UPDATE 2-Mediaset cuts dividend, warns of lower 2009 profit

* Warns profit could fall in 2009

* Cuts dividend to 0.38 euros/share

* Ad revs in Italy, Spain fell markedly in Jan, Feb

* 2008 net profit falls 9 pct but above forecasts

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By Deepa Babington

ROME, March 17 (Reuters) - Mediaset (MS.MI), Italy's biggest private broadcaster, on Tuesday posted a 9 percent fall in 2008 profit, cut its dividend and warned profit could slump again this year as the economic downturn crimps advertising revenues.

The company, which is owned by the family of Italian Prime Minister Silvio Berlusconi, said advertising revenues in its key markets of Italy and Spain saw a "marked" fall in the first two months of 2009 and were expected to be down for the entire year.

That could push operating and net profit for 2009 down from a year earlier, though the worsening economic climate made it difficult to make forecasts, the company said. It promised to keep a tight rein on costs and television investments.

Mediaset is the latest free-to-air European broadcaster to warn of a troubled year ahead, after Britain's ITV (ITV.L) and Germany's ProSiebenSat.1 (PSMG_p.DE) earlier this month sounded alarm bells on the severe advertising downturn.

Commercial free-to-air broadcasters are among media companies most exposed to the recession since they usually rely almost entirely on advertising, unlike pay-TV rivals who have subscription income to lean on.

Mediaset, which dominates free-to-air television alongside state-owned RAI television, reaps about two thirds of its revenues from domestic advertising.

It said sales at its Italian advertising arm Publitalia were down 12 percent in January, with February figures expected to be line with those of the month before.

Mediaset reported 2008 net profit fell to 459 million euros, hurt by a goodwill charge and lower earnings in its Spanish operations. But the result beat the Reuters Estimates analysts' consensus forecast of 448.1 million euros and a separate Reuters poll of 10 analysts that forecast a profit of 444 million euros.

The company cut its 2008 dividend to 0.38 euros per share, from 0.43 euros a year earlier, despite promising in November that it would maintain its dividend payout.

Gross advertising revenues in Italy were flat from 2007, while its pay-TV segment reported a 79 percent rise in revenues.

Revenues rose 4 percent to 4.25 billion euros in 2008, broadly in line with the Reuters Estimates consensus forecast of 4.23 billion euros.

Shares of Mediaset are down 19 percent year to date, outperforming other broadcasters like France's TF1 (TFFP.PA) and Britain's ITV, helped by the expectation the Italian advertising market would be least hit by the downturn.

The company faces growing competition from pay channels like News Corp.'s (NWSA.O) Sky Italia and with the Internet. It will address analysts on its 2008 results on Wednesday. (Editing by Andrew Macdonald)