Mediaset, Sky Italia deal “good news” for both

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The agreement between Sky Italia and Mediaset, where a batch of Mediaset’s premium channels (5 cinema and 4 series/entertainment) will shortly be carried on Sky Italia’s satellite service, is seemingly good for both organisations.

A bank reports: “While complex, the deal could have a similar effect as an outright sale of the pay-TV platform (a deal which Mediaset previously attempted with Vivendi). The deal comprises various elements, with a key point being that Mediaset will (from mid-2018) provide to the Sky satellite platform its Premium series and movie channels. These will be included in the main Sky Italia content bundles and Mediaset will be paid affiliate fees for their distribution. Meanwhile, Sky Italia will launch on DTT, using Mediaset’s technical services and platform. Mediaset has spare DTT capacity today so, given compression, there should be no reduction in the number of channels, even after spectrum reallocation in 2022,” according to equity analysts at Berenberg Bank.

“Additionally, Mediaset has an option to sell outright to Sky a ‘newco’ that has been created to hold these DTT platform services. The option is exerciseable in November or December 2018, once the Serie A auction result is known. Assuming Mediaset does not secure Serie A football rights – management has been clear that it will not pay a price on which it cannot at least break even – and with the option exercised, Mediaset will have a purely editorial role in relation to its Premium channels, since it would outsource all other services to Newco,” adds the bank’s report.

Sky is to pay Mediaset around €60-€70 million annually for access to the channels.

Mediaset’s Premium channels has long been seen as a major drain on Group profitability, and has been expected to be sold, closed or scaled back. Vivendi has frequently been seen as a potential buyer of Mediaset’s premium assets, which now is ruled out. The Sky Italia agreement delivers a useful revenue boost to the Mediaset parent company.

The Mediaset + Sky Italia deal is seen as being good news for Eutelsat, which currently does not carry the Mediaset premium channels. The consensus is that Sky Italia will end up carrying up to 17 Mediaset channels, worth at least an extra transponder upon Eutelsat (assuming Sky itself has no under-utilised transponder capacity).


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