.

Mediaset is currently embroiled in a legal wrangle with former Vivendi boss Vincent Bolloré and current CEO Arnaud de Puyfontaine concerning a $1 billion pay-TV deal that went sour. Vivendi had planned to buy out Mediaset's pay-TV division for a reported $1 billion but balked at the agreement. Mediaset sued, claiming Vivendi pulled out of the deal to deliberately drive down Mediaset stock. Vivendi upped its stake in Mediaset after the stock crashed and now owns just under 30 percent of the Italian company. The Italian government is investigating the matter and indicted both Bolloré and de Puyfontaine on Dec. 12.

Mediaset was reportedly behind a recent shift in ProSiebenSat.1's strategy which has seen the German group sell off stakes in non-TV companies to focus on its core broadcast business.

That business is doing better-than-expected. ProSiebenSat.1 reported preliminary results which showed a bounce back in advertising revenues in the fourth quarter of last year. The group recorded 2020 revenue of around $4.9 billion (€4.04 billion) and operating profit of around $850 million (€700 million).

ProSiebenSat.1 CEO Rainer Beaujean said he expected COVID-19 measures in Germany — the country recently extended its coronavirus lockdown to mid-February — would hit the advertising business in the first quarter, but that he expects a significant improvement in the entertainment segment in the second quarter.

The company will publish full 2020 results and its financial outlook for 2021 on March 4.

Correction: An earlier version of this story incorrectly stated Mediaset's direct stake in ProSiebenSat.1, which is now 12.38 percent.