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The television empire founded by Silvio Berlusconi has stressed the need for consolidation in European media to compete against US giants, as it wages a boardroom battle at the German broadcaster ProSiebenSat.1.
MediaForEurope, which is majority owned by the family of the late Italian prime minister, is the largest shareholder in ProSieben with a near 30 per cent stake. It also owns channels in Italy and Spain.
The Berlusconi family’s group is pushing for changes at the German broadcaster, including new board members, ahead of an annual general meeting at the end of this month.
“We see the media industry in Europe suffering from the competition coming from the US,” said Marco Giordani, the chief financial officer of MFE. “Frankly, it’s a matter of scale.”
The idea of a pan-European broadcast group is a long-standing ambition of MFE’s chief executive Pier Silvio Berlusconi. Giordani said MFE has become “more and more convinced about [the need for] European consolidation”.
MFE first invested in ProSieben in 2019, building a stake that it has since expanded even as the shares have sunk about two-thirds since that first investment.
The rationale for MFE’s acquisition of the ProSieben stake was because “if you don’t have Germany, at the end of the day you can’t be considered European,” Giordani said.
However, in rare public comments by an MFE executive, Giordani insisted MFE’s campaign was not part of a takeover drive, noting that if it had such designs it could have made a move a few months ago when ProSieben shares traded even lower.
“We believe that the company needs to find a new way before thinking about [a potential acquisition],” he said.
The Bavaria-based broadcaster ProSieben has lost about 85 per cent of its share price since its 2015 peak as it has struggled with falling advertising revenues amid the growth of streaming and encroachment from US rivals. It trades at close to a €2bn market valuation.
MFE is proposing that ProSieben appoint new directors — veteran banker Leopoldo Attolico and former EY partner Simone Scettri — and explore spinning off some assets outside its core business.
While ProSieben has begun engaging with investment banks to sell two of its larger assets outside its main television business, the company is forcefully pushing back against what it calls MFE’s “hostile actions”.
The broadcaster says MFE’s plan would destroy the value in the company, with one person close to ProSieben arguing the only rationale for pursuing the initiatives would be to tee up a potential takeover.
“Either they have no plan or they want to get it on the cheap,” said a person close to ProSieben. “That really doesn’t make any sense unless you want to destroy the value of the core business to be able to buy it.”
ProSieben’s revenues dropped about 7 per cent to €3.9bn last year and generated a net loss of €134mn.
Giordani said the company needed to move faster to dispose of its non-core assets.
“The company is not in good shape. So the status quo in our opinion is not an option,” he said. “They are a conglomerate today and that’s also one of the reasons why we believe the share price has underperformed.”
Groups have come out in opposition to MFE, including proxy advisers ISS and Glass Lewis, which recommended investors vote for the company’s nominees.
“[MFE] want to buy it and they will want to buy on the best possible terms,” said François Godard, an analyst at Enders covering European broadcasters. “Their approach now is just showing this, it’s brinkmanship.”
MFE was formed in 2019 as a holding company based in the Netherlands to become the parent group for then-Mediaset’s Italian and Spanish TV businesses as it sought to create a European television group.
Giordani said integrating the group’s business and “having a single organisation taking care of monetisation and a single organisation taking care of technology globally, it has created more advantages than we thought”.
He said he would not rule out similar collaboration between ProSieben and MFE in the future. “I’m not excluding some sort of industrial integration in the future” such as combining sales or technology efforts, he said.
A representative for ProSieben declined to comment.
