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Mediaset pays big for studio content

Silvio signs $1.1 billion Hollywood deal

Mediaset has ponied up a whopping e800 million ($1.1 billion) to secure rights to Warner Bros. and Universal movies and TV shows.

The two four-year volume deals mark Silvio Berlusconi’s latest move as he attempts to transform his media empire into a content provider following its $3.6 billion acquisition of Endemol.

Warner and U confirmed that they have signed new output pacts with Mediaset, disclosed Tuesday as the Italo broadcaster unveiled its first-half results, but neither studio would comment on the terms of its deal.

Berlusconi’s three-channel network reportedly paid Warner Bros. $608 million, while $497 million went to Universal for all Italian TV and new-media rights — including pay TV — to a massive amount of product, including a vast portion of the studios’ libraries in addition to current productions.

Typically, terrestrial and pay TV deals have been locked up by separate parties in Italy. The all-rights deals mean that Mediaset could now resell pay TV rights to, say, the “Harry Potter” franchise, to Rupert Murdoch’s satcaster Sky Italia, which is Italy’s sole pay TV operation.

The network run by Berlusconi’s son, Piersilvio Berlusconi, bought and resold some Serie-A Italo soccer rights to Sky Italia earlier this year.

In recent interviews, Piersilvio Berlusconi has repeatedly underlined that due to a decline in the advertising market, the company intends to generate more revenue as a content provider.

Indeed, Mediaset’s Italian advertising intake in the first half was down 3.4% from the same period last year. But those losses were offset by boosted profits at Mediaset’s Spanish TV unit, Telecinco. Based on an uptick in the past two months, Mediaset said it sees advertising revenues for the full year in line with those of 2006.

In the first half, Mediaset’s net profit was up 2.5% on last year to $471.12 million on revenue up 4.2% to $2.88 billion.

In May, Mediaset led the consortium that in May purchased a 75% controlling stake in Endemol, along with John de Mol and Goldman Sachs.

In July, Mediaset absorbed its sister company Medusa, Italy’s top film producer and distributor.

Calls to Mediaset for comment were not returned late Tuesday.

(Diane Garrett in Hollywood contributed to this report.)

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