MILAN (Reuters) -MFE-MediaForEurope on Thursday reported a drop in operating profit, hit by weak advertising sales and lower margins in its Spanish market, while debt soared following the takeover of German rival ProSiebenSat.1.
Earnings before interest and taxes (EBIT) fell to 61.3 million euros ($70.6 million) in the first nine months, about half the level a year earlier, but was still above a company-compiled analyst consensus of 43 million euros.
Gross advertising sales rose by 1.4% to 1.43 billion euros in Italy, but fell 8% to 494 million euros in Spain, underscoring the pressure on traditional broadcasters as audiences and advertising budgets shift online.
Net debt rose to 2.85 billion euros from 692 million euros a year earlier, after MFE added ProSiebenSat.1’s assets to its balance sheet following the September takeover that gave it a 75.6% stake in the Bavaria-based broadcaster.
MFE sees European expansion as key to gain scale and compete with stiff competition from U.S. video streaming giants like Netflix and Google’s YouTube.
It is also in talks to buy an up to 33% stake in Portuguese media company Impresa.
The Milan-listed company said it will start fully consolidating ProSieben’s income statement from the fourth quarter and reaffirmed expectations for “strongly positive” profit and cash flow this year on a like-for-like basis.
“Despite the TV market in Spain remaining very challenging and the impact from ProSiebenSat.1 – which we have only just started working on – MFE continues to grow, beating forecasts,” said Chief Executive Officer Pier Silvio Berlusconi.
Earlier this month, ProSieben trimmed its profit forecast for the year, with rival European broadcasters RTL and TF1 also cutting their outlook.
($1 = 0.8677 euros)
(Reporting by Elvira PollinaEditing by Sonia Cheema)
