Advanced Television

Mediaset: Expectations still low

December 12, 2012

By Chris Forrester

Italy’s Berlusconi-backed commercial broadcasting network Mediaset is having an unexpectedly half-decent December in terms of advertising revenues, says a report from Berenberg Bank.  Revenues have been helped by a campaign from new low-cost cellular operator BIP which is screening its commercials only on the Mediaset channels.

However, senior analyst Sarah Simon says that this is the not end of the advertising downturn. “Management is keen to set expectations low for next year, and visibility is virtually non-existent, as is the case for the other European broadcasters. This being said, a “less bad” month is good news given that the level of decline has been more and more pronounced up until now.”

“While this news on December is welcome,” she adds, “the more interesting message from management actually concerned 2013. For whereas one might have expected management, in the current market context, to say that the priority for 2013 was on cost-cutting, this was not the case. Indeed, [Mediaset’s CFO] went so far as to say that this part of operations was now being taken care of, in terms of implementation, by middle management, with senior management being more focused now on gaining advertising market share.”

“The CFO noted that the company has done well historically in selling the main channels (Canale 5, Italia 1, Rete 4), but that the thematic channels are not yielding what they should. It was noted that these channels are in some cases knocking on La7’s door (in terms of audience share), yet yielding far less in terms of advertising. We note that at the 9 month stage, Mediaset’s DTT channels took a 7.1 per cent 24-hour share of the commercial target, whereas La7 stands at around 3.5 per cent. La7 generated €140 million in revenues in 2011, and as at the 9 month 2012 stage was up 7.2 per cent yoy, according to Nielsen. Meanwhile, on our estimates, Mediaset’s total net DTT channel advertising revenues will be €160 million – €180 million this year. This suggests to us that there could be €80 million – €100 million in potential revenue upside from better selling of the thematic channels,” said the bank’s report.

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