ROME – Italian broadcast giant Mediaset said Tuesday that it earned a profit of €43.1 million ($51.7 million) on revenue of just under €2 billion ($2.4 billion) in the first half of the year, both much lower than a year ago as the company struggles with falling demand for TV advertising and rising expenses in key areas.
Mediaset, founded and controlled by billionaire former Prime Minister Silvio Berlusconi, saw profits dramatically contract from €162.8 million in the year-ago period, a decline of 73.5 percent. Revenue fell by 11.3 percent to €2.0 billion.
Italy -- where the company owns three free-to-air television networks, a for-pay satellite television enterprise and the Medusa film production and content house – remained far and away Mediaset’s largest market. Breaking out results for the Italian market, revenue fell 10.9 percent to 1.5 billion ($1.8 billion) as the company posted a 7.6 percent drop in operating expenses.
Earlier, the company had said that ad sales were down by at least 10 percent amid Italy's economic mailaise.
Despite the lower revenue, Mediaset said it continues to be the leader in national primetime TV viewership and in the key 15-to-64 demographic. But even in those categories, Mediaset is facing stiff competition from Sky Italia, Italy’s satellite TV provider controlled by Rupert Murdoch’s News Corp., and from Italian state broadcaster RAI.
Mediaset predicted that results would be soft going forward as the economic situation in Italy and in Spain -- Mediaset’s biggest foreign market -- is unlikely to recover in the coming months. But it pointed to last year’s restructuring plan to keep costs under control, predicting further cost reductions going forward.
The results were released after the stock market close on Tuesday. The company's shares lost 0.6 percent to close at €1.42 ($1.71). Mediaset stock is down 33.1 percent so far this year and by about 50 percent over the last 12 months.
Despite the falling revenue, Mediaset it will continue to spend money on developing new content, with around €1.5 billion ($1.9 billion) earmarked for project development this year.