Thumbs up for bid

Silvio sets sights on ProSiebenSat 1

ROME — The board of Silvio Berlusconi-controlled TV group Mediaset approved a potential bid for Teutonic broadcaster ProSiebenSat 1 on Tuesday, shortly before the Italo firm announced a disappointing 20% earnings drop to e369.1 million ($469 million) for the first nine months of 2006.

Despite the business slide, the cash-rich company made clear its intention to expand, through acquisition if necessary.

“We will evaluate this and all other types of investment to enlarge our business interests across Europe,” said Fedele Confalionieri, Mediaset chairman.

Mediaset was unable to discuss the timing or financing of a bid in a conference call with analysts, as it is bound by nondisclosure restrictions.

Germany’s biggest broadcast group, which is controlled by private equity funds headed by Haim Saban, operates free-to-air channels ProSieben, Sat.1, Kabel 1, N24 and 9Live and recently launched two pay TV outlets and a video-on-demand service and took a stake in German YouTube clone MyVideo.

Mediaset is overexposed to Italy’s slumping advertising market and hobbled by Italy’s slow switchover to digital TV, making expansion abroad a compelling move.

But Mediaset stressed it would not make a bid for ProSieben unless it could find operational synergies between its core Italian and Spanish broadcast businesses and that of the German broadcaster. “And it’s too preliminary to say if there will be synergies or not,” said Marco Giordani, Mediaset’s chief financial officer.

Bids have been invited for a 50.5% stake in ProSiebenSat 1, what some media observers estimate at a $6.3 billion pricetag. By law, the winning bidder would be required to make an offer for the remaining shares of the company.

Other potential ProSiebenSat 1 bidders are believed to include NBC Universal, U.S. equity firms Texas Pacific Group and Blackstone Group and the U.K.’s Apax Partners.

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