UPDATE 1-Mediaset boosts cost cuts after first-ever loss

Tue Nov 13, 2012 3:10pm EST

* Sees 2012 loss unless ad market improves strongly

* Q3 net loss 88.4 million euros

* CFO sees no M&A in the short term

* Doubles Italy cash generation to 355 mln euros

By Danilo Masoni

MILAN, Nov 13 (Reuters) - Italy's biggest broadcaster Mediaset SpA boosted its cost-cutting plan and posted its first-ever quarterly loss on Tuesday as a recession and pay-TV competition intensified.

The economic downturn in its two main Italian and Spanish markets dragged nine-month revenues down 12.5 percent to 2.65 billion euros ($3.37 billion). High content costs and competition from News Corp's Sky Italia weighed on its pay-TV unit.

As a result of the drop in sales, the group controlled by former prime minister Silvio Berlusconi posted a net loss of 45.4 million euros for the nine months, versus a profit of 164.3 million euros a year ago.

The quarterly loss was 88.4 million euros.

Mediaset said it will continue to focus on cutting debt and predicted a full-year loss in line with the nine-month result, barring a significant improvement in the advertising market.

The loss underscored the growing challenges that Mediaset, founded thirty years ago, is facing as audiences move to the Internet and new digital channels for news and entertainment.

Analysts say Mediaset, long-time leader in Italy's advertising market, needs to overhaul its outdated business model to win back investor confidence.

A partner for its loss-making pay-TV unit and a stronger push into the digital world would also help the investment case.

Shares in Mediaset have lost 43 percent over the last 12 months, leaving it with a market value of about 1.5 billion euros. On Tuesday the stock ended up 0.5 percent at 1.245 euros.

The group said in a statement it would boost its three-year cost-cutting plan, started in 2011, to 450 million euros from 250 million euros previously.

On Tuesday, the group's chief financial officer, Marco Giordani, said he saw consolidation opportunities in the market but ruled out any deal in the short term.

Giordani also said the focus was on bolstering Mediaset's balance sheet and that it was too early to comment on the dividend for 2012. Cash generation in Italy doubled to 355 million euros in the nine months.

Mediaset had cut its 2011 dividend to 0.10 euros a share from 0.35 euros of 2010.

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