MILAN (Reuters) - Italian private broadcaster Mediaset (MS.MI) would have broken even last year had it not been for the failed sale of its pay-TV unit Premium to France’s Vivendi (VIV.PA), the group’s CEO Pier Silvio Berlusconi said on Wednesday.
The two companies have been feuding since July when Vivendi, in an unexpected U-turn, pulled out of a 800 million euro ($857 million) contract that would have given it full control of Premium, claiming the unit’s business plan was unrealistic.
The spat was aggravated by a swift stake-building by Vivendi in December which made it the second-largest shareholder in the Milan-based TV group after the family of former prime minister Silvio Berlusconi.
“For us it’s a bad story, but now it’s in the past,” Mediaset’s Chief Financial Officer Marco Giordani told a post-results analyst call.
But the soured deal hit the group’s 2016 accounts by 341.3 million euros, well above the 100 million euros initially estimated by its CEO at the end of March.
The change of heart by the French media group resulted in “a series of extraordinary one-off charges” amounting to 269.3 million euros at the operating profit level, bogged down further by an additional loss of 72 million euros, the Milan-based group said in a statement.
Mediaset reported an operating loss of 189.2 million euros in 2016, compared with an operating profit of 231.4 million euros in 2015.
Premium’s revenues however rose 11 percent to 620 million euros in 2016, and the group expects sales to grow by a further 10-20 million euros by the end of this year.
The broadcaster has rethought the strategy for the unit after the sale to Vivendi fell through and aims to make Premium’s channels and content, currently exclusive to its stable two million subscribers, available to other market players.
The pay-TV unit is expected to contribute almost half of the company’s ambitious target of a 468-million-euro improvement in its Italian operating profit by 2020.
Giordani said on Wednesday that Vivendi, which now holds a 28.8 percent stake in Mediaset, does have a relevant influence in the broadcaster’s activities, in line with a ruling by an Italian regulator on Tuesday.
But Giordani did not say whether the decision by the watchdog and its consequent request to Vivendi to cut its stake in either Mediaset or phone incumbent Telecom Italia (TLIT.MI) would favor the negotiation of a deal between the two groups.
Pier Silvio Berlusconi later added that a solution to the dispute was up to Vivendi and that his group would only say at a later stage how it would act after the decision by the Italian communications watchdog.
Reporting by Giulia Segreti and Giancarlo Navach; Editing by Adrian Croft