Euro-FTA broadcasters: Undervalued or desperate?

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A timely note from media analysts at Deutsche Bank questioned moves by some commercial broadcasters and, in particular, Mediaset’s purchase of a 9.6 per cent “friendly” stake in Germany’s ProSiebenSat1.

The public rationale from Mediaset said: “It is in this spirit of collaboration and shared vision that Mediaset, the leader in Italy and Spain, has decided to invest in ProSiebenSat.1. An investment that, we are sure, will create tangible value for both groups”.

Deutsche Bank is far from convinced.  “We are in a quandary,” said the bank’s note. “The stated rationale is about collaboration and cross-border synergies. Yet, Mediaset already participates in three separate ProSieben-led joint-ventures covering all of the key synergistic areas of cross-border marketing campaigns, shared production spend and shared R&D/ technology. It could have invested directly into these, but has not.”

The bank reminds investors that Mediaset does not get a seat on the Pro7/Sat1 Board.

“So, what is behind the move?” asked the bank.  “In our view, this is motivated by a desire by Mediaset and/or its parent, Fininvest, to refocus ProSieben away from its current partnership focus on Discovery & General Atlantic and more towards Mediaset.”

The end objective is likely to be a full merger of Mediaset and Pro7 under a new CEO, said the bank. Mediaset will need to own more than 9.6 per cent equity (9.9 per cent voting rights) to achieve this, so could be a buyer on any ProSieben stock weakness.


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