Private equity in line for ProSieben

Mediaset eliminated from auction for German b'caster

Private-equity groups look likely to win the bidding for Haim Saban's German broadcaster ProSiebenSat.1 after Italy's Mediaset was eliminated from the auction.

The Mediaset news and the release of disappointing third-quarter figures Thursday hurt ProSieben's shares, which fell 5.2% to €22.81 ($29.28).

Revenue at the Munich-based group increased 3.7% in the third quarter to €431.3 million ($551 million), but its profit tumbled to just €13.1 million ($16.7 million), compared with €44.7 million a year ago.

ProSiebenSat.1 CEO Guillaume de Posch blamed the drop on a decision to pay off a €200 million loan earlier than expected. But he insisted that ProSieben had "the wind at its back" thanks to a rebound in the German advertising market and the launch of several new-media ventures, including video-on-demand service Maxdome and two digital pay TV channels.

De Posch said sales growth at ProSieben will outpace the overall market, forecasting 5%-6% revenue growth this year, compared with an expected 2%-3% for the industry.

Saban and company have reportedly received about 10 nonbinding bids. Sources said they include ones from Goldman Sachs' investment arm and private-equity group Permira.

Sources close to the negotiations confirmed media reports that Mediaset has been taken off the list of potential ProSieben bidders because of "political concerns."

German politicians of all stripes have come out against a takeover of the country's largest commercial broadcaster by Mediaset, which is controlled by Italian billionaire and former Prime Minister Silvio Berlusconi.

The image of Berlusconi in the German media is that of a corrupt and power-hungry populist. Many Germans have not forgotten his comments in 2003, when he compared a German legislator to a concentration camp commandant.

Mediaset confirmed Thursday that it has not been accepted into the next round of bidding for ProSieben.

ProSieben and two Saban spokeswomen declined comment Thursday, but sources said some of the bids were for more than €30 ($38) a share. That compares with the €23.37 ($30) a share German publisher Axel Springer offered this year in a deal that failed.

Saban and his private-equity investors, which include Bain Capital, Providence Equity Partners, Thomas H. Lee and Hellman & Friedman, hold 88% of ProSieben's voting shares. The price tag for full control of ProSieben is likely to top $6 billion.

Scott Roxborough reported from Cologne, Germany; Eric J. Lyman reported from Rome.