The market speaks on Mediaset

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As reported yesterday, Mediaset is planning to merge its Italian and Spanish broadcasting operations into a new Dutch holding company: MediaforEurope (MFE), which will also be home for the 9.6 per cent stake in ProSieben/Sat.1 recently acquired by Mediaset.

Mediaset is controlled by the Berlusconi family through its Fininvest SpA holding company.

The core advantage is claimed that there will be cost efficiencies of about €100 million – €110 million by 2023, which is 2 per cent of the new company’s market capitalisation.

However, the real reason may be that Dutch law permits long-standing shareholders to have special voting rights. After two years in the Netherlands the shareholders would be entitled to five-times the voting rights of ‘ordinary’ shareholders. After a three-year period those extra voting rights extend to 10-fold.

While a final shareholder decision will be made in September there’s many a potential slip ahead. As analysts from Deutsche Bank pointed out: Vivendi will have a 7.7 per cent holding and MFE needs a 90 percent shareholder agreement for the deal, and Vivendi could gather objectors to the move.

“Mediaset Spain CEO has said at its Q1 results (last month) that he did not see material cross border savings, but is now stating they do exist. Pro7 CEO yesterday reported in Handlesblatt saying that today cross-border mergers do not make sense and RTL has also said cross border synergies are minimal. So expect scepticism over this,” argues Deutsche Bank.

Berenberg Bank described the plan as “Bold” and says it believes “the combination of the two companies, and the resulting synergies, will create a stronger business that can benefit shareholders and consumers in the medium to long term.”  The bank’s report adds: “As TV consumption shifts online, and monetisation follows, every broadcaster globally must invest in streaming and advertising technology. There is significant overlap here in terms of investment and in know-how: an overlap that was not there in the past when broadcasters relied on linear distribution.”


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