Silvio Berlusconi's Mediaset Posts First-Ever Full-Year Loss

Silvio Berlusconi - Possible Return to Politics and Legal Charges

Disgraced former Italian Prime Minister Silvio Berlusconi is apparently planning a return to politics. The 75-year-old media billionaire will “probably” run for the prime minister post again in 2013, the head of the political party Berlusconi founded said this week, Berlusconi continues to face several open lawsuits, alleging tax evasion, corruption and paying an underage girl for sex.

UPDATED: The company also said it would no longer pay a dividend. It blamed the poor results on weak economies in Italy and Spain.

ROME – Italy’s Mediaset ended last year €235.4 million ($305.6 million) in the red, the first time the company ever lost money over a full year since it went public in 1996. The company also scraped its quarterly dividend for the first time ever.

In 2011, the company turned a profit of €225 million ($293 million).

The Milan-based television and cinema giant controlled by three-time Italian Prime Minister Silvio Berlusconi, has struggled in recent quarters with falling ad revenue amid the European economic crisis, especially in Italy and Spain, the company’s main markets.

“The results were heavily effected by the international economic crisis and the recessions in Italy and Spain,” the company said, nothing that the ad markets in those two countries had contracted by €1.6 billon ($2.1 billion) in 2012 compared to 2011.

Overall, the company’s revenue in 2012 was €3.72 billion ($4.84 billion), around 12 lower than in 2011.

But company officials said the results contained some positive news, noting that without one-time write offs, the company would have turned a €72.4 million ($94.1 million) profit last year. They also noted that despite the eroding ad markets, Mediaset has managed to maintain its overall television market share and in some cases grow their market share.

The company on Tuesday announced plans to cut costs by an average of €450 million ($585 million) per year within three years.

Mediaset is made up of three national television networks in Italy and one in Spain, the Medusa cinema production and distribution house, and various print media. In recent months, the company has tried to unload non-core assets, including its Medusa Home Video subsidiary, which it sold to Warner Bros-Italia last November. The company is also reported to be shopping around its ownership of The Space Cinema exhibitor chain, which it co-owns with clothing maker Benetton. Mediaset’s share of the chain is estimated to be worth at least €120 million ($156 million).

Mediaset’s share price rebounded from all-time lows around €1.15 ($1.50) reached in December, but they have still lost enough value to send Berlusconi tumbling down Forbes’ list of the world’s billionaires. The shares closed trading Tuesday at €1.55 ($2.02).

Before the results were released, Milan investment banking house Mediobanca reaffirmed its “neutral” rating on the stock, setting a target price of €1.45 ($1.89) on the shares. But there is no consensus on the stock’s outlook: within the last month, AlphaValue issued a “buy” rating on Mediaset with a target price of €2.10 ($2.73), while Liberum Capital issued a “sell” rating, predicting the shares would fall as low as €0.50 ($0.67).

Tuesday’s results come as Berlusconi, the company’s founder, is engaged in a political chess match that will determine who will be Italy’s next prime minister. Berlusconi, former minister Pier Luigi Bersani, and comedian and activist Beppe Grillo all earned big blocs of voted in Italy’s Senate, assuring none can achieve a majority without an alliance with one of the others.

Berlusconi is also engaged in a series of legal battles. After being sentenced to four years in prison for a tax fraud case connected to Mediaset last year, and a further year behind bars in a wire tap case earlier this year, Berlusconi is now facing charges of paying an under-age girl for sex and abuse of power.