MILAN — Profits at Italy’s commercial TV group Mediaset fell a sharper-than-expected 41% to €248.4 million ($216.8 million) in large part due to a writedown of its 2.28% stake in struggling German media group Kirch.
“We decided to take a charge of $150 million, equal to 80% of the stake we hold in Kirch Media, as a prudential measure, even if Kirch has not published its financial results yet,” Mediaset chairman Fedele Confalonieri told analysts and reporters at a meeting in Milan on Wednesday. “The Kirch Group still has many valuable assets and is not finished, but we have no intention of putting any more money into it.”
“However we do not exclude anything … we are ready to listen to what the creditor banks propose to us,” Confalonieri said, adding that any early statement about the rescue of the German media empire was premature and could hit Mediaset stock, listed on the Milan stock market.
Pretax profit down
Mediaset chief financial officer Marco Giordani said pretax profit was $364.8 million in 2001, down from $565.6 million a year earlier and earnings before interest, taxation, depreciation and amortization (EBITDA) fell 2.7% to $1.153 billion.
Revenues slipped by 0.5% to $2.052 billion from $2.062 billion not because of advertising sales (which, despite a generally gloomy European market, rose by 0.5% to $2.115 billion) but because of the consolidation of the Epsilon group, Mediaset’s joint venture with Kirch which was terminated in 2001.
Italo Prime Minister and media mogul Silvio Berlusconi’s son and Mediaset vice chairman Pier Silvio Berlusconi said that despite the economic slowdown, 2001 was a great year for the TV group. “Our flagship channel Canale5 achieved the highest share in the history of commercial television and for the first time was the leading channel at primetime with an average 24.1% (1.6%) primetime share, beating RAI1,” he said.
Pier Silvio Berlusconi repeated a pledge “to cut television operating costs in 2002, continuing to increase our channels’ TV share and quality of the programming.”
Cuts to mount
Mediaset will cut $52 million from program costs and $87 million from TV rights. “We stopped signing output deals with the U.S. producers, and we started buying products only if we know when and where to program them, according to channel requirement,” Pier Silvio Berlusconi said.
Long-running, low-budget serials will be bought rather than miniseries, which will become only special events.
Produced hours will decrease by 20%, and primetime fiction budget will be cut by 24% with a extended use of reruns or re-editing of programs from the Mediaset library, he said.