Mediaset fears internet challenge amid ad slump

Reuters News
Posted: May 18, 2012 3:52 PM
Mediaset fears internet challenge amid ad slump

MILAN (Reuters) - An executive at Mediaset said on Friday internet giants could challenge Italy's biggest commercial broadcaster's business model in coming years, while the advertising outlook remains grim.

Mediaset, controlled by ex-prime minister Silvio Berlusconi, is Italy's leading advertising seller but in the last few years its dominance has been eroded by pay-TV satellite competitor Sky Italia and the proliferation of new channels enabled by the switch to digital television.

"I'm afraid that the future is Internet connectivity. Five years ago Mediaset was concerned about the arrival of the Murdoch group (Sky Italia), today it fears Google, Apple and Facebook. I think the real problems will come from there in the next three years," Marco Paolini, Strategic Marketing Director for Mediaset, said at a conference.

In March Mediaset Chief executive Giuliano Adreani, signaled for the first time plans to expand its marginal online business through deals with global players. An accord is expected by the summer.

About 7-8 million television sets in Italy are estimated to be connected to the Internet in two or three years.

Paolini said Mediaset would have to rethink how it delivers content as advertisers cut spending during the recession and new channels on digital television prove to be not as attractive as hoped.

"We expect the advertising market will be very bad in 2012 and will remain as such in 2013, at the best", he said.

Shares in Mediaset hit their lowest since their 1996 listing earlier in May after the group, which also operates in crisis-hit Spain, delivered poor results and advertising guidance.

(Reporting By Claudia Cristoferi; Writing by Danilo Masoni; Editing by Jon Loades-Carter)