Prisa profits drop despite revenue growth

Media group says it's able to weather ad crisis

MADRID -- Spain's leading media group, Prisa, on Thursday reported 83 million euros ($105 million) in net profit for 2008, a 56.8% drop from the previous year, despite an 8.3% growth in revenue and a modest 4.9% dip in advertising revenue.

Prisa posted 1 billion euros ($1.2 billion) in ad revenue, 27% of the group's total sales of 4 billion euros ($5 billion). An additional 1 billion euros ($1.2 billion) came from subscribers to its products.

Including the extraordinary costs of acquiring the totality of film and TV company Sogecable, Prisa announced a 5 billion euro ($6.3 billion) debt for the end of 2008.

The group -- which owns Spain's widest circulating daily, El Pais, and textbook publisher Santillana and the main pay TV platform Digital Plus as well as free-to-air channel Cuatro -- said it was able to weather the advertising investment crisis plaguing the industry better than other media thanks to its "diversification of clients the Group counts on, as well as its positioning in national, local and international advertising."

Sogecable, the group's film and TV branch, hit a record 1.87 billion euros ($2.3 billion) in revenue for 2008, with its Cuatro bolstering ad revenue 13.7% to 292 million euros ($397 million) and snagging 8.6% of the audience three years after its launch. Digital Plus, which boasts more than 2 million subscribers, saw its ad sales drop 8.1% to 26.2 million euros ($33.2 million).

The group's Internet business Prisacom continued its growth, with 19.35 million euros ($24.6 million) in revenues, a 22.4% jump over 2007, while it decided to sell its stake in local broadcasting chain Localia.

In the past year, Prisa announced it did not have to sell Digital Plus in order to pay a 2 billion euro ($2.5 billion) debt due in March after it received bank support for the repayment. Talks between Prisa and potential buyers Vivendi and Telefonica reportedly stalled after failing to agree on a price.

Prisa has said selling Digital Plus is part of a broad cost-cutting strategy.

Also late Thursday, Prisa Secretary General Miguel Satrustegui presented his resignation to the administrative board, stepping down as well as head of the juridical counseling department. Satrustegui will be replaced by Fernando Martinez as Secretary General of Prisa Group.

Martinez has come up through the ranks within Sogecable, most recently serving as director general of the financial branch since 2005. Inigo Dago will step in as Director of Juridical Counseling.