Third quarter results underscore Italian ad weakness

MILAN — Mediaset, the broadcaster controlled by outgoing Italian prime minister Silvio Berlusconi, posted a 31% drop in nine-month operating profit Tuesday as the media mogul-turned-pol promised to resign from government.

The third-quarter results were in line with analyst predictions — but underscored that advertising continues to be weak in Italy and Spain, where Mediaset owns Telecinco and Cuatro.

Earnings before interest and tax dropped to €368.2 million ($502 million) from $740 million during the first nine months of 2010.

Nine-month revenues were fractionally lower at $4.2 billion as ad sales on Mediaset’s Italian free-to-air channels fell 2.9%.

Net profit stood at $230.5 million in line with forecasts.

Mediaset’s shares fell 2.9% on Tuesday, as Berlusconi lost his majority in parliament and later said he would step down.

Mediaset repeated a forecast of lower 2011 net income.

“Italy and Spain continue to be among the most exposed economic areas and there is therefore little prospect of a significant change in the trend in the advertising market compared with the first nine months,” it said in the statement.

Deutsche Bank analyst Alessandro Bai-Badino told Variety the results measured up to market expectations. “But they show that advertising pressures and costs are the key issues facing the company,” he said.

Another issue is the upcoming loss of Berlusconi’s pervasive political influence over Italy’s media landscape.

Meanwhile, chief financial officer Marco Giordani confirmed during a conference call that Mediaset will bid for control of Dutch TV production giant Endemol, which it now owns a third of, pitting it against Time Warner, which has made a non-binding $1.4 billion offer for the heavily indebted company.

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