Mediaset Shares on the Rise on Rumors of Middle Eastern Buyers

Silvio Berlusconi - Political Plans and Legal Charges
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Italian media tycoon Silvio Berlusconi has often been seen as the teflon media mogul - always facing legal and other charges, but never really facing consequences. In Oct. 2012 though, a court sentenced the head of media group Mediaset, whose stock has been dropping amid weak ad trends, to four years in prison in a tax evasion case - marking the first time he is facing time behind bars. And just before Christmas, prosecutors also called for a prison sentence of at least one year for Berlusconi on charges of publishing information about a political rival that was obtained illegally. The three-time prime minister, meanwhile, announced he would run for a fourth term in early 2013 after having left political office in late 2011.

Shares in the Silvio Berlusconi-controlled giant are up 15 percent over the last two sessions, the biggest two-day gain since 2008.

ROME – Mediaset shares closed with their biggest two-day gains in four years on speculation that a group of Middle East investors are acquiring shares with an eye toward becoming the company’s second leading shareholder after founder and Italian mogul Silvio Berlusconi.

Shares closed trading Friday at €1.61 ($1.98), up 14.9 percent since Wednesday’s close. Despite the dramatic increase, the shares are still down 26 percent since the start of the year, and only 11 trading days removed from a 52-week low of €1.17 ($1.44).

Trading in Mediaset shares had been unusually heavy earlier in the week, and reports circulated starting Wednesday that an unnamed group of Middle Eastern investors were discretely gobbling up shares to take a large minority stake in the company and perhaps earn one or two seats on the Mediaset board.

“It’s always hard to tell where this kind of speculation comes from, but it’s moving the share price and it’s very possible that will continue next week,” said Olivero Fiorini, an analyst with Milan’s ABS Securities.

Mediaset shares have been beaten down in recent months due to declining revenue from advertising due to the country’s economic malaise -- first half profits reported in July were down 74 percent from the previous year -- as well as speculation that Berlusconi has been distracted from the operations of the media giant he founded as he mulls another political run in 2013, in hopes of becoming prime minister again.

Mediaset is Italy’s largest media company, with three television networks in Italy and one in Spain, a large cinema production and distribution division, holdings in print media, and the country’s biggest advertising media buyer.