Mediaset SpA (MS), the broadcaster
controlled by former Italian Prime Minister Silvio Berlusconi,
cut its dividend after full-year profit dropped more than
estimated by analysts on lower advertising sales.

Net income fell 36 percent to 225 million euros, the Milan-
based company said in a statement today. Sales declined 1
percent to 4.25 billion euros. Analysts estimated net income of
250 million euros on sales of 4.28 billion euros, according to a
Bloomberg survey.

Mediaset, which runs free-to-air and pay-TV channels that
compete with the network of state-owned RAI SpA and Rupert Murdoch’s Sky Italia Srl, has been hit by declining advertising
sales amid the European sovereign debt crisis. Italy and Spain,
where the company controls Mediaset Espana Comunicacion SA (TL5), are
both struggling with high debt and unemployment. The broadcaster
today proposed a dividend of 0.10 euros per share compared with
0.35 euros a year earlier.

“The financial solidity of the company is the first
priority,” Chief Financial Officer Marco Giordani said on a
conference call today when asked about the dividend cut.

The company said it can’t make accurate predictions about
the development of advertising sales this year because of the
continuing economic uncertainty.

“The group’s results in 2011 obviously reflect the
difficult international economic situation,” the company said.
“The recessionary phase currently affecting both Italy and
Spain is affecting the advertising market in both the geographic
areas in which the Group operates.”

Rising Unemployment

Italy’s jobless rate rose to the highest in more than a
decade in January as austerity measures meant to fight the debt
crisis helped push the euro area’s third-largest economy into a
recession. Unemployment increased to 9.2 in January, the highest
since March 2001, from 8.9 percent in December, Rome-based
national statistics institute Istat said in a March 1 report.

Mediaset said 2012 net income will be lower than last
year’s if market conditions don’t improve. The company plans
savings of 250 million euros by 2014 to reduce operating costs
“in all major business areas.”

Total ad sales, which include domestic unit Publitalia, pay
digital channels and video content on Mediaset’s website,
dropped 3.3 percent to 2.77 billion euros in 2011. Revenue at
pay-TV offering Premium rose 14 percent to 615.6 million euros.

Before the full-year earnings were announced, Mediaset rose
0.2 percent to 2.298 euros in Milan trading.

To contact the reporter on this story:
Chiara Remondini in Milan at

To contact the editor responsible for this story:
Kenneth Wong at