Mediaset pay TV service shines

Revenue rises 56.5% to $759 million

MILAN — Mediaset, the broadcast group owned by Italo Prime Minister Silvio Berlusconi, forecast on Tuesday higher net income this year as well as stronger ad revenues. But analysts pointed to the key progress in its pay TV operation as the real star of its latest financial results.

Mediaset overall pay TV revs sky-rocketed 56.5% to Euros 561 million ($759 million) in 2009. The pay TV operations lost $85.8 million last year.

Italo media watcher Alessandro Bai-Badino of Deutsche Bank said: “The results show that the pay TV operation will definitely break-even in 2010. And given that it only began in 2005, Mediaset has to be pretty pleased.”

Bai-Badino said the latest available figures showed the positive trend of increasing subscriptions was continuing. “We know that by the end of March the number of Mediaset pay TV clients will have risen to 4.2 million from 3.725 million in December 2009,” he said.

And despite the five-year haul to profitability for Mediaset’s pay TV operation he said the company’s debt levels were well under control. “You’re talking about debt levels of less that one times EBIT. That’s not bad. This is a well-run company in pretty good shape.”

Given Mediaset’s success with its pay TV top-up cards model, Bai Badino said it “certainly wasn’t beyond the bounds of possibility” that a similar system might be introduced elsewhere, “possibly in Spain.”

Mediaset launched its pay TV package, Mediaset Premium, in 2005, as a direct challenge to News Corp.’s satcaster Sky Italia.