Mediaset to Cut Shareholder Dividend

Johannes Eisele/AFP/Getty Images
Silvio Berlusconi

Falling ad sales have taken a toll on the Italian broadcast giant's bottom line.

ROME – Italian broadcast giant Mediaset said it would cut its shareholder dividend, as falling ad sales took a heavy toll on the company’s bottom line.

Mediaset, which is controlled by former Prime Minister Silvio Berlusconi, is suffering along with the entire advertising market, as the country’s economic malaise continues. Media watchdog groups reported Wednesday that the country’s overall advertising market in 2011 was 19 percent smaller than in 2010, the third straight year the sector contracted.

That 19 percent reduction was less than Mediaset’s 36 percent net income drop in 2011, released Tuesday. The company said it took in €225 million ($293 million) on sales of €4.25 billion ($5.53 billion), which was down a little more than 1 percent compared to the previous year.

Based on Tuesday’s weak results, the company said Wednesday it would immediately cut its dividend to €0.10 ($0.13) per share compared to €0.35 ($0.46) previously. The company’s board must still vote to adopt the change.

Berlusconi, who stepped down as prime minister Nov. 12, said he would dedicate the bulk of his energy to the Mediaset empire he founded once out of politics, but that has so far failed to help the company’s revenue stream.

Mediaset runs three national television networks, a major cinema production and distribution company, the country’s largest ad buyer, and significant print media. The company’s largest foreign holding is TeleCinco in Spain.

Mediaset is hurt more by a drop in ad sales than its rivals, which have other significant sources of revenue: Italian state broadcaster RAI is supported by a “canone” fee television owners in Italy pay, and News Corp. subsidiary, Sky-Italia, a satellite broadcaster, gets revenue from subscription fees.

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