Silvio Berlusconi's Mediaset Sells Remaining Stake in Reality TV Producer Endemol for $94 Million

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A debt restructuring had diluted the stake of the Italian broadcaster, which has been affected by increased competition from Sky Italia, a pay TV unit of Rupert Murdoch's News Corp.

ROME -- Italian broadcast giant Mediaset said Tuesday it has sold its remaining stake in troubled reality television producer Endemol for about €72 million ($94 million), formally ending its relationship with the company it considered taking over completely as recently as six months ago.

STORY: Mediaset to Bid on Troubled Reality TV Production Company Endemol

Mediaset, controlled by former Italian Prime Minister Silvio Berlusconi, made the move in the wake of a dramatic $2.6 billion restructuring plan that left Mediaset -- once Endemol’s main shareholder -- with just 6 percent of the company’s debt as control shifted to private-equity companies including Apollo Global Management and Cyrte Investments.

Mediaset took a one-third stake in Endemol -- the company that created reality TV hits Big Brother, Deal or No Deal and Extreme Makeover: Home Edition -- five years ago in a deal heralded at the time as having the potential to reshape the European television sector. That level of influence never materialized, and the company soon began running into financial difficulties, reporting in September that it was $3.6 billion in debt.

Berlusconi stepped down as Italian prime minister in November, and one of his first moves in his return to active participation in Mediaset’s day-to-day activities was to announce that he was mulling a takeover bid for the part of Endemol it did not already own. Eventually, Mediaset declined to invest more in the company, which was forced to turn to private-equity companies for a cash infusion.

That reduced Mediaset’s stake in Endemol to the 6 percent debt holding it announced it sold off Tuesday.

STORY: Mediaset to Cut Shareholder Dividend

In a conference call with reporters, Mediaset officials said the deal would remove a “weight” from the company’s balance sheet at a time when that is badly needed. Just last month, Mediaset said reduced cash flow from advertising and increased competition from News Corp. subsidiary Sky Italia forced it to cut its dividend for the first time. Also in March, the company said profits were a third lower than in the year-ago period.

Mediaset shares responded positively to the move, surging more than 5 percent in heavy trading Tuesday, though they remained about 50 percent lower than at this point in 2011.

Endemol said it anticipated continuing its content relationship with Mediaset in the future, though indications were that the flagship Big Brother franchise, which has run on Mediaset for 12 seasons, would be halted in Italy for at least a year.