Mediaset has bounced back into the black in the first quarter following its €294.5 million loss last year, which the company blamed squarely on “the turbulence” caused by French media giant Vivendi reneging on its deal with the Italian broadcaster.
Mediaset’s success in clawing its way back to profit is due to its campaign of cost-cutting. Operating costs were down to €537.7 million (US$584.4 million) from €549.8 million last year, giving the company a positive EBIT of €76.6 million and net profit of €15.9 million, compared with a net loss of €18.2 million for the same period last year.
Revenues for the quarter were €889.3 million, down €22.7 million on the same period last year, driven lower by the performance of Mediaset Italy, which posted sales of €649.3 million, down from €682 million. Mediaset Spain saw its revenues rise by €9.7 million to €240.4 million.
Mediaset said it expects advertising sales to remain positive for the rest of this year.
Mediaset also plans to put an aggressive share repurchase programme before its annual shareholders’ meeting, giving directors the power to buy up to a maximum of 10% of the company’s share capital. Mediaset currently owns 3.795% of its capital.
Mediaset’s biggest shareholder Fininvest currently holds 39.8% of the company’s voting rights, while Vivendi holds 29.9% of the voting rights.
While strengthening the Berlusconi family’s control, Mediaset’s buyback programme will have the effect of strengthening the voting power of both Fininvest and Vivendi, potentially complicating the regulatory battle over the latter’s stake.
Italian regulator AGCOM has ruled that Vivendi cannot hold stakes simultaneously in Telecom Italia and Mediaset. Vivendi’s recent moves to fortify its position on the Telecom Italia board indicate that, if forced to choose, it will retain its stake in the telco. However, the French media group has also said it will challenge the ruling.