Italian broadcaster Mediaset has reported record losses of €294.5m ($313.9m) for 2016, blaming the collapse of its proposed deal with French media company Vivendi for the state of affairs.
In its financial results for the year ending December 31, Mediaset said it would have broken even if not for estimated liabilities of €341.3m resulting from the Vivendi saga. This contributed to an overall loss for Mediaset’s domestic operations of €380.1m, with only the strong performance of its Spanish operation, Mediaset España, which recorded a profit of €171m, dampening this figure.
Mediaset said that the “ongoing instability of the macroeconomic situation was radically impacted by the serious damage” caused to the group's Italian business by Vivendi's “contractual violations”.
In particular, there were a series of extraordinary one-off charges – resulting from commitments made following the signing of the contract with Vivendi and the necessary subsequent writedowns amounting to €269.3m at the EBIT level. To this item was also added unexpected liabilities related to the unforeseen continuance of the pay-television business, Mediaset Premium, in the fourth quarter of 2016.
Earlier this week, Vivendi said it was considering legal action after Italian communications authority AGCOM ordered it to cut its stake in either Mediaset or telecommunications firm Telecom Italia within a year.
Vivendi is the single biggest shareholder in Italy’s main telco, with 24 per cent, and has recently built up a 28.8-per-cent interest in Mediaset. Vivendi and Mediaset are currently engaged in a bitter dispute. Mediaset, one of the leading sports broadcasters in Italy, is seeking damages from Vivendi after it stepped away from an April 2016 agreement to take full control of Mediaset Premium.
Under the original deal, Vivendi was set to acquire 100 per cent of Mediaset Premium and exchange 3.5-per-cent stakes with Mediaset. Vivendi made a revised offer to sell a 3.5-per-cent stake in its business in exchange for a 20-per-cent shareholding in Mediaset Premium and a 3.5-per-cent stake in Mediaset, but this was rejected by Mediaset at the end of July.
In its results, Mediaset said net revenues amounted to €3.667bn, an increase on the €3.524.8bn recorded in 2015. In particular, revenues in Italy rose by 4.8 per cent compared with the €2.554.2bn during the previous year. There was a comparable increase in Spain, where the figure was €992m, compared to €971.9m in 2015.
Vivendi and Mediaset’s ongoing tussles come with Mediaset Premium set to contest rights tenders for domestic Serie A football and the Uefa Champions League, both of which are due to be held in the first half of this year.