Berlusconi's family affair

Mediaset gains control of Medusa

Italian broadcaster Mediaset has acquired complete ownership of film distributor Medusa in a deal worth €152 million ($205 million) plus a percentage on Medusa films in distribution during the next year.

Tuesday's move was not conducted on the open market because both companies are controlled by media tycoon and former Prime Minister Silvio Berlusconi — directly and through his holding company, Fininvest.

The companies reported that Fininvest owns 36% of Mediaset shares and all of Medusa's stock. It will transfer its ownership of Medusa to Mediaset for the cash payment and up to an additional €18 million ($24 million), a figure that will be based on the performance of Medusa films during the next 12 months.

Despite the in-house nature of the deal, it is significant because it further strengthens Mediaset's role as a content producer in the wake of the company's lead role in the consortium that purchased 75% of Dutch reality television producer Endemol in May. This latest acquisition marks the company's first significant move from the small screen and into cinemas.

The deal will result in a management shake-up at Medusa, where the board of directors has stepped down as a condition of the decision. Medusa's new chairman will be Carlo Rossella, who resigned as editor of Mediaset news program "TG5" to take over as Medusa's chairman. Giampaolo Letta, a veteran film industry player, will continue as Medusa's deputy chairman and managing director.

The acquisition is expected to add to Mediaset's profit at a time when ad sales have been eroding. The news was announced after the close of stock trading in Milan, but Mediaset shares — which edged 0.5% higher in light trading on the day — trended upward in after-hours trading.

Barring any regulatory problems, the deal will become final July 16.