On December 19th Advanced-Television reported on a merger scheme between Italy’s Mediaset and its 43 per cent-owned Spanish Mediaset España operation. In particular the plan, if effected, would see merged Mediaset’s Italian ‘Premium’ business which operates via DTT and OTT, and its Spanish Digital + division which operates via satellite, cable and IPTV.
Mediaset said the joint project will “examine international development potential, possible synergies, the expansion of OTT services, as well as the eventual involvement of industrial and/or financial partners in the new company”.
However, the news did not wholly impress the analysts. One, Sarah Simon, of bankers Berenberg, said: “Looking at each of these in turn, it is not obvious that a new holding company is any more likely to succeed internationally than the businesses separately. We do not see this as a key focus. Synergies, on the other hand, might be achieved, particularly in the field of technology development, although in our view a greater benefit would be derived were the 22 per cent stake in Digital+ to be expanded to a position of control. Perhaps Telefónica and/or Prisa could be persuaded to inject their holdings in Digital+ into the new company in return for a shareholding in the combined entity? Certainly Digital+ could do with an infusion of innovation: the platform has obviously not been helped by the economic climate, but we also believe that it has fallen behind the European peers in terms of introducing new services, eg OTT.”
She added that the final point mentioned by the companies – the involvement of industrial and/or financial partners – is the real appeal of this project. “However, at least from a market perspective, with Mediaset having ceased to report on the profitability of Mediaset Premium – management has said on a number of occasions that it is now in the black – we believe that the consensus view is that the platform is worth zero at best, or possibly something negative. The perception is still that this is a loss making business. Meanwhile, we do not think Mediaset España receives much value for Digital+, given that it is loss-making at the associate level. This reflects goodwill amortisation, however: the underlying business is profitable. Were third parties to be brought in, then a value would be placed on these pay-TV assets: this looks to us like pure upside.”