Mediaset could increase stake in ProSieben further: source

MILAN (Reuters) - Italy's top commercial broadcaster Mediaset MS.MI could lift its stake in German peer ProSiebenSat.1 PSMGn.DE, a source with knowledge of the matter said on Tuesday but the group's chief financial officer ruled out a full takeover.

FILE PHOTO: The Mediaset tower is seen in Cologno Monzese neighbourhood Milan, Italy, April 7, 2016. REUTERS/Stefano Rellandini/File Photo

Controlled by the family of former Prime Minister Silvio Berlusconi, Mediaset now holds 15.1% of ProSieben after it bought a 5.5% stake in the group on Monday through its Spanish unit Mediaset Espana TL5.MC.

No decision has been taken yet, but the Italian group could raise its stake in the German company to just below 20%, the source said.

Established European broadcasters are looking for ways to respond to growing competition from streaming services such as Netflix Inc NFLX.O and online advertising giants like Alphabet Inc's Google GOOGL.O and Facebook Inc FB.O.

Mediaset has invested around 520 million euros ($573.04 million) so far and has become ProSieben’s largest investor, a move ProSieben said it welcomed.

ProSieben Chief Executive Max Conze wants to move away from commercial TV toward the more profitable businesses of digital, content production and e-commerce.

The Munich-based broadcaster is, however, sceptical about cross-border TV mergers, preferring partnerships such as its advertising technology joint venture with competitor RTL Group RRTL.DE.

Speaking to analysts during a third-quarter financial call, Mediaset Chief Financial Officer Marco Giordani said the Italian broadcaster was not planning to increase its stake at this stage but he did not rule it out in the future.

He said Mediaset, which posted a surge in nine-month net profits, does not plan a takeover of the German rival, adding the group’s approach remains “friendly”.

A source with knowledge of the matter said Mediaset aims to convince ProSieben that an agreement over a closer tie-up is necessary.

Mediaset aims to press ahead with a corporate overhaul and merge its Italian and Spanish business into a Dutch holding company, dubbed MediaforEurope, to pursue pan-European tie-ups, including a potential merger with ProSiebenSat.1.

That would allow it to provide streaming services across Europe and create a digital advertising champion.

Vivendi VIV.PA, Mediaset's second largest shareholder, is challenging the plan in the courts claiming it includes a governance structure that would favor Berlusconi's holding Fininvest.

But the two groups have recently talked about overcoming the dispute and Giordani said an accord with Vivendi was possible.

Mediaset ended up 2.3%, while ProSieben fell 0.7%.

Additional reporting by Douglas Busvine; writing by Francesca Landini; editing by Giselda Vagnoni, Jason Neely and Lisa Shumaker