MILAN (Reuters) -Italy’s MediaForEurope (MFE) confirmed its 2022 guidance despite a 77% drop in operating profit in the first quarter of the year due to a rise in costs, partly linked to scheduled content rights payments.
The country’s top commercial broadcaster expects advertising revenues in Italy, its main market, to rise 1% this year and will have costs of 1.8 billion euros ($1.9 billion), Chief Financial Officer Marco Giordani said in a post-results call.
The TV group, controlled by the family of former Italian Prime Minister Silvio Berlusconi, said advertising revenues in Italy maintained a positive trend in the first four months of the year despite the uncertainty linked to the Ukraine war and the COVID-19 pandemic.
It added that it expected “positive economic results and a positive free cash flow.”
The company, listed in Milan but registered in the Netherlands, reported a first-quarter group operating profit of 15.3 million euros ($16.4 million) compared with 67.9 million euros in the same period last year.
Broker Equita noted that first-quarter results in Italy were weaker than expected due to increased spending for broadcasting rights to events such as Coppa Italia and Supercup soccer.
It added, however, that no advertising clients had cancelled any of their planned campaigns.
Previously known as Mediaset, MFE, makes the bulk of its turnover in Italy by selling advertising spaces on its free-to-air channels such as Canale 5.
As part of its European growth strategy, it also has built a stake of more than 25% in German media group ProSiebenSat.1 and has announced a bid to buy the stake it does not already own in its Spanish subsidiary Mediaset Espana.
Total operating costs, including its Spanish unit, rose to 639 million euros from 566 million euros the year before, the broadcaster said.
Giordani also said that in a scenario of a weaker revenue trend, MFE would be able to reduce its cost base by up to 3% in Italy.
MFE A shares were down 1.26% at 0824 GMT, B shares down 2.28%, underperforming Milan’s all-share index, up 0.38%.
($1 = 0.9355 euros)
(Reporting by Elvira Pollina, editing by Giulia Segreti and Keith Weir)
