Mediaset Mulls Merging Italo And Spanish Pay-TV Ops

Mediaset's possible merger of its pay-TV ops in Italy and Spain comes as Berlusconi says he will not run at Italy's next elections

Mediaset Mulls Merging Italo And Spanish

ROME –  Silvio Berlusconi’s Mediaset is mulling merging its pay-tv operations in its core Italian and Spanish markets, the top Italian commercial broadcaster announced on Wednesday.

In a statement Mediaset, which is run by Piersilvio Berlusconi (pictured) said the plan would entail creating a new company which would hold 100 percent of its Italian pay-tv business, Mediaset Premium, and the 22 percent stake it holds in Spain’s Digital Plus. It may also seek an industrial and financial partnership.

“The evaluation will examine international development potential, possible synergies, the expansion of over-the-top services, as well as the eventual involvement of industrial and/or financial partners in the newco,” the statement said.

News of the possible merger, which could mark the start of a new pan-European pay-TV powerhouse, comes just as Berlusconi senior, a three-time Italo prime minister, announced he will not run at Italy’s next elections after being recently ousted from parliament due to Mediaset-related legal woes.

The announcement follows speculation in Italian financial daily Il Sole 24 Ore, that Mediaset and Spanish telco Telefónica would jointly buy 56 percent of the pay-TV platform to gain full 100 percent ownership.

Mediaset and the Spanish telco currently hold 44 percent of Digital Plus shares. That is because, on top of Mediaset’s 22 percent stake Telefonica also has a 22 percent portion of the Spanish pay box, which is Spain’s top pay-TV player with nearly two million subs.

According to Il Sole, Digital Plus owner Prisa would not accept an offer lower than Euros 900 million ($1.2 billion), a sum which Telefónica and Mediaset may now be willing to pay.

In Italy Mediaset Premium has over two million subs. The Italo pay-TV market is dominated by Rupert Murdoch’s Sky Italia service which has more than 4.7 million paying viewers.

Mediaset Premium revenues grew 7.3 percent during the first nine months of 2013 to Euros 410 million ($564 million), but the Italo digital paybox is still not profitable. Digital Plus instead pulled in nearly Euros 870 million during the same period, scoring double digit growth and has long been a profitable operation. Digital Plus also operates leading online video-on-demand  platform, Yomvi.